RFID Tags Evolved from Supply Chain to Item Level Tracking
Next Step: Chips that give information to consumers, experts say
FAYETTEVILLE — Radio frequency identification has evolved in the past six years from a way to track pallets of items through the supply chain to chips that can tell Dillard's to restock the red Ed Hardy shirts in medium.
Item-level RFID tags are possible now because the tags have decreased in price — from about $1.25 several years ago to a dime each now.
That was the talk at an item-level RFID conference held Tuesday and Wednesday at the Reynolds Center for Enterprise Excellence at the University of Arkansas in Fayetteville.
University staff have an RFID lab where they test various types of tags, on items from shipping containers to clothing to jewelry.
"We spent a lot of time in the lab at the item level, a lot on apparel and footwear," said Bill Hardgrave, executive director of the university's RFID Research Center. "People suspected it worked but they were still playing around with it."
His research, funded by Little Rock-based Dillard's Inc. and Cincinatti, Ohio-based Procter & Gamble, showed item level tagging works.
Hardgrave said it can lift sales figures by 2 percent to 15 percent by controlling inventory, reducing theft and reducing time spent on inventory.
Hardgrave wrote a paper in April summarizing his research with Dillard's.
"The amount of product a retailer thinks they have on hand is usually wrong," as previous studies indicated inventories can be off by 51 percent, the paper said.
Hardgrave investigated inventory accuracy in four Dillard's in a major metropolitan area with an audit firm conducting physical inventory counts twice weekly in two departments. The study included 1,100 to 2,000 items with RFID tags and tag readers installed in stores.
The Dillard's inventory accuracy improved by 4 percent after using RFID, Hardgrave's report stated. A store that didn't use RFID and conducted new inventories had accuracy decline by 13 percent, the report stated.
RFID item tags also can reduce shrink, that is, stolen merchandise, said Patrick Javick, director of industry level development for GS1US. The item tags must be able to activate and deactivate quickly, and can tell if something left the store without payment, what the item was or if multiple items left, Javick said.
As RFID evolved, the next step is using RFID chips to tell customers information about products.
"In an Asian market, it is really important to know where fish are from and that it was fresh that day," said Matthew Jones with Newport Digital Technologies, based in Newport Beach, Calif. Jones works from a Bentonville office.
A firm uses RFID tags on fish packages. Customers can hold the packages up to RFID readers in markets and find out on which farm the fish were raised, what day they were harvested and killed, the route they took to market and what the farmer fed them, Jones said.
That's possible as RFID tags, like other technologies, improve each year and their costs decrease, Jones said. RFID tags cost as low as 7 cents for a high-volume purchase of tags.
"In a couple of years, I see a 4-cent tag," Jones said.
Customers worried that others can use RFID readers to spy on their purchases needn't worry, said Ted McCaffrey, business development manager for security firm ADT.
He likens an RFID tag to a vehicle license plate. A reader will show the encoded information as a series of numbers on the RFID tag.
But without the secure database to tell the reader what those numbers mean — the color, size and price of an item and date of purchase, for example — the series of numbers means nothing, McCaffrey said.