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May 2007
Prepared by IBM Canada Ltd. for
Canadian Council of Grocery Distributors (CCGD)
Food and Consumer Products of Canada (FCPC)
EPCglobal Canada
Canadian Grocery Industry RFID Pilot
RFID Value Assessment Results
RFID Value Assessment ResultsPage 2
Contents
Executive Summary 3
Pilot Overview 8 Background 8 Objectives, Execution, and Deliverables 10 Technology 11 Analysis Methodology 12
Pilot Results 14 Results Overview 14 Technology Key Messages 14
Business Case Drivers 18 Benefi ts Overview 18 Investments 26
Deployment Strategy 30 Deployment Overview 30
Next Steps 34
RFID Value Assessment ResultsPage 3
Executive Summary
Preparing for the future of RFID
The Canadian RFID Grocery Industry Pilot was born out of the collaborative
partnership between the key players associated with the Canadian RFID Centre
(CRC): industry, associations and technology providers. Four grocery product
manufacturers, one retailer, three industry associations and three RFID solution
providers participated in the Pilot, which was conducted under the premise that
RFID and EPC adoption should be approached as an industry-wide initiative.
With a focus on the business case validation of food traceability, distribution centre
effi ciencies, environmental monitoring and reduction of out-of-stocks at the retail
level, the Pilot took place between May 2006 and January 2007. To analyze the Pilot
results, our detailed methodology covered:
• analysis of the product fl ow dynamics;
• benefi ts identifi cation and quantifi cation;
• investments assessment; and
• business case development for each manufacturer and retailer involved.
This White Paper examines the results of the Grocery Industry RFID Pilot and
suggests recommendations for industry adoption. As RFID gains traction in the
Canadian market, the question of RFID adoption in Canada’s grocery industry
is not a matter of “if”, but rather, “when.” Early – and informed – adoption is key
to successful implementation.
Highlights
“The Canadian grocery industry RFID pilot
was done for the right reasons, the right
way and provides members with the right
information to understand the conditions
that will be required for successful implement
of RFID throughout the grocery supply chain.
The commitment of the industry to take
a collaborative approach to understand
RFID’s potential and the impact and benefi ts
to both suppliers and retailers is unique to
the Canadian market and defi nes our industry
approach to changes that require critical
mass adoption to maximize benefi ts.”
- David Wilkes, Senior Vice President,
Trade and Business Development,
Canadian Council of Grocery Distributors
“The Canadian RFID Centre and the RFID
Industry pilot are excellent examples of the
industry working collaboratively to ensure
due diligence on emerging issues that
can significantly affect the supply chain.
In the case of RFID, building knowledge
and examining the business case collectively
provides stakeholders with an objective
perspective that can be used to make
decisions.”
- Elaine Smith,
Senior Vice President, Industry Affairs
Food and Consumer Products of Canada
RFID Value Assessment ResultsPage 4
Results Overview
Even though the Pilot had a unique, collaborative industry-wide approach,
it confi rmed some fi ndings identifi ed in other previous studies. When considering
RFID, it is important to delve deeply into an organization.
Read rates improved signifi cantly over the course of the Pilot, rising an average
of 18% overall. By using “inference of read rates” companies can achieve benefi ts
in various categories, including traceability, promotions management, condition
monitoring, out of stock and improved labour effi ciencies. In addition, new and
upgraded technology can contribute to improved read rates and thus improved
results. Effectiveness can be maximized by integrating the RFID solution data
into existing applications for improved decision-making.
From a retailer perspective, RFID provides a positive return given critical mass
of tagged cases and pallets is achieved through the distribution and store network.
On the manufacturer’s side, the results were mixed. Payback for this pilot study was
highly dependent on how manufacturers were currently performing in the six benefi t
areas analyzed. If manufacturers were performing very effi ciently in certain areas,
or they had diffi culty quantifying their existing environment, potential improvement
opportunities were harder to identify and track. It should also be noted that payback
was very sensitive to changes in the labour required to tag cases and hardware costs.
With Slap and Ship, RFID benefi ts are only considered after the tagged product
leaves the manufacturer’s DC. Therefore, it does not represent the full potential
RFID can offer to a manufacturer.
Other potential benefi ts derived from additional information and inventory visibility
to support other business areas – such as demand forecasting, production, inventory
management and marketing – have not been quantifi ed and included in the business
case. The business cases also exclude benefi ts that could be realized in other supply
chain execution areas such as transportation management, asset tracking and raw
materials and work-in-process inventory management. Such areas were not in scope
of analysis in the Pilot.
RFID Value Assessment ResultsPage 5
Some of the results were surprising. Given the current high level of effectiveness
in managing shipments from suppliers to retailers, only limited Proof of Delivery
benefi ts were quantifi ed. These results, however, may not refl ect the reality of
the industry, particularly for those companies with very fragmented distribution
networks that see the standardization of their processes as a challenge. For those
companies, RFID could provide drastic gains by automating their shipping and
receiving.
For traceability, benefi ts depended greatly on each pilot participants own supply
chain network and were mainly qualitative in nature. That’s because the real value
of traceability information is serving as a source of feedback to support pro-active
risk mitigation measures that will drive effi ciency gains and optimize logistics,
manufacturing and quality management processes.
Using RFID Successfully
The greatest benefits discovered in the Pilot related to improving promotion
execution and reducing out of stocks. These benefi ts categories provided substantial
potential, but are highly dependent on the interaction among members in the
supply chain. Therefore, the benefi ts realization can be compromised by lack of
collaboration between retailers and manufacturers in terms of information sharing
and process execution.
Critical to any successful RFID deployment is a collaborative effort – the sharing of
information between manufacturer and retailer to realize mutual benefi ts associated
with promotion management and out-of-stocks at the retail store.
RFID Value Assessment ResultsPage 6
The Pilot showed that:
• “Slap and Ship” can be a workable approach, if used in a low-volume
situation where there is no benefi t in investing in a larger solution. Regardless,
it was discovered that the earlier the tag was applied in the supply chain, the
better the result in terms of improved accuracy and more effi cient shipping.
• RFID can be used to avoid OOS situations. RFID delivers real-time information
about inventory levels in the supply chain, enabling employees to act upon
that information. Thus, operational variability can be reduced and product
availability at the stores can be improved.
• RFID technology is expected to offer a superior level of promotions management
due to the enhanced visibility both retailers and manufacturers gain on
inventory positions, before and during the promotions. RFID is also promises
improved traceability during a recall because managers can have full visibility
into where the products are moving from the moment they have a commis-
sioned RFID tag attached to them until they are available to consumers.
