From World War II to the latest inventory solutions, trace the development of RFID from novelty technology to essential retail tool
Key Takeaways:
- RFID technology was initially held back by its cost and hard-to-determine ROI
- Increased capabilities and reduced expenses make RFID indispensable to retailers
- Improved data analytics make a strong case for RFID’s value
- The technology helps to improve retail supply chain safety and efficiency
Radiofrequency identification, or RFID, has a long history stretching back to World War II. It helped identify friendly aircraft from foes on radar.
RFID works by using electromagnetic waves to track and identify tags attached to objects. It is used by the military and a host of modern industries, including retail. At first, the adoption of RFID was slow because of its steep cost and unclear ROI.
Since then, the price of RFID tags and readers has decreased, making the technology viable for large and small retailers. Advances in the technology have also helped spur its adoption for uses that range from tracking purchases in the store (helping to staunch losses due to theft) to managing inventory.
Statistics show that more than 98% of retailers use RFID in one form or another. The majority of these believe that its benefits cannot be replicated by any other technology.
Challenges of early RFID adoption
In the early 2000s, RFID technology seemed to hold great promise for retailers, with big names like Walmart and Macy’s investing in it. However, the technology was not yet ready for prime time. The greatest problem was price. Decades ago, they cost as much as 60 cents per tag. In the early 2000s, this number fell to about 15 cents, but still too expensive for many businesses.
There were also problems with reliability, range, and standardization. Limited analytics capabilities hindered many retailers from knowing whether or not the technology represented a good investment.
Because RFID cannot be turned off like other technologies, some were worried about unauthorized access and had privacy concerns. They feared that the wrong people could read the data remotely, revealing private information about the business or the customer.
The turning point: advancements and value recognition
Today’s technological advances and lowering costs have made RFID technology increasingly important to retail businesses.
McKinsey & Company points out: “After a nearly 20-year ‘incubation,’ with advances in readability, range, and cost, RFID stands poised to address precisely the use cases that are at the center of today’s need for more omnichannel, data-driven, accurate, and customer-driven shopping experiences.”
Advances in chip technology have meant that RFID prices have fallen 80% to approximately four cents per tag. At least, this is the approximate cost of passive tags (as opposed to the more expensive active tags, which require an internal power source). The hardware needed to read the tags is still costly, but major cost reductions have also been seen.
Protocols such as EPCglobal have addressed the lack of standardization. They help eliminate human errors by automatically reading electronic product codes (EPCs). They also track tagged items remotely, securely, and in real-time, helping to improve supply-chain efficiency.
When determining ROI, new data analytics capabilities can mine many valuable insights from RFID data. For example, they might be used to track items’ movements through a store, revealing valuable information about customer pathways through the premises and data about high-traffic end caps and pinch points.
The technology enables retailers to create a serialized data archive of products in brick-and-mortar stores, online, and throughout the supply chain. The unique ID codes assigned to each item greatly improve inventory tracking, enabling retailers to manage stock levels better, reduce errors, and cut operational costs.
Retailers can also use artificial intelligence (AI) tools to leverage RFID-supplied data.
Since RFID technology allows retailers to provide better services and engage with their customers more meaningfully, it is gaining wider consumer acceptance. This trust is also enhanced by the growing body of privacy legislation covering RFID systems, bar codes, and other systems. Some states are enacting RFID-specific legislation, covering, for example, unauthorized scanning of RFID tags.
Retail opened the door to other industries
As retailers continue to find innovative and productive uses of RFID (such as inventory management), other industries are taking note and investigating how it works for them.
In healthcare, for example, patients may wear RFID bands that contain all their information when they visit a hospital. Hospitals might also use the technology to track inventory. When one large laboratory equipment manufacturer experienced a high rate of internal supply damage to products being transferred from its facilities to a warehouse, it implemented a SpotSee ShockWatch® RFID impact indicator program. Not only were more damaged goods found before shipment, but supply chain workers were also made aware of the problem and started to handle goods more carefully.
The devices detect when equipment has experienced an “impact event” before being put on a truck, so quality assurance checks it immediately. This helps to make supply chain workers more aware of how they handle delicate technology.
Manufacturing often uses different types of large equipment. RFID can help track all the machinery’s different maintenance schedules to ensure minimum downtime and efficient operation. It might also track workers’ equipment use or log their working hours, including overtime.
One garage door manufacturer used SpotSee ShockWatch RFID to determine when their products were damaged in transit, helping to reduce the number of costly returns.
In the hospitality industry, RFID tracking enables hotels to track all inventory—from bedsheets and towels to staff uniforms — to ensure smooth operation and customer service. It might also track equipment maintenance schedules such as refrigerators and industrial-size laundry machines.
RFID has several uses in security. Police may use it to determine if crucial evidence has been tampered with. The technology might also be incorporated into entrance wristbands, preventing people from fraudulently copying them for others. Some countries even incorporate RFID transponders into their passports for security purposes.
How RFID can be used to improve your supply chain
Advances in RFID technology in retail have made it a much more compressive solution for users. Not only can RFID’s clearly defined benefits make a much more compelling case for ROI, but the falling cost and growing range of capabilities of the devices mean that no player can afford to ignore the technology. Today, RFID adoption in retail covers:
- Supply chain management
- Theft prevention and stock management
- Optimized checkout processes
- Movements of items in stores
- Enhanced data collection for greater consumer insights
SpotSee’s ShockWatch® RFID makes it nearly impossible for damaged products to get through the supply chain without notice. Our products can reduce damage by 40 to 60%, cutting back on the number of repairs, delays, and claim filings.
Contact us today to learn how the SpotSee range of products can help monitor and protect your goods. As the global leader in condition-indicating and monitoring solutions, we can ensure that your products and brand reputation are saved from unnecessary damage.
