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achieving,” says Beverly. “Usually, that’s easier with a prom
dress than with a can of tomatoes.”
A white paper from Accenture and VICS (which Beverly
co-authored), “Item-Level RFID: A Competitive
Differentiator,” provides a table that shows the sales lift
needed for an RFID tagging effort to break even. (The
white paper can be found on Accenture’s website.) The
table breaks the amounts down by unit margin and cost of
the tag. For example, according to Accenture’s calculations,
a product with a $5 margin and total tagging costs of 20
cents per item would need a 4-percent sales lift to justify
the cost.
It’s worth noting that companies are using RFID tags to
track more than just merchandise. Some are also tagging
individual shipping and warehousing assets, particularly
high-cost, moveable items. Companies typically lose one in
four of their returnable, reusable shipping containers, such
as totes, containers, or plastic pallets, says Warner. So it
makes a lot of sense to tag these items for tracking purposes, he explains.
your systems—such as your enterprise resource planning
system and your order entry systems—are coordinated and
can talk to one another.
In addition, it’s important to have accurate product
information. “Data synchronization is really key,” says
Andraski. “You need to make sure that whatever you have
in your product master [data sheet], your customer has the
same information in its product master in terms of weight,
size, and what you’re calling the product.”
4You have a lot of items that are offered in various per- mutations. If your products come in multiple sizes, styles, and colors, tagging individual items can make
a lot of sense, according to Warner. RFID tags can make it
significantly easier to find the exact item the consumer is
seeking, he explains. Macy’s, for example, has begun its
item-level RFID implementation by focusing on products
that come in many different sizes, such as women’s shoes
and men’s slacks.
3Your systems are coordinated and your data is synchro- nized. As Andraski says, before a company can imple- ment item-level RFID, it needs to “have its act together.” What he means by that is you have to make certain all
5You have an item with a short sales window. Companies whose survival depends on selling enough snow shovels or designer coats between
December and March can benefit from the real-time inventory information that RFID can provide.
NOT FOR EVERYONE
For all its many benefits, RFID doesn’t make sense for
everybody. “If bar codes are working well today and you
can’t point to a clear problem, then RFID’s probably not a
good option for you,” Beverly says. “The cost of the tags is
still not to the point where you should retire all bar-code
infrastructure and processes just to go with something new.
Bar codes still work extremely well for a wide variety of
things.”
For example, the pharmaceutical industry had been
pushing hard for companies to adopt RFID to fulfill chain
of custody requirements. But some industry players have
backed off from RFID after realizing there are still ways to
get more from their existing technology and data manage-
ment systems, says Beverly. Many companies in the indus-
try now see RFID as something for the long term.
This also applies when it comes to the business case for
the technology. While there are undeniable benefits to
implementing RFID in your distribution operations—
reducing chargebacks, boosting inventory accuracy, and
cutting invoice and payment cycle times, to name a few—
that’s not what’s driving current implementations, according to Beverly.
“The knee-jerk reaction is to assume you can get benefits
from it in a lot of different areas,” Beverly says. “And while
that’s true, it’s hard to add up all those incremental benefits
versus using bar codes today. If you can just simplify and
focus on one or maybe two benefits at most, that makes it
much easier to figure out where and how to use it.” ;