• RFID can improve the effectiveness of shipping and receiving processes.
It enables operators to proactively identify wrong picks, short shipments
and overages before loading is concluded.
Cost Considerations
The most cost-effective solution for each client was chosen, and the range of costs
is illustrated in the following table for all participants in the Pilot.
Investment Area Lower Range % of total costs
Higher Range % of total costs
Corporate Services 6 16
Application & Integration 9 20
Maintenance 1 4
Hardware 3 67
Labour 0 35
Tags 3 33
RFID Value Assessment ResultsPage 7
Explanation of costs:
• Corporate Services: All consulting and internal manpower required
for an RFID solution.
• Application and Integration: Application hardware, middleware and costs
to integrate RFID application into existing WMS systems.
• Maintenance: Yearly software maintenance and support.
• Hardware: RFID readers and tagging equipment
• Labour: Labour required tagging cases and pallets
• Tags: individual costs of an RFID tag
Tailoring RFID for your business needs
Given the fi ndings of the Pilot, a compelling case exists from a retailer’s perspective
to deploy RFID. From a manufacturer’s perspective, the case is not as clear cut.
Preparation of a full business case is required to see where a particular manufacturer
stands. Depending on their specifi c pain points, deployment of RFID by product
or product category may be a viable option.
RFID Value Assessment ResultsPage 8
HighlightsPilot Overview
Background and Scope
The Canadian RFID Grocery Industry Pilot (the “Pilot”) was launched as a logical
extension to the collaborative partnership created at the Canadian RFID Centre
(CRC) between industry, associations and technology providers. This Pilot was
conducted under the premise that RFID and Electronic Product Code (EPC)
adoption should be approached as an industry-wide initiative. All the participants
identifi ed herein have contributed signifi cantly to this project and its fi ndings.
The purpose of this White Paper is to report the fi ndings and conclusions from
the Pilot and to suggest a series of recommendations for industry adoption.
Four grocery product manufacturers, one retailer, three industry associations
and three RFID solution providers were involved in the pilot.
The industry participants were:
• General Mills Canada
• Loblaw Companies Limited
• Maple Leaf Foods
• Kruger Products Limited
• Unilever Canada
The industry associations were:
• Canadian Council of Grocery Distributors (CCGD)
• Food & Consumer Products of Canada (FCPC)
• EPCglobal Canada
The solution providers were:
• IBM Canada Ltd.
• Intermec Technologies Limited
• Motorola, Inc. (formally Symbol Technologies Limited)
The Canadian RFID Grocery Industry Pilot
was conducted under the premise that RFID
and EPC adoption should be approached as
an industry-wide initiative. This White Paper
reports the fi ndings and conclusions
from the Pilot and suggests a series of
recommendations for industry adoption.
RFID Value Assessment ResultsPage 9
Unless otherwise stated, the results (including fi ndings and recommendations)
outlined in this paper are based on the scope in which the Pilot was executed.
Each of the four suppliers tagged two to three SKUs at the case and pallet level for
the Pilot. In total, 10 SKUs were tagged. The tagged SKUs were shipped to a single
retailer distribution centre and then sent to be sold at two retail stores. The selected
products spanned a wide range of categories, encompassing frozen products,
refrigerated products and dry goods. They included:
• Dry products
• Canned products
• Fresh, processed meat products
• Frozen products
• Display-ready pallets
During the life cycle of the products, they were read by fi xed RFID portals at the
time of: manufacturer shipping; retail distribution centre receiving; retail distribution
centre shipping; retail store receiving; upon entry or return from the retail store
sales fl oor; and fi nally, when entered into the retail store trash compactor.
The following were specifi c to each location:
Supplier Warehouse: The supplier warehouse or third party logistics (3PL) entity,
which provided RFID and EPC enablement services on the supplier’s behalf, stored
goods for shipment to customers. The key technology consideration for the sup-
plier was the entry point and conversion of products with UPC SKUs into the EPC
standard, and the departure of EPC enabled goods to other locations of the supply
chain.
RFID Value Assessment ResultsPage 10
Distribution Centre (DC): The distribution centre was used to store goods from
multiple suppliers, and to fulfi ll orders of required goods for the two retail stores.
The distribution centre infrastructure allowed RFID enabled product to be tracked
as they entered and left the distribution centre. The key points of interest in the
distribution centre included receiving and shipping docks, as well as storage
(freezer, fridge, dry goods).
Retail Store: The retail domain consisted of the back end, receiving area of a retail
store where shipments were received from the retailer’s distribution centre,
the entry point to the store fl oor where goods were displayed for sale, and the
trash compactor where the boxes and wrappers were disposed.
Objectives, Execution and Deliverables
The primary objectives for the Canadian Food Industry RFID Pilot included:
1) Validation of the RFID business case associated with food traceability, distribution
centre effi ciencies, environmental monitoring (temperature) and reduction
of out-of-stock at the retail level
2) Creation of an industry implementation approach for each supplier,
distributor and retailer
3) Validation of the fi ndings made at the Canadian RFID Centre (CRC) in the fi eld
To accomplish these objectives, the project was organized into fi ve distinct phases,
beginning in May 2006 and ending in January 2007.
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Project Mobilization & Solution Design
Solution Build & Site Mobilization
Solution Install & Solution Test
Pilot Launch & Pilot Run
Result Analysis & Report Development
May 1 - June 6 June 6 - July 6 July 7 - July 28 July 28 - November 3
November 4 - January 15
RFID Value Assessment ResultsPage 11
TechnologyThe Pilot was conducted using a centralized hosted applications model; therefore, limited technology was physically deployed at each of the participating sites. This approach was used because it provided: • Speed to deployment; • Lower costs for participants; • Easier management and support during Pilot execution; and • A scalable solution, capable of being reused in a future deployment.
RFID Value Assessment ResultsPage 12
Analysis Methodology
A detailed methodology was applied to analyze the Pilot results. The methodology
covered not only analysis of the product fl ow dynamics during the Pilot, but also
benefi ts identifi cation and quantifi cation, investments assessment and business
case development for each manufacturer and retailer involved.
Business processes that were impacted by the rollout of an RFID solution were
investigated. The business processes were then used to defi ne a set of benefi t
categories for analysis. In addition, several discussion points were prepared for
the respective benefi ts. A questionnaire was completed to summarize baseline
data for each Pilot participant.
