RFID: Everything you need to know

by | Oct 28, 2024 | Data Management, Inventory Management, Order Fulfillment, Retailers, Suppliers

In today’s supply chain, suppliers, retailers, 3PLs and the like are all looking to optimize their technology in a way that boosts their business and helps their bottom line. One technology that retailers are leveraging is RFID.

RFID technology can boost efficiency in product receiving at distribution centers, enhance inventory accuracy and track theft. Though it’s been around for a while, RFID technology has recently advanced, making it cheaper to implement—and an easier, more viable option for companies.

What is RFID?

RFID technology, or radio-frequency identification technology, is a type of wireless communication used to identify a unique object. It offers a way to uniquely pinpoint data about an object, sending that information back to the RFID reader.

RFID works via a small computer chip that can store tons of information about a singular product. This chip holds unique information, including item number, inventory information, shelf location, color and price.

Some leaders in the retail industry were early adopters of RFID technology, finding that RFID could be a value add to their supply chain when it came to inventory and sales processes. Until recently, however, RFID technology was too complex and expensive for many retailers to fully get on board.

In recent years, RFID technology has become more accessible for many businesses, with a lower cost and simplified implementation. It’s also become physically easier to work with. A chip and antenna that transmit information make up what is called the RFID inlay, which was previously too large to use on many smaller items. RFID inlays have become smaller, which allows them to be used on an expanded group of products, like individual cosmetics or small grocery items.

How is it used in the retail industry?

RFID technology is mainly used in retail for inventory identification and tracking purposes. The computer chip is often used as a ‘replacement’ for printed barcodes. Here’s how it works:

  1. Items are tagged with RFID technology.
  2. An RFID reader records the item information.
  3. The RFID reader stores the item data for inventory, fulfillment, product recalls and selling.

Why do retailers use RFID?

RFID is used for inventory management, fulfillment, selling and more.

Inventory

The biggest benefit of RFID is its inventory management capabilities. Each time RFID data is scanned, its product location is stored, keeping that information up to date in real time.

Fulfillment

Many retailers have a problem with shipments getting lost or stolen between their distribution center and delivery. With RFID technology, a product’s movement can be tracked at all times.

Omnichannel selling

Any time a retailer or supplier is working with varying sales channels, there’s room for confusion and, eventually, error. RFID supports omnichannel selling and makes it easier for customers to reserve and pick items up in-store. This added layer of a customized shopping experience becomes seamless for both the end consumer and the retailer.

Product recalls & spoilage

No one wants a product recall, but they do happen. RFID technology tracks an item’s lifecycle to the tiniest detail, which makes handling a recall easier.

What are the benefits of implementing RFID?

RFID technology has many benefits to any business that plays a role in the supply chain. It’s a much better way to have an all-encompassing view of the item without adding extra steps to the supply chain process. Some benefits include:

  • Better inventory control.
  • Improved customer experience.
  • Real-time updates to item location.

Why should suppliers care about RFID?

RFID is a technology solution that many suppliers must implement to meet their retailers’ requirements. As retailers in the apparel space move to mandate RFID technology to improve operations, suppliers must implement RFID tags on each item they send to a retailer’s distribution center.

Once you start using RFID technology, it’s a good opportunity to reevaluate the rest of your technology. SPS Commerce is your partner to support inventory accuracy, supply chain efficiency and increased customer satisfaction.

Morgan Asplund
Latest posts by Morgan Asplund (see all)
Warehouse employee using RFID scanner

RELATED POSTS