Comment: Where are we now with RFID?

Around a decade ago, Radio Frequency Identification (RFID) was being talked up as the next big thing in supply chain operations. Despite all this hype, actual adoption has been limited. So what is the status of the technology now and has the potential for wider adoption emerged yet?

A brief introduction to RFID

RFID, like barcodes, is a data carrier technology. However, while barcodes work in the visible spectrum, RFID works in the radio spectrum, meaning that a tag (or multiple tags almost simultaneously) can be read when they are not in the direct line of sight of a reader – they might be hidden inside a garment or product box for example. They can also be light and thin, as they take their power from the reader and don’t have a battery.

GS1 has a clear interest in any data carrier technology developments and, at the end of the 1990s, played a central role in the Auto-ID Center, an MIT initiative involving some of the world’s biggest companies, to carry out research and development into RFID and stimulate its use in industry, particularly supply chain.

In the years that followed, expectations were high – indeed the hype reached absurd levels. But despite the world’s biggest retailer Walmart requiring their top 100 suppliers to put RFID tags on cases and pallets, it never really took off, as challenges to the business case and operational difficulties introduced some reality to the frenzy.

A shift in focus

Now, ten years after the height of the hype and in a calmer atmosphere, several retailers are investing significant sums in RFID. So what’s changed?

There have of course been improvements in the technology and the costs of tags and readers have come down. There has also been a change of focus – supply chain uses are not forgotten but store operations, and in particular stock visibility, is where benefits are being pursued. Priority is being given to items with many variants at the higher end of the price range.

Clothing and footwear is where most is happening. In the UK for example retailers such as Tesco, John Lewis, Asda, American Apparel, Zara and M&S are all involved in implementations. The objective is product availability, achieved through visibility of what is on the shop floor and in the stock room.

Stock counting by reading RFID tags can be carried out much more frequently and with greater accuracy than could ever be possible with manual counting, visual inspections or barcode scanning, particularly when there are many size, colour and style variations and customers don’t always return stock to the same location. Reading RFID tags allows “missing” items to be located on the shop floor (or back of store). 

Stock availability is also crucial for supporting high quality omnichannel experiences. With so many different channels for consumers to engage with a brand, it is all-too common for the information presented through each to be inconsistent. A trip to a store to collect an item shown in the system but that does not reflect the actual physical stock is clearly frustrating for that customer. Through the enhanced stock visibility enabled by use of RFID, the risk of experiences like this occurring can be minimised.

Other potential business uses

Stock visibility and availability are the current drivers, but the original vision of a better supply chain is still valid. When tags are applied at source, visibility is improved throughout the supply chain and processes such as picking and packing, dispatch, receiving at warehouse, dispatch from warehouse and receiving at store can all be improved. Barcode scanning improves these processes too, but RFID enables greater automation and less human intervention so speed and accuracy are even greater.

Theft prevention using RFID is also attracting interest. The tags carry serial numbers, so a list of all identifiers on store merchandise can be accessed at the tills and flagged when sold so that customers do not trigger an alarm upon leaving the store – although the alarm will sound if the item is still shown as in stock in the system. This approach to Electronic Article Surveillance minimises false alarms and provides more specific evidence in the case of a prosecution.

But RFID can offer more than simply enhancing practical processes – it also has a role to play in retail theatre. Used alongside smart mirrors for example, customers can read RFID tags in-store and have product images provided to them on tablets or on mirrors and access stock levels of different sizes and colours, including receiving suggestions for co-ordinating items. Going further, the really smart mirror enables customers to see how they would look in a particular garment, or more to the point combinations of different garments and accessories, without actually trying them on. Reading the RFID tags gives the necessary information on the products and cameras on the “mirror” provide a picture of the customer. This technology is reality today even if its cost justification is often questioned.

At the height of the hype there were those that believed, or pretended to, that RFID would kill barcodes. Barcodes were invented in the 1950s and the retail standard adopted in 1974; they were old-fashioned and their time had come. Few believe that now, as barcodes and RFID can comfortably co-exist and users choose the technology appropriate to their circumstances. That is possible because both function as data carriers and GS1 standard data, in particular identifiers such as the Global Trade Item Identifier, can be carried in either of these (or indeed many other) technologies.

Put another way – while investment in RFID is growing, in many cases it will still be used alongside barcodes as part of a mix, meaning businesses find that they can move to RFID for part of their operations fairly easily, without causing disruption to existing systems.

GS1 UK will be providing a regular column for Essential Retail on technology in relation to retail industry standards and the wider supply chain.