The benefi ts were quantifi ed at a per-case level, to take into account different
volume fl ows throughout each participant’s supply chain. Along with the potential
benefi ts calculation, real illustrations of how business can capture value provided
by RFID solutions were identifi ed as a result of Pilot observations. Examples were
shown throughout the Pilot with the aid of information provided by an RFID
solution. These included proof of delivery (discrepancies treatment, service level
improvement, returns), traceability (old code / spoilage, order tracking, recalls),
condition monitoring, inventory visibility, out-of-stock, promotions management
and labour effi ciencies.
Market pricing from the software and hardware vendors involved were utilized
as a baseline for the investments calculations. Using information from participants,
a customized, cost-effective RFID solution was conceived for each participant.
A yearly deployment strategy was then developed to obtain the best net fi nancial
outcome for all the participants involved in the Pilot to supply one retailer.
The number of cases requiring RFID tags on a yearly basis was used for each
participant and hardware investments were extrapolated accordingly to handle
the fl ow of RFID tagged cases. Specifi c assumptions were made around the price
depreciation of RFID equipment and future trends (i.e. tag prices). Some of the
key assumptions used when calculating payback were a $0.10 tag cost depreciating
to a fl oor of $0.05 and hardware discounts based on large orders. Finally extensive
sensitivities were conducted on these variables to assess the level of impact.
RFID Value Assessment ResultsPage 13
Four Investment Models
From an investment perspective, four distinct investment models were evaluated
for each manufacturer: Slap and Ship, Hybrid, Inline Printing, and Corrugate Tagging.
Each model was considered for the manufacturers and the best viable solution was
analyzed in detail for them to provide an RFID solution to one retailer.
Slap and Ship: This model was used during the Pilot project and requires all
suppliers’ products to be manually tagged at their manufacturing sites or distribution
centres. This model provides the least required capital investment but allows
company’s to provide an RFID solution to comply to any potential mandate with
signifi cant impact to their current processes. However, because labour costs rise
as case volumes increase, it is not recommended as a long-term solution.
Hybrid: This model is a “slap and ship” model in early deployment years (when
volumes are low), and a “print and apply” automated system in the later, high-volume
years. Some additional manual labour is still required. This model proves that tagging
may be done at a 3PL or within the manufacturing/distribution network of the
suppliers. The Hybrid model provides the smallest investment for a large manufacturer
who still needs to provide an RFID and non-RFID solution to its customers.
Inline Printing: All cases are tagged by an inline printer installed on each of the
manufacturer’s product lines. This model provides the best long-term solution for
manufacturers/suppliers in terms of reducing the labour costs and ineffi ciencies.
It affords the best opportunity to capitalize on additional benefi ts that can be gained
upstream in internal warehousing, inventory control and logistics. The challenge
here is twofold: 1) Segregating RFID orders from non-RFID orders is diffi cult, and
2) Many manufacturers have a global supply chain and would require an international
RFID initiative to make inline printing a practical and cost-effective solution.
Corrugate Tagging: This fi nal model considers RFID tags embedded into the case
corrugate by the corrugate suppliers. This option, like inline printing, is deemed to
be a viable long term solution. However, the viability of the corrugate tagging model
strongly depends on the technology maturing and its broader adoption by other
members of the supply chain. Corrugate suppliers should understand that products
with RFID labels can be considered a distinct line of business, and as such, might
drive substantial business opportunities.
RFID Value Assessment ResultsPage 14
HighlightsPilot Results
Results Overview
Results clearly showed that read rates improved signifi cantly over the course
of the Pilot, rising an average of 18%. At the same time, it was evident that by
using “inference of read rates” companies can achieve benefi ts in various categories,
including traceability, promotions management, condition monitoring, out of stock
and improved labour effi ciencies. New and upgraded technology can contribute to
improved read rates and the benefi ts realized. And fi nally, the effectiveness of
the solution can be maximized by integrating the RFID solution data into existing
applications for improved decision-making.
Technology Key Messages
Read rate performance promises signifi cant business value across the supply chain
Read rates improved signifi cantly over the course of the Pilot. The initial average
read rate for the nine piloted SKUs was 71%. However, by the end of the Pilot,
the average read rate had risen to 89%. This 18 percentage point improvement
can be attributed to modifi cations and adjustments to the process, equipment and
application including upgrading the fi rmware and middleware. In addition, proper
tag placement on the product was critical to achieving the optimal read rate.
Even more signifi cantly, three out of the nine SKUs had 100% read rates and seven
out of the nine SKUs had read rates over 85%. The results of the Pilot show that
for many product categories and packaging types, RFID read rate performance is
adequate today to drive signifi cant business value across the supply chain. However,
there are others for which further read rate improvements are still required before
there is a rationale for adoption.
It is important to note that this Pilot did not consider the process changes or the
business reengineering of pallet confi gurations; therefore, the read rates experienced
in this Pilot could have been higher had these changes been considered. This
report cannot make recommendations on pallet reconfi guration – each company
needs to evaluate the implications of making such changes to their business.
Integrating the RFID solution data into
existing operational and decision-making
applications will align the use of the
information with day-to-day activities.
RFID Value Assessment ResultsPage 15
Ultimately, given ongoing technology improvements, read rates are expected to
continue to rise. Ongoing testing of new technology such as tags and readers will
further improve read rates, bringing RFID a step closer to full adoption.
Inference of read rates often suffi cient to drive business benefi ts
In situations where a 100% read rate is currently not achievable, the concept
of “inferring a read” may be applicable. Read rate inference utilizes the known
number of case tags associated with a pallet. During pallet building, RFID tags
are printed and commissioned. The number of case tags along with tag EPCs
are then associated with a specifi c pallet tag. Those tags are applied to the cases
and pallet, and a baseline or aggregation is performed.
Therefore, at the next read point, if only 85% of the case tags are read, the other
15% are inferred or read based on the known fact they are associated with that
pallet. If at any instance in the supply chain the pallet is broken down, and baseline
or aggregation is established, case tags are then associated to the pallet tag for the
newly created pallet.
Inference of read rates will allow a company to achieve benefi ts – where achieving
a 100% read rate is currently not available – in various categories, including
traceability, promotions management, condition monitoring, out of stock
and improved labour effi ciencies.
Retailers will often use the concept of Trusted Supplier Agreements with their
vendors and regularly audit receipts from vendors to ensure that case quantities
associated with pallets are accurate. In this way, when there is a high degree of trust
between the retailer and its vendors in terms of ship/receive quantities, inference
of read rates is an acceptable RFID practice.
