RFID Trailblazers - InformationWeek

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RFID Trailblazers

Radio-frequency identification is among the most provocative technologies to emerge in recent years, yet just a handful of companies are using it. An RFID implementation can carry a hefty price tag, and even the trailblazers admit they haven't determined everything they'll get back from their investments. But those who've taken a leap of faith into this unchartered territory are seeing results, whether it's tracking the success of an advertising campaign or conducting faster inventories. Jamshe

A Little Tag'll Do Ya

Radio-frequency identification in retail is often thought of as a stockroom technology, but at Gillette Co., RFID goes hand in hand with glitzy advertising campaigns.

The consumer-goods company has used RFID to determine whether stores have stocked their shelves with a specific item in time for a marketing promotion. Gillette is doing that by analyzing data from retailers with RFID scanners, which read the electronic product codes on each tag at receiving docks and at various points between stockrooms and store entrances.

In one instance, Gillette confirmed that all the stores it measured received the product before a promotion ran. Among stores that moved the product from stockroom to shelves before the promotion hit, average sales were 48% higher for it than those that did so after the promotion's start. Gillette also found that more collaboration was needed with stores, since 38% of them didn't execute correctly. "We see this as a huge opportunity," Jamshed Dubash, director of Auto-ID technology at Gillette, said last week in Chicago during a session at the Retail Systems conference that included executives from Wal-Mart Stores Inc. and Levi Strauss & Co.

The most important lesson for Gillette: RFID is a two-way street. The company estimates that 80% to 90% of the benefits of RFID will come from collaboration with retailers. Put another way, 20% or less of the benefits will come from operational improvements Gillette can make within its own walls. Gillette reached these and other conclusions by using the technology to see what works and what doesn't. "Our approach has been to launch and learn," Dubash said.

Lesson No. 2 for Gillette: Be willing to adapt as you learn. With RFID, Gillette's primary long-term goal has shifted from just reducing theft of its products to the broader goal of reducing out-of-stock merchandise.

--Chris Murphy


Wal-Mart Outlook On Perfection: Good Luck!

Wal-Mart also has readers positioned between stockrooms and store entrances in some stores, letting the retailer keep tabs on where products are at any given time. Lesson from Wal-Mart: Even if the data coming from those readers isn't perfect--if one case of soap doesn't get read as it's carried through a door--it's still very valuable. "If we get 95% read rates, that gives us 95% visibility to the stock in the back room, which is tremendous," Simon Langford, manager of global RFID strategy for Wal-Mart, said at the Retail Systems conference.

Simon Langford

Simon Langford
Smack dab in a busy shopping time like a Friday night, Wal-Mart employees can't move fast enough to replenish the goods flying off shelves. The company is testing handheld and wireless devices to let employees more quickly locate merchandise in the back room during peak shopping periods. Eventually, Wal-Mart wants to refine that process to help employees choose the fastest-selling merchandise first.

Lesson No. 2 from Wal-Mart: Don't be stingy with your knowledge. Companies need to map out the benefits they're likely to get and "share the learning, share the success stories," Langford said. He also urged companies not to rush. "Don't try to take the whole gauntlet of process changes at once," he said.

Levi Strauss, meanwhile, is testing RFID at one of its stores in Mexico City, where it has tagged every item and can take a full inventory each morning in about 30 minutes. "We're almost fast-forwarding RFID," said Fred Betito, who manages global IT strategy and enterprise architecture for the clothing maker.

By taking inventory more often and getting more-accurate data on sizes on store shelves, Levi Strauss hopes to reduce out-of-stock items and improve customer satisfaction.

--Chris Murphy

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