Another SCM Priority: Expanding RFID Item Tagging

RFID item tagging takes investment of time and resources for partners all along the retail supply chain. But the rewards are worth it.

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Supply chain executives always have a lot on their plates. During COVID, their workload surged. Ever since, it’s been all hands on deck to tackle one challenge after another. Radio-frequency identification (RFID) item tagging is now one of them.

From stationery to home décor — and so much more — recent retailer requirements are accelerating implementation of item-level RFID. This is the case for consumer goods brands and manufacturers, especially those selling to huge retailers such as Walmart. It affects supply chain teams behind America’s most recognizable household names and private label products alike.

As a result, supply chain managers are racing to get up to speed on new technologies and processes so they can roll out RFID item tagging on thousands, millions or billions of products.

Why the New RFID Requirements?

What has changed? Why are major retailers looking to expand RFID item tagging beyond apparel and footwear?

The answers are familiar retail priorities:

  • Better inventory management
  • Increased sell-through
  • Stronger customer satisfaction

Leading retailers saw dramatic improvements in all of these metrics from RFID item tagging of apparel, and now they want to drive similar results across more product categories.

What is RFID’s magic bullet? RFID item tagging reduces labor and time needed to confirm on-hand inventory, with near-perfect accuracy. Passive RFID tags, the most common type for item tagging, are activated automatically when scanned by a reader. The difference between reading a UPC tag vs. an RFID tag is that the latter does not require line of sight or hands on the product for a successful scan. Retail associates, roving robots or handheld RFID readers simply scan over an area, and the retailer gets a real-time read on every single product.

Accurate real-time inventory visibility is crucial for omnichannel commerce. Not only do retailers know when in-store shelves need restocking, they also know precisely which products are available for fulfillment of online orders. Quarter after quarter, retailer financial results show how consumers love ordering online and picking up at the store. Curbside pickup and other shopping behaviors common during the pandemic have remained popular due to their convenience.

The Challenges

Apparel brands trailblazed the way with RFID item tagging in response to retail mandates. While none will say it was easy, arguably they had a few factors that helped out. For example, a hangtag can readily accommodate an RFID inlay, the tiny antenna and micro computer chip that give RFID technology such powerful capabilities. There are multiple ways to embed inlays into hangtags. In addition, garment suppliers have the option to add a second hangtag specifically for RFID. Neither approach requires significant process change or capital investment.

Also, most apparel and footwear products are made in low-labor-cost locations. Production is very manual. Factories employ hundreds if not thousands of workers. Adding another manual step, such as attaching a second hangtag, is relatively simple.

This is not the case for many consumer products, which are labeled on high-speed automated production lines. Just imagine if every bottle of laundry detergent had to be handled by a person to be labeled!

The Solutions

How can supply chain leaders address these challenges? How can RFID item tagging benefit not only retailers but also manufacturers’ supply chains?

Consumer goods businesses have much to gain from RFID. Like their retail customers, they benefit from having the right inventory in the right place at the right time. Stronger sales, greater efficiency and increased customer satisfaction are compelling rewards.

Best practices already are in place for RFID item tagging many consumer product types, and R&D work is making more inroads every day. This is the result of ongoing collaboration among partners across the supply chain, such as the Auburn RFID Lab, the GS1 standards organization, retailers, consumer goods suppliers, RFID inlay makers, label providers and labeling service bureaus. Still, it can be overwhelming to start up or expand an RFID program.

Where to start? Here are important considerations.

Speed. Retailers require responsiveness. Out-of-stock products are lost sales opportunities. In turn, consumer goods suppliers cannot lose cycle time waiting for RFID labels to arrive. They can’t afford to slow or stop production lines due to inconsistent, off-spec RFID tags. To make on-time deliveries to retail customers, consumer product manufacturers need RFID labels:

  • Delivered on-demand within hours or days
  • Supplied in the volumes required, with verified encoding
  • Designed to flow seamlessly into production lines

Quality encoding: right first time. RFID item tagging shows what products are in stock, down to the individual, unique unit. In addition to hyper-accurate inventory visibility, RFID enables track-and-trace for every product, important for quality management and supply chain transparency. Every RFID inlay must be encoded properly with product information for the individual item, and every label must be readable. If not, RFID loses its efficacy, and the retailer might lose sales, sometimes faith in the supplier. Label providers should offer strong analytics to validate RFID tag encoding and performance, plus statistical process control and audit procedures meeting or exceeding industry standards and Auburn RFID Lab protocols.

Secure application. Consumer products come in all shapes and sizes. There are kitchen tools, candles, bud vases, metal cannisters and containers of motor oil, cleaners, makeup and other liquids. All pose technical challenges for RFID item tagging. It is important to work with a label supplier with specialized equipment and adhesives knowledge. Valuable RFID labels must stay on throughout the supply chain from point of manufacture through the customer checkout process.

Simplicity. RFID is designed to reduce complexity, not make things more complicated. Yet there are many moving pieces. The more your supply chain partners offer your business one-stop-shop solutions, the more streamlined your RFID implementation will be.

RFID item tagging takes investment of time and resources for partners all along the retail supply chain. But the rewards are worth it. Consumers expect to find what they need when they want it. RFID is a powerful technology to make that happen.