If you are reading this column, chances are your are already familiar with the benefits of RFID. But you may not be aware of the compelling reasons to apply RFID tags at the source of manufacture.
Why RFID Source Tagging?
Most commonly, global companies with high volumes and complex supply chains employ source tagging. Those three factors most often point to a high ROI for RFID. But other factors also come into play.
For example, while large apparel retailers have made the biggest inroads to date, we’re starting to see movement in other product categories, including cosmetics, liquids, over-the-counter drugs and other perishables, such as grocery items, all of which were considered too difficult to tag in the past.
Cosmetics is a good candidate for RFID source tagging. A single cosmetics merchandise category may include 300 or more SKUs, there is high turnover of goods, it tends to be at high-risk for shoplifting and each unit is relatively costly, so good inventory management and asset protection makes sense.
One driver behind the expanded range of merchandise being source tagged is the fact that hypermarket retailers have already experienced success source tagging apparel and are now looking to tag other merchandise categories.
In the case of food and over-the-counter drugs, expiration dates are an added catalyst. By enhancing supply chain transparency, retailers can track chain of custody from source, comply with regulations and more efficiently respond to crises — for example, when a specific batch of over-the-counter medication is determined to be harmful. In such cases, only that specific merchandise determined to share the same RFID code might have to be discarded, vs. the vast quantities pulled out and destroyed today.
Moreover, this added supply chain visibility can ensure brand authenticity for drugs and other merchandise. When detailed information is included on RFID tags at source, retailers can ensure that a given leather designer handbag, for example, is legitimate and that the meat marked sirloin is prime beef and not a lower grade of beef.
Another factor is that many companies already source tagging their EAS labels have found efficiencies by applying RFID tags at the same time, because adding RFID or dual tags at the point of manufacture incurs a relatively small incremental cost. It has also led to significant store efficiencies, such as associates can assist customers instead of spending time in the back room tagging merchandise in store.
What Is Involved?
Selecting the appropriate RFID tag in North America has been made easier by Auburn University’s RFID Lab (ARC) standards, which indicate the tag specifications that are appropriate for each merchandise category. In Europe, EECC has published similar specs. Selecting tags that are certified by ARC or EECC ensures that tags will be effective for the categories noted.
Retailers should also consider how to customize their tags. While certified inlays are identical, the completed tag is generally customized for each customer. This enables personalization that might include brand information, the use of specific colors, pre-printed information, etc.
Moreover, source tagging can take place both at the point of manufacture as well as distribution centers, so consider the benefits of each approach. Retailers frequently tag at DCs before distributing merchandise to multiple stores.
Source Tagging Challenges
Traditionally, source tagging has presented challenges in the areas of enterprise number management, tagging large amounts of merchandise quickly and keeping pace with evolving standards. Fortunately, we’ve come a long way in all three areas.
For successful source tagging, RFID tag data must be both consistent and accurate. So those employing source tagging should invest in number management to avoid duplicate digits that could potentially sabotage efforts. GS1 has established numbering standards, and you can outsource numbers management to experts to achieve single source controls that accurately track EPC numbers, while reducing your own RFID responsibility checklist.
In addition, it’s now common to bulk commission hard tags so that 1,000 or more tags can be encoded at once. When combined with high-speed printing capabilities for RFID soft tags, this enables retailers to respond more quickly to variable demands. We’ve implemented bulk commissioning solutions to encode over 30,000 labels per hour.
When source tagging, it’s important to anticipate how packaging and product materials come into play. We’ve seen examples where 30 percent or more of cosmetic packing ready to be tagged has metal content, which can reduce the accuracy of RFID reads. By planning ahead, this can be addressed. For example, in one case, the manufacturer simply switched to gold colored paper packaging. Other considerations that affect RFID performance include liquid filled bottles and glass containers. That said, even these can be source tagged if issues are addressed in advance. So stay involved in the design stage to avoid last minute crises.
We’re also beginning to see retailers work with suppliers to add more product attributes to tags, particularly when merchandise is sold via online and mobile channels. Doing so makes it easier for shoppers to find the product they are seeking (and increase purchases). For example, shoppers may be able to filter a range of purses by color, product dimensions, materials, country of origin, etc. – to more quickly find the desired product.
Including this information at source and sharing data throughout the supply chain also ensures higher accuracy in delivering the right item to the retailer and can help identify counterfeit merchandise that may find its way into the supply chain.
Specific steps should be taken before embarking on an RFID source tagging project. Packaging firms can examine materials to be used at the design stage. They should work with vendors to determine the right tag to use with the packaging as well as the data that is to be captured and tagged.
Apparel, consumer goods and other manufacturers can prioritize what is to be tagged — in the same way they currently prioritize EAS applications. Factors such as volume, velocity, price, risk of theft and expiration dates should be factored in such a decision.
Source tagging is a proven and evolving high-impact program that can increase store sales and reduce shrink. New products and methods are creating increasing momentum in the market place, making it even more attractive to RFID source tag today. Incorporating these considerations into your RFID source tagging program will help ensure the success of your inventory management and asset protection initiatives.