RFID Value Assessment ResultsPage 16
As RFID technology improves, companies must continue to assess its benefi ts
As demonstrated during the Pilot, upgrades to existing technology components,
along with the introduction of new technology, contributed to the improvement
of read rates and the overall effi ciency of the technology. This allows for more
options when designing and implementing an RFID solution; they improve
the read rates of products with challenging compositions.
Companies must continue to monitor and evaluate RFID technology. Technology
assessed at the beginning of a deployment will improve within a short time frame,
and applying the most effi cient technology components will allow a company
to achieve the most from its RFID strategy. For example, during the three months
of the Pilot, we observed an improvement in all aspects of the technology: readers,
fi rmware, software, and middleware.
Integration of RFID technology with existing decision-making tools will improve benefi ts
Integrating the RFID solution tool sets and data into existing operational and
decision-making applications will align the use of the information with day-to-day
activities.
Most sophisticated replenishment, inventory management, manufacturing
and warehouse management systems drive the planning and operational activities
– and subsequent feedback – into the fi nancial aspect of the organization.
Point-of-sale information is typically integrated into back-offi ce solutions
periodically throughout the day.
However, the speed and quantity of data fl owing from an RFID solution – dynamically
integrated with the operational and decision-making tools – can expedite the
action/reaction time signifi cantly. Triggering management or operational alerts
to situations such as out-of-stocks, code date issues, stocking, picking or shipping
errors, will only be benefi cial if that information is provided real-time to the user
who must remedy the situation. This changes the landscape of reaction and execution,
to event-driven activities that need to be performed by fl oor staff in the retail store,
warehouse or manufacturing environments. The key is having the information received
by the right person at the right time, giving them the opportunity to correct or
address the situation.
RFID Value Assessment ResultsPage 17
Information available to the manufacturer, such as inventory status and sales trends,
can increase the accuracy of production volumes and capacity requirements from
a planning and production perspective when integrated into planning and forecasting
modules. This can reduce the reliance on forecasting methods that are typically
used today – which are “best-guesses” based on historical information instead
of real-time data. This is not to say that these methods will become obsolete,
but they can be enhanced by the infl ux of current data and information.
The level and timing of integration should be tempered with maximizing the
benefi ts. Integration into complex systems can be a long and expensive endeavor.
Integration of the RFID data into business and operational systems through detail
planning, design, development and deployment should be an activity that is
performed in the initial phases of an RFID deployment plan.
RFID Value Assessment ResultsPage 18
HighlightsBusiness Case Drivers
Benefi ts Overview
The Pilot demonstrated that RFID can be used to avoid OOS situations. RFID
delivers real-time information about inventory levels in the supply chain, enabling
employees to act upon that information. Thus, operational variability can be
reduced and product availability at the stores can be improved.
It also showed that RFID technology is expected to offer a superior level of promotions
management due to the enhanced visibility both retailers and manufacturers gain
on inventory positions, before and during the promotions. RFID is also promises
improved traceability during a recall because managers can have full visibility into
where the products are moving from the moment they have a commissioned RFID
tag attached to them until they are available to consumers.
Finally, RFID can improve the effectiveness of shipping and receiving processes.
It enables operators to proactively identify wrong picks, short shipments and
overages before loading is concluded.
Reduced out-of-stocks can be profi table for both manufacturers and retailers
Reducing out-of-stock (OOS) levels represents the greatest opportunity area for
both retailers and manufacturers to profi t from RFID technology adoption. Even
though several initiatives have been undertaken by the Consumer Package Goods
(CPG) industry throughout the years to improve product availability on the shelves,
OOS events still jeopardize brand loyalty, customer experience, and ultimately
overall profi tability.
Several factors can contribute to an out-of-stock situation. Unpredictable consumer
behavior, for instance, is a huge source of fl uctuation in demand and can play a role
in reducing product availability. However, other causes of OOS are more dependent
on process compliance and information-sharing infrastructure and, therefore,
should have the full attention of both manufacturers and retailers.
Reducing out-of-stock (OOS) levels represents
the greatest opportunity area for both retailers
and manufacturers to profi t from RFID
technology adoption.
RFID Value Assessment ResultsPage 19
As illustrated in the chart, below, the following situation was identifi ed during
the Pilot:
• PoS data showed a period of fi ve days in which there were 0 sales
for one of the Pilot products.
• RFID event data showed that in fact that particular product was in the back
room of the store during the time at which there was an out-of -stock at the
shelf level.
• In a real-world implementation, the PoS activity would be linked to an alert
mechanism which would notify store staff that there is an out of stock at the
shelf and that the required product is located in the backroom.
RFID can enable business analysts, category managers, merchandise managers and,
ultimately, store personnel to act (and react) upon real-time information concerning
inventory levels in different parts of the supply chain. As a result, a great part of the
intrinsic operation variability can be reduced and, therefore, product availability at
the stores can be greatly enhanced. The table below describes some of the business
processes that can contribute to an OOS situation and how RFID can help minimize
them.
RFID Value Assessment ResultsPage 20
The Pilot had a mandate to study, identify and quantify only the benefi ts associated
with the interaction between suppliers and retailers. As such, it validated the
importance of reducing OOS situations as one of the major benefi ts categories for
both retailers and manufacturers. OOS represented 36% to 68% of all the potential
benefi ts quantifi ed. We would expect these proportions to reduce in importance
as more business processes and benefi ts areas are investigated by each particular
company.
Furthermore, RFID could contribute to market share gains if it can improve
the chances that a certain brand can be available to consumers more often than
its competitors, particularly in highly competitive, price-sensitive categories.
At the same time, retailers could differentiate themselves by providing their customers
with a more standardized and pleasant customer experience at the stores than their
competitors would.
How RFID can address OOS
Areas Ordinary Process RFID enabled Process
Receiving Accuracy
• Receivers need to manually count full/mixed pallets.
• Tagging and scanning may be necessary for control (at DCs).
• Discrepancies are identifi ed after the fact. Correction process is time- consuming, costly and might disrupt planned availability of products.
• Automatic receiving can minimize the need for audits.
• RFID-generated ASNs can speed up and improve store receiving accuracy.
Stock Visibility • Ordering and forecasting processes is based on historical and often inaccurate data.
• Real-time visibility of inventory throughout the supply chain streamlines ordering and forecasting processes, reducing variability and shocks of demand.
Replenishment from Backroom
• In most current retail store environments, it is diffi cult to segregate inventory from the backroom to the sales fl oor.
• Store associates do not have full visibility of the inventory carried at the backroom.
• In effect, RFID creates a fi fth wall within a retail store so they can distinguish between back-room and front room inventory.
• Triggered alerts can be sent to store associates informing them about available stocks in the back room.
