RFID Will Soon Be a Profit Center

Posted 13th September 2016 by Melissa Magestro

Whether you supply packaging and/or labels to retailers, manufacturers or companies in other industries, you can now provide a value-added service to your customers and help them solve problems they have in tracking and managing their assets. How? By integrating radio frequency identification (RFID) into your labels and packaging.

You may be familiar with RFID. Like many new technologies, it was much hyped when it first emerged as a way to track and manage physical objects with low-cost “tags” or “smart labels.” Many articles in 2002 and 2003 said RFID would spell the end of the bar code and make it possible for companies to know exactly where their inventory was in real time. When the technology failed to transform the global supply chain overnight, the stories about RFID turned negative, and many companies dismissed it as a fool’s errand.

But some people kept using the technology to solve business issues they had struggled with for years. Solution providers kept enhancing their products, making the technology more reliable and easier to deploy. And now, 15 years later, RFID is delivering real benefits to companies in retail, manufacturing, health care and other sectors.

Macy's, for example, began employing RFID technology in all of its stores in 2012. The retailer asks suppliers to put RFID tags on items shipped to Macy's, either in a hangtag or a label that can be removed. As a result, store associates can now take inventory with a handheld RFID device, capturing data on 7,000 items per hour in departments in which all items are tagged. It takes roughly 14 hours to scan that many items with bar codes. That’s why Kohl’s, Soma Intimates, Gieves & Hawkes, Levi Straus, Polo Ralph Lauren and many other retailers worldwide are adopting RFID.

Manufacturers are also embracing RFID. American Woodmark, a maker of kitchen cabinets and vanities for the remodeling and new home construction markets, is using RFID to track inventory of the many styles of doors it has for its products. The company is using approximately 9 million RFID tags annually. The result: cycle counting time has been cut by 66 percent and inventory accuracy has improved from roughly 80 percent to 100 percent.

Is RFID here to stay? Consider that in 2015, roughly 5 billion passive ultrahigh-frequency RFID transponders were sold. In a few years, analysts estimate the number could be 10 or 20 times that. Here’s why. New technologies follow a common adoption curve. Initially, visionaries see the potential and jump on board. There is a lot of hype, but as more companies investigate the technology, they find it’s not mature and more difficult to deploy than articles make out.

Over time, the technology gains a foothold by solving problems no other technology can solve. As the benefits of solving this issue are proved, more companies sign on. Eventually, the technology reaches a tipping point and takes off.

The retail sector will likely be the first industry in which RFID reaches the tipping point. That’s because it has proved that it can solve a problem all large retailers struggle with—inventory inaccuracy. As more retailers embrace RFID, it is only a matter of time before the industry hits critical mass. When that happens, large suppliers will tag all their goods. Retailers not using RFID will be forced to by competitive pressures, and the number of tags consumed will explode.

Companies in a wide range of industries—including industrial manufacturers, oil and gas firms, horticulture producers, and wine and spirits makers—are embracing RFID. What does this mean for packaging and labeling companies? It means there is an opportunity to convert RFID transponders into tags and labels for apparel suppliers, manufacturers and others, or to embed RFID in packaging for customers and charge a little more. Some companies will be asked by suppliers to provide RFID labels. Others might use the knowledge of RFID converting to break into new markets. Either way, there is a huge new opportunity on the horizon.

Keep in mind that you can also use RFID to manage your inventory, so you don’t run out of critical supplies, which can lead to paying high shipping fees to air freight supplies or shutting down production. All Printing Resources, for example, developed an RFID solution to manage supplies at customer sites (see SupplySentry Keeps a Lookout on Inventory for Package Printers). [link: /www.rfidjournal.com/articles/view?14584

By Mark Roberti, Founder and Editor of RFID Journal www.rfidjournal.com

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