Sometimes it pays to wait on something — like RFID — until more people start using the technology and costs shrink. With that in mind, a lot of procurement and supply chain operations have traditionally shied away from RFID, because “the way we’ve always done it” was the most efficient and cost-conscious path to choose.

But the growth of RFID usage in supply chain networks is growing, which is helping to make technology costs more reasonable. This in turn has made RFID become an easier sell for procurement pros looking for the go-ahead from highers-up, since there are tangible results now of return on investment in RFID.

There also are options in how you choose to plant the small radio frequency device (per pallet, per box, etc.) and how you choose to read the RFID chips (wand, pass-through archway, etc.).

What’s driving much of this progress? Among the companies that have implemented RFID and seen it fuel improvement, there are two stats that jump out (and they happen to be ranked No. 1 and No. 2 as well):

• 47% of businesses reported containing costs as the driving force,
• 25% saw RFID implementation as a means of improving customer service.

RFID is finding greater use in retail businesses, which of course often has stock that can be more “mobile” than other businesses. The number of retailers spending money on RFID this year doubled over 2007; 39% of respondents have been working with RFID for more than one year.

Three main criteria were used to evaluate the efficiency of RFID:

• customer satisfaction, up 12% over the past 2 years
• 94% report better employee productivity, and
• 78% said inventory turns improved by (an average of) 5.4%

This information is found in ”Real-Life RFID in Retail: The Past as a Prologue,” an April ’08 research report from Aberdeen Group.

Among those who haven’t yet implemented RFID, 36% plan to do so in the future.

Tags: inventory, RFID, supply chain