April 25, 2014

Survey: Use of item-level RFID growing, but slowly

Although the technology can help retailers improve customer service, data accuracy, and inventory management, barriers to adoption remain.

By DC Velocity Staff

Companies continue to take small steps toward the implementation of passive item-level radio frequency identification (RFID) technology, according to the results of a recent survey of DC Velocity and CSCMP's Supply Chain Quarterly readers conducted by the consulting firm Collaborative Energizer LLC. Item-level RFID marks individual products with their own unique identification tags. Passive tags are those that require an outside power source for activation.

Only 29 percent of survey respondents said that they have deployed passive item-level RFID. As for the benefits of such deployment, 72 percent of survey takers said they had either already achieved or expected to achieve improved information accuracy. Another 70 percent cited improved customer service as a benefit, while 60 percent cited improvements in inventory management.

Few respondents are tagging their entire line of products. More than half (55 percent) of the respondents said that they use or plan to use item-level RFID on less than 25 percent of their products. Another 25 percent said they use or plan to use item-level tagging for between 25 and 50 percent of their products. Another 10 percent cited 50 to 75 percent of products, and 10 percent said item-level tagging would cover more than 75 percent of their product line.

Costs continue to be a barrier, the research found. When asked what factors are holding back wider use of passive item-level RFID, 75 percent of respondents stated that the expense of the technology was an impediment. Just under half (48 percent) cited a poor return on investment as an impediment, and 28 percent said lack of collaboration with supply chain partners was a problem. Twenty-three percent also said that a lack of operational talent with expertise in the technology was another barrier.

Collaborative Energizer founder Joseph C. Andraski said the survey shows that companies that could benefit from item-level RFID need more information about the role and importance of the technology in improving inventory visibility and tracking in real time. "The industry needs to do more education on item-level RFID," he said. "People are set in their mental model, and there needs to be more dialogue with industry experts about its value."

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