• Integration with POS data can drive proactive behavior to avoid the occurrence of OOS events.
RFID Value Assessment ResultsPage 21
Improved execution evident during promotional events
Today’s retailers can see what’s within their four walls, but cannot distinguish
between back room and sales fl oor. RFID effectively adds a “fi fth” wall.
Even though sales promotions have become an indispensable tool to drive
business objectives, both retailers and manufacturers agree that there is great
room to increase return on investment in consumer and trade incentives. Studies
show that promotions can account for more than 60% of typical marketing budgets
of a CPG manufacturer, but the profi tability associated with trade promotions is
still considered dismal. Anecdotal results show that as many as 2/3rds of promotion
dollars do not have the desired revenue impacts for both manufacturers and retailers.
Several factors contribute to this poor performance, including inaccurate forecasting,
lack of coordination among the parties involved, and competitive movements. Poor
store operation has stood out as a major component. In fact, the ability to manage
promotional item handling and to adjust processes quickly in a constantly changing,
demand environment is essential for improving promotion results.
RFID technology is expected to offer a superior level of promotions management
due to the enhanced visibility both retailers and manufacturers gain on inventory
positions, before and during the promotions. Compared to a normal store, an
RFID-enabled store is better equipped to provide accurate inventory levels, due
to the improved visibility of the inventory at the back room. As a result, chances
of a display-ready pallet sitting at the back room, or being broken down to replenish
normal shelves, is reduced.
Hence, RFID enablement can be the tool to drive major competitive advantages
for both retailers and manufacturers, allowing them capitalize on a more streamlined
supply chain. However, such advantages tend to diminish as more manufacturers
and retailers reduce OOS levels on their products through the adoption of such
technology. As a result, we expect greater gains for manufacturers and retailers that
fi rst move toward investigating the impact of RFID on their own business processes.
RFID Value Assessment ResultsPage 22
Also, store personnel and business analysts, from both manufacturers and retailers,
can be alerted about the speed of inventory depletion and then make decisions
that can change replenishment plans and consequently drive promotion success.
This is possible by following product movement from receiving, to sales fl oor, and
then to the trash compactor. Point-of-sale data, if shared by the retailer, can support
the identifi cation of OOS situations in almost real time, allowing even faster reaction
from store management and even vendors’ sales personnel.
Furthermore, RFID data can also be used to generate intelligence about past
promotions that can not only improve forecasting for future promotions but also
identify areas of ineffi ciency to enable continuous process improvement. Retailers
can identify individual stores that are not running promotions effectively, for
instance, and take action to improve execution of future promotions. Manufacturers,
on the other hand, can better track the investment in trade dollars and claim
measures from the retailers when appropriate.
The Pilot validated some of the expectations for improving promotions management.
A markdown promotion was scheduled to run in different stores for a full week,
in different stores. The RFID system was able to track the inventory increase at the
DC during the days that preceded the promotion. It also allowed analysts to identify
the dates and times that promoted products arrived at the RFID-enabled store,
and when they moved from the back room to the sales fl oor. The promotion was
successfully run at the pilot store, given that the inventory was depleted according
to the forecast and no OOS event was identifi ed. However, in another store, which
was not RFID- enabled, an OOS situation occurred for many hours during peak
of consumption.
Quantifying the opportunity for improving promotions execution as a result of RFID
deployment is extremely complex and requires deep understanding of the processes
involved in designing, monitoring, executing and analyzing the results of promotions.
During the Pilot, only OOS for promoted items was quantifi ed in terms of the
potential gains that manufacturers and retailers can achieve. On average, the results
showed that promotions management represents 17% to 60% of the total benefi ts
quantifi ed to retailers and manufacturers.
RFID Value Assessment ResultsPage 23
Provides an effective way to provide one-up, one-down traceability
Traceability capability is essential for the food industry – to manufacturers, retailers,
and consumers. It represents not only compliance to increasingly demanding
regulatory regulations but also an opportunity to provide greater value to customers
while reducing costs.
While food manufacturers have applied procedures and technology environments
that address the issue with a certain degree of reliability, RFID allows them to improve
the effi ciencies in which traceability is performed. ERP-enabled solutions can track
production lots and code dates, shipments and destinations, but such information
systems cannot provide visibility into the processes happening further down the
supply chain.
RFID stands out as a very promising solution to enable a real breakthrough in
the way traceability is performed, because managers can have full visibility into
where the products are moving from the moment they have a commissioned RFID
tag attached to them until they are available to consumers. RFID not only allows
immediate order and shipment tracking, but it also reduces the number of interme-
diaries involved in the event of a recall, while preventing managers from potentially
having to scrap large inventories instead of only the lots that need to be removed.
During the Pilot, a recall process was simulated with great success. Cases shipped
under different purchase order numbers had their locations identifi ed in less than
fi ve minutes, providing product, distribution and inventory information as mandated
by regulatory agencies.
But the real value of RFID-enabled traceability is not just in its strengths during
emergencies. Full traceability information can be used as the basis for effi ciency
gains and optimization in logistics, manufacturing and quality management processes,
by providing quick feedback to support pro-active measures to minimize risks on
future operations. Manufacturers and retailers should, therefore, make use of the
full visibility to gain effi ciencies in the supply chain and build competitive advantage,
instead of to simply comply with regulatory requirements.
RFID Value Assessment ResultsPage 24
RFID-enabled condition monitoring allows greater visibility into temperature variations
Given the importance of controlling environmental conditions to maximize product
shelf life, thus avoiding spoilage costs and to improve compliance with strict regulatory
requirements, many food manufacturers and processors have implemented diverse
solutions to control temperature variations of perishable products in transit.
However, most of these solutions can only track average temperatures inside trailers.
The monitoring devices are not attached to specifi c cases; therefore, they cannot
identify events such as poor handling at the docks or warehouses. Moreover,
information access is limited to closed-circuit fl ows (transportation from origin to
destination and back to same origin), because the reading/controlling devices need
to be returned so that the information they carry can be accessed and analyzed.
As a result, the data captured is normally a description of what happened in the
past, limited to just a fraction of the total operation, and mostly intended to
support regulations compliance.
Consequently, there is great opportunity for improving the business benefi ts of
temperature control throughout the supply chain, and make it a source of differen-
tiation. Because RFID technology provides visibility to manufacturers and retailers
of how perishable products are handled before they are available to consumers,
it can be a viable enabler of consistently providing fresher products, stronger
branding positioning and, hence, competitive advantage.
