Staples Wondering If RFID ROI Is Nearterm Realistic
Written by Evan SchumanStaples’ Canadian operation, Staples Business Depot, has been experimenting with RFID and has seen some sharp efficiency improvements, but is finding getting a clean financial ROI difficult.
“At the end of the day, we know additional cost is going to be passed down to us” from suppliers, Joe Soares, Staples’ director of retail processes, said Thursday at the RFID Journal Live Canada conference, according to a report in IT Business. “To get (suppliers) on board, there is a substantial infrastructure investment” needed. “It’s iffy as to whether we can get ROI.”
Staples’ Canadian operation started its RFID pilot in August 2003, working with PriceWaterhouseCoopers and Bell Canada. But the story quoted Ashroft as saying there was a brief halt to the project because of personnel changes, which turned out to be a good thing because it delayed the project long enough to deploy Gen2 technology. The group had aimed for 99.9 percent accuracy in RFID read rates and ended up with 97.41 percent once the pilot concluded, the story said. “Read rates were drastically improved overall, however. Before the trial, it took 17.75 minutes to register items on a pallet; using RFID scanners, it took an average of 2.7 minutes.”
-Marc
November 10th, 2006 at 9:34 am
A more detailed account is available at:
http://www.rfidjournal.com/article/articleview/2684/1/1/
It appears that only the pallet RFID tag