RFID can achieve near 100% order accuracy, study says

Dive Brief:

A new study from GS1 US and Auburn University's RFID Lab, "Project Zipper," found RFID technology can help reach 100% order accuracy and could therefore eliminate claims costs in the supply chain.
The 10-month study 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. Audits with legacy systems recorded an order inaccuracy 69% of the time, while RFID data did so with less than 0.01% of orders.
The result "is much, much higher than expected," Justin Patton, director of the Auburn University RFID Lab, said in an email to Supply Chain Dive. However, the most surprising finding was not the fact there were errors in the legacy data, he said, "but just how much the industry as a whole has accepted the errors."

Dive Insight:

"The supply chain data accuracy processes have been frozen in time for decades, and a lot of the brands and retailers are begging for improvements, which is how we were able to get so much user support," said Patton.

Patton and his team at the Auburn University RFID Lab are not done with the study. The next phase, according to the report, is a deeper "failure analysis" to understand why, in some cases, EPC/RFID data did not exactly match with ASNs. This could be for one of nine reasons, including over-picking and under-picking, but data is currently being collected to help understand more and recommend corrective actions.

The Phase 1 report, however, already includes a list of recommendations for supplier and retailer use cases, based on the findings. It also proposed an ROI formula to help supply chain managers prove the technology's benefits.

RFID ROI formula — Auburn University RFID Lab

"This is the first [ROI formula] I'm aware of that focuses on supply chain. I know there are some ROI models focused on the retail store, RFID Journal has one and some others as well, but research for RFID and serialized item data in the supply chain is almost non-existent," Patton said.

The findings suggest the return of RFID is a "much simpler process" than other UPC implementations. With 100% order accuracy, cost claims and chargebacks can effectively be eliminated, justifying the cost of the technology.

"That's huge — this means that brand owners can reduce operating costs and improve margins by assuring the right goods are sent where they need to be, and ultimately, retailers can be more confident that they are delivering on their omnichannel strategies effectively," Patton said. "We can end claims and chargebacks right now, that's billions of dollars saved."