RFID-enabled condition monitoring allows manufacturers to track temperature
in near real time through various control points in the supply chain. Tags attached
to each product case can record temperature readings, which can be accessed every
time the case passes through an RFID portal. If the temperature exceeds a pre-defi ned,
acceptable threshold, an alert is sent to the operators, enabling them to take preventive
actions to avoid premature spoilage. Also, the system can keep track of historical
temperature data that would serve as a record to satisfy regulatory requirements
and allow for process and quality improvements.
RFID Value Assessment ResultsPage 25
During the Pilot, a proof-of-concept was run to validate the technology readiness
and its potential. Four temperature tags were applied to a pallet of perishable
product at the supplier’s facility. Real-time, instant temperature reads were taken
by RFID readers at various points across the supply chain: supplier shipping,
retailer distribution centre and retailer store. The temperature monitoring solution
was confi gured to trigger alerts according to pre-defi ned business rules that set
temperature thresholds. The results showed that the products in the experiment
were manipulated according to the standardized procedure, and no substantial
variance was noticed. Product life shrinkage could have been calculated and alerts
were set to be sent if there had been a different outcome.
It was concluded that RFID-enabled condition monitoring is already possible today,
and this new way to ensure product freshness should be considered by food
manufacturers and retailers as a way to reduce costs and improve condition
monitoring effi ciencies.
Automation of shipping and receiving processes offers more than simply productivity
increase from replacing bar code scanning
The automation of shipping and receiving processes might be the most intuitive
application for RFID technology. Once simply considered the next generation of bar
code systems, RFID was mainly thought to provide benefi ts exclusively associated
with the productivity improvement gained by substituting bar code scanning. This
approach makes the quantifi cation of savings more visible to managers studying
the viability of deploying the auto identifi cation concept to their business. However,
it omits the benefi ts generated by the automated dynamic interaction between
vendors, transportation suppliers and retailers.
During the Pilot, a broader approach was taken. Rather than simply focus on
quantifying the labor costs associated with scanning labels, other business
processes were investigated in an attempt to identify ineffi ciencies that could
potentially be reduced. It greatly emphasized service level compliance and
costs of maintaining inventory accuracy.
RFID Value Assessment ResultsPage 26
Results showed that shippers that have a more fragmented distribution network
(several shipping locations) and a larger number of transportation suppliers –
or that present a lower level of information integration among their warehouse
management, order management and fi nancial systems – tend to face a greater
challenge in providing higher service levels. Such complexity represents opportunity
for capturing benefi ts generated by RFID deployment, given that it can standardize
execution processes while capturing more accurate information in real time.
RFID can enable operators to proactively identify wrong picks, short shipments
and overages before loading is concluded, thereby improving the effectiveness
of shipping and receiving processes. Also, the RFID-enabled automatic shipment
notice (ASN) allows faster receiving and more accurate inventory control, minimizing
variability associated with order fulfi llment and establishing the foundation for
ASN-based collection/payment procedures. Finally, RFID can reduce administrative
efforts and the costs associated with correcting and managing discrepancies in
inventory, outstanding orders and payment, while reducing order to cash cycles,
easing confl ict resolution and ultimately improving service levels.
Investments
There are many cost/investment components to implementing an RFID solution.
For the purposes of the Pilot reporting, the category structures used are summarized
as follows:
1. Hardware: All hardware components required for the RFID technology
including PCs, controllers, printers, portals, readers (fi xed, portable
and handheld), antennas, light trees, motion sensors, cabling of equipment
and conveyors (where applicable).
2. Application and integration: Application servers and software (including
licensing) to gather, fi lter and report the RFID transactions, middleware,
hosting services, networking (one-time and ongoing monthly charge)
and integration into existing information systems.
3. Services: All consultation and integration services to support the pilot/rollout.
4. Maintenance: Ongoing software maintenance support costs.
5. Tag: The cost of the tags
6. Labor: Any and all labor costs associated with applying tags to the cases
on pallet, de-palletizing, re-palletizing and re-shrink wrapping the pallets
of tagged product.
RFID Value Assessment ResultsPage 27
The chart below illustrates the results of the three different models and the breakdown
of investment categories per model.
As you can see, the category breakdowns differ – signifi cantly – depending on the
solution used. Each of the categories is discussed below, relative to the models
and how the results changed over the six-year period of deployment.
Hardware
Hardware, while a signifi cant investment for an RFID implementation, became less
signifi cant for the Hybrid and Slap and Ship solutions during deployment because
the cost of labor and tags surpasses the cost of the hardware. Fully integrated Inline
Print and Apply solutions use more sophisticated and expensive hardware, and for
a full rollout, all manufacturing lines require the installation and support of Inline
Print, Apply and Read Verifi cation equipment. This approach eliminates the labor
aspect from the onset, thus changing the results of the investment picture.
The Hybrid model introduces the use of Inline Print and Apply equipment further
in the deployment and at a smaller scale, using fewer lines to perform the tagging
of cases after production, thereby reducing the amount of inline print and apply
equipment required but still demanding a signifi cant amount of manual labor.
RFID Value Assessment ResultsPage 28
Application and Integration
Integrating the RFID solution into existing management networks makes up a con-
siderable portion of the overall investment, with the majority of it occurring in the
fi rst year or two. It makes good business sense to ensure that the RFID data being
gathered is effectively incorporated into the day-to-day, decision-making tools
to reap the benefi ts of the information effi ciently.
Both Hybrid and Inline Print and Apply solutions have similar results (16-20%)
in terms of the percent of overall cost to integrate in this scenario. Inline Print
and Apply solutions generally have more points of integration and are more complex
as the solution travels further through the supply chain – starting in manufacturing
or packaging through to shipping. Slap and Ship has fewer integration points requiring
effort to integrate and is overshadowed by the escalating costs of labour.
Services
Services include business, process, and networking consultation and implementation
assistance. The range of services required is dependent on the level of sophistication
and complexity of the solution. Generally, more assistance is required to reengineer
processes, install the equipment and integrate the solution when implementing
Inline Print and Apply solutions. They are typically installed further up in the
process, such as during manufacturing or packaging where they are integrated
with existing program logic control (PLCs) and production systems. They affect
more intricate processing, both at the beginning and throughout the remaining
storage, picking and shipping activities.
Slap and Ship solutions, while still requiring signifi cant effort to install the RFID
equipment, affect only processes in the later stage of shipping, such as picking
and shipping. Therefore, they tend to require less consultation services.
