RFID raises inventory accuracy from an average of 63% to 95%, the study found

RFID raises inventory accuracy from an average of 63% to 95%, the study found

Apparel brand owners and retailers that use radio frequency identification technology (RFID) technology can reach near 100% order accuracy and, therefore, improve supply chain efficiency and potentially cost, a new study has found.

Carried out by Auburn University's RFID Lab and non-profit GS1 US, the 'Project Zipper' research found brands and retailers using RFID to optimise inventory management and reconcile product shipments were capable of achieving 99.9% order accuracy.

If further found that RFID raises inventory accuracy from an average of 63% to 95%, reduces retail out-of-stocks (OOS) by up to 50%, and cuts cycle count times by 96%.

The two organisations examined the flow of product information between the brands and retailers for over a one-year period between June 2017 and July 2018. They evaluated eight brands' and five retailers' use of legacy data (UPC codes) to audit advance shipping notices (ASN) upon receipt, compared to EPC/RFID data. 

Most of the products chosen for the study were apparel products that were already EPC tagged at the source to support current industry EPC/RFID programmes.

"This study should cause retail industry stakeholders to consider the immediate positive impact item level RFID can have on supply chain efficiency," says Justin Patton, Auburn University, RFID lab director. "Retailers and brands have a tremendous opportunity to eliminate errors, as the lack of inventory accuracy is a preventable problem that can be solved with greater automation through RFID."

The study found that retailers who do not validate 100% of inbound shipments are susceptible to greater inventory inaccuracy, and when RFID was not implemented, 69% of inbound orders (shipped from brands and received by their retailer partners) contained errors. These errors were revealed in picking, shipping, and receiving, resulting in inventory inaccuracies and potential costly chargebacks from the retailers to the brand owners.

Furthermore, the research found that brands and retailers who attempt process error "workarounds", often create additional errors and costs.

Chris Clark, chief information officer for Levi Strauss & Co, noted in the study: "Data reconciliation issues, manual processes, mispicks—all of these challenges slow down the supply chain and can be improved, even eliminated, with the use of item level RFID. Our customers are demanding excellence and RFID will help us truly evolve to meet the needs of the omni-consumer."

The research conducted by Auburn University's RFID Lab did not end with the conclusion of Phase One. The team has added more retailers and brands for Phase Two. Data is currently being collected to update the findings of the study regarding order shipment accuracy. Additional use cases for traceability, authenticity, and data exchange will also be investigated in the Phase Two report expected to be released in 2019.