Maintenance
All software purchased today comes with maintenance offerings that are usually
about 10 to 15% off the purchase price. This cost is small in the scheme of things
and a good investment to ensure that upgrades and support are readily available
when needed. RFID middleware and software will continue to become more
effi cient and effective in providing enhancements to the technology that will
support critical business decisions.
RFID Value Assessment ResultsPage 29
Tags
Tags continue to be the most consistent investment of an RFID solution, regardless
of the model used. The Inline Print and Apply model shows that in the six-year
period evaluated, the hardware costs outweighed the tag costs. For Slap and Ship,
the labour costs exceeded the cost of tags. This study amplifi es the need for lower-cost
tags. It encourages suppliers and manufacturers to look deep into their organization
for the benefi ts that outweigh the ongoing cost of tags. They should consider solutions
that can open the door to additional benefi ts further upstream in their manufacturing
and distribution processes.
Labour
Labour is directly affected by the RFID solution implemented. Clearly, Slap
and Ship continues to be the most labour-intensive approach, at almost 50%
of the overall costs over six years based on this Pilot. The Hybrid Model, while
reducing labour costs, still requires manual attention during the fi rst year or two
prior to implementing more automated print and apply technology as the volumes
increase. However, there is potentially still the need for manual intervention to tear
down the pallet, load it onto a conveyor system for tagging, and rebuilding the pallet.
If these steps can be eliminated, then there is the opportunity to reduce the labour
costs further for Hybrid Models. Inline Print and Apply solutions are designed to
eliminate the manual effort required to apply tags to both cases and pallets. This
approach also tends to increase the consistency of tag application, and consequently
can lead to better and more reliable read rates.
RFID Value Assessment ResultsPage 30
HighlightsDeployment Strategy
Deployment Overview
The Pilot showed that “Slap and Ship” can be a workable approach if used in
a low-volume situation where there is no benefi t in investing in a larger solution.
Regardless, it was discovered that the earlier the tag was applied in the supply
chain, the better the result in terms of improved accuracy and more effi cient
shipping. Critical to any successful RFID deployment is a collaborative effort –
the sharing of information between manufacturer and retailer to realize mutual
benefi ts associated with promotion management and out-of-stocks at the retail store.
“Slap and Ship” is not a viable long-term solution
For each of the four manufacturers, “Slap and Ship” became unfeasible as case
volumes increased beyond Pilot levels. The amount of labor time involved with
tagging a large number of cases drove costs upward, dwarfi ng the benefi ts identifi ed
in the Pilot. It was observed in the Pilot that approximately 15 to 20 minutes of
additional labor time was required to accurately apply RFID tags to every case on
a pallet. This included removing shrink wrap from a pallet, breaking down a pallet
while applying tags in the appropriate position, rebuilding and shrink wrapping
the pallet. This additional processing effort drives labor costs upwards when large
volumes are considered.
“Slap and Ship” also has a number of execution issues that reduce its viability
as a long term solution. Extra space is required to perform “Slap and Ship.” Extra
handling of the product to apply tags will increase the possibility of product damage
and associated inventory write-offs. Additional lead time and segregating inventory
may be required to perform the “Slap and Ship” function, driving costs to an even
higher level.
“Slap and Ship” can be viable if being used for a low volume, a short-term pilot,
a test, or proof of concept, where compliance is the key driver. That’s because there
is no long-term benefi t to investing in the costs associated with complex, integrated
solutions if compliance can be achieved by using a “Slap and Ship” approach.
However, most compliance pilots lead to more long-term commitments where
a more strategic solution is required. Therefore, it is important to understand
the intention of the partner in the long term.
“Slap and Ship” can be viable if being used
for a low volume, a short-term pilot, a test,
or proof of concept, where compliance
is the key driver.
Automating the application of tags to cases
– while we commonly refer to it as “Inline
Print and Apply” – is an appealing, long-term
model for manufacturers.
RFID Value Assessment ResultsPage 31
Tagging strategy is dependent on a manufacturer’s specifi c environment
The earlier an RFID tag is applied in the supply chain, the better the result. This
provides the manufacturers the opportunity to capitalize on benefi ts within their
own operations by using RFID technology to reduce handling, increase inventory
accuracies and achieve more effi cient shipping and receiving within their own
four walls.
While “Slap and Ship” was the scenario used during the Pilot, the limitations of
the model became apparent and alternative deployment approaches were considered.
Each approach had to be tempered to the manufacturers’ environment, requirements,
absorption rate and strategic direction.
Automating the application of tags to cases – while we commonly refer to it as
“Inline Print and Apply” – is an appealing, long-term model for manufacturers.
Installing print and apply applicators was considered from two perspectives: during
the actual manufacturing process as products are being packaged; and after packaging,
as it moved into storage locations. Each one has benefi ts that were directly attributable
to the processes, tools and desired results of the manufacturer.
Another variation to this approach considered the evolution of the technology to the
point where tags would be embedded in corrugate and would simply require encoding
during the manufacturing or storing process. This would remove the need for inline
tagging or print and apply applicators and reduce the costs that most manufacturers
are absorbing today. From a manufacturer’s perspective, this approach is far more
appealing because it reduces their capital investment and also opens the door to
more benefi t opportunities further along in their manufacturing/packaging processes.
Logistics organizations (3PLs) that provide warehousing and shipping services
for manufacturers in the supply chain are faced with the same dilemma if they
are considering providing a tagging service. Automating the process within their
environment is critical to reducing the service cost to make this a viable option
for their customers.
RFID Value Assessment ResultsPage 32
During the Pilot, results showed that for low volumes, they were able to provide
acceptable service levels using “Slap and Ship”. However, as the volumes increased,
signifi cant disruptions to their operations and space requirements were evident.
Where existing conveyor systems were available, automating the process was evaluated
as a more cost-effective solution. As an integral cog in the supply chain, and to provide
the visibility throughout their warehouses, stationary or mobile readers would need
to be used to capture the RFID data and ensure the integrity of the information.
In summary, each manufacturer in the supply chain has special needs that require
unique RFID solutions, based on their operating environments, tools and processes.
Critical mass is benefi cial
As we examined the manufacturer business cases, volume sensitivities were calculated
to explore the effects of larger RFID-tagged case volumes. The conclusion was that
rolling out to multiple retailers could signifi cantly improve the manufacturer’s ROI
in a shorter timeframe. Leveraging the implemented RFID infrastructure across more
retailers lowers the per unit cost for the manufacturer, making it a more lucrative
investment opportunity. It reduces the impact and complexity of managing two
different operational processes and inventory management activities that will cause
confusion and additional work in the manufacturer’s environment.
However, it is safe to assume that 100% saturation in the use of RFID-tagged
product may never be achieved because small retailers and suppliers will not
be in a position to implement the technology until the costs are signifi cantly lower.
Collaboration is key to qualitative benefi ts
One of the key assumptions necessary to achieve RFID benefi ts, which were proven
in the Pilot, is that collaboration and information sharing from the manufacturer to
the retailer, is critical. Near real-time data such as point-of-sale information, which
is not traditionally shared in this type of environment, is essential for the supplier
and retailer to realize benefi ts associated with promotion management and out-of-stocks
at the retail store.
RFID Value Assessment ResultsPage 33
PoS and inventory location data throughout the supply chain will enable faster and
more precise identifi cation of products during a recall situation. Speed to react, and
the ability to identify specifi cally where the products are, is critical during a recall
to ensure the safety of the consumer and the long-term reputation and confi dence
the consumer has in the retailer and supplier.
Visibility to the inventory in the supply chain will help manufacturers, suppliers
and retailers ensure that the consumer is getting the freshest product at the time
of purchase. Management and rotation of code-dated products (fi rst expired fi rst
out - FEFO) can become simpler and more effi cient as data is captured through
the read points and made available to both manufacturer and retailer. It can help
identify situations that caused a product to have an early expiration.
Implementing RFID in the current environment of limited information sharing
not only limits the potential benefi ts, but it may cause RFID to fail before it begins.
Deployment confl ict must be addressed
When defi ning an optimal deployment strategy for retailers and manufacturers,
differing preferences became evident during the Pilot.
Retailers preferred a geographic deployment plan by DC along with the associated
stores supplied by that DC. Once the infrastructure is installed by the retailer, they
can leverage their investment and increase the benefi ts by maximizing the number
of SKUs (that are RFID-labeled) fl owing through their RFID-enabled retail outlets.
This makes good business sense for the retailer because the main benefi t drivers
are achieved when the product fl ows to the store fl oor.
In contrast, many manufacturers have suggested that they prefer to deploy by product
or product category, particularly if they provide private-label products for that retailer.
By providing a strategy that supports the automation of the tagging process by
manufacturing line for specifi c products or product groups, this approach simplifi es
their deployment. It also reduces the required hardware investment and the need
for segregated and/or dual inventory and minimizes labor and space constraints
associated with supporting a “Slap and Ship” solution.
Considering the divergent deployment strategies, discussions between both parties
to arrive at a mutually satisfactory deployment plan is necessary.
RFID Value Assessment ResultsPage 34
HighlightsNext Steps: Making the Benefi ts of RFID a Reality
The RFID direction that Canadian retailers and manufacturers take in the near
term is not clear-cut. Many factors come into play when determining the best
strategy for individual organizations. However, retailers and manufacturers must
continue with RFID testing. This can be in the form of in-house RFID labs,
specifi c RFID pilots or through limited deployment.
As RFID gains traction in the Canadian market, it is imperative that manufacturers
are aware of the read characteristics of their products. Knowing which products
perform well with current technology and keeping abreast of new developments
will assist with deployment planning.
As RFID deployment in the American and European markets continues to grow, the
question regarding RFID in Canada’s grocery industry is not “if” it will be deployed,
but “when” it will be deployed. Manufacturers should be proactive in shaping their
destiny by identifying key SKUs that are frontrunners for RFID deployment. Criteria
for selecting these SKUs include high read rates, retailer specifi c or private-label
SKUs, and SKUs with potential for the greatest benefi ts (i.e., currently have high
out-of-stock rates). Given this knowledge, retailers and manufacturers can work
together for mutually benefi cial RFID deployment. This will maximize benefi ts
for all parties involved.
Retailers also should be heavily involved with testing. With the high investment
in RFID infrastructure required at retail operations, it is imperative to procure the
correct equipment. Testing equipment in real-life environments will highlight any
potential hardware-related concerns. Choosing the right equipment and confi guration
appropriate for each specifi c physical site can make the difference between capturing
identifi ed benefi ts versus continually searching for ROI.
In addition, the value of being an early adopter should not be underestimated.
In Canada, many organizations have taken a “wait and see” approach to RFID.
RFID early adopters will actually accrue the greatest benefi ts, particularly in the
out-of-stock reduction benefi t area. Reducing out of stocks will give a competitive
advantage to early adopters that might translate into increased market share.
Developing a specifi c business case for your organization will help identify
the tipping point where RFID benefi ts outweigh RFID costs.
As RFID gains traction in the Canadian
market, the question regarding RFID in
Canada’s grocery industry is not “if” it will
be deployed, but “when” it will be deployed.
So the real question is: Are you ready?
RFID Value Assessment ResultsPage 35
As that tipping point quickly approaches, companies who are prepared for this
RFID transition will be rewarded. Deploying pallet and case-level RFID on a limited
basis is a viable option today for retailers and manufacturers, particularly where
certain supply chain pain points can be addressed.
Moving beyond the pilot stage involves a signifi cant commitment from organizations
including the assignment of an internal RFID champion with a supporting execution
team. To achieve success, deployment is much more of a process-driven implemen-
tation than solely a technical implementation. Redefi ning processes to be RFID-enabled
and leveraging the additional information generated is critical to implementation
success.
Finally, looking beyond case and pallet tagging, RFID solutions can play a role
in a variety of areas for grocery retailers and consumer product manufacturers.
Surprisingly, item level tagging is gaining traction in other apparel and drug retailers.
As Canadian grocery retailers increase their pharmacy, and general merchandise
footprints, these item-level tagging solutions must be considered.
RFID solutions that track promotions (end-caps, displays, items, etc) will also be
popular solutions for piloting and deployment in the coming years. RFID-tagged
promotional materials will allow manufacturers and retailers to evaluate the true
effectiveness of promotions. Highlighting which stores are not complying with
activities and timelines will give retailers and manufacturers the necessary tools
to improve overall performance. Identifying when a promotion failed because of
execution issues rather than customer acceptance will help allocate future trade
funds in the most profi table manner.
New RFID solutions for grocery retailers are being introduced rapidly. For example,
intelligent shopping carts with digital screens will use RFID to display specifi c
advertisements, depending on where the consumer is located in the store. Also,
RFID tracking of trucks, trailers and containers is gaining traction in the industry.
Each of these solutions will become more commonplace in the future. RFID will
be consuming a larger portion of the IT budget each year so allocating those dollars
appropriately will be critical.
For further information regarding this study, please contact:
Shai Verma at [email protected]
© Copyright IBM Corporation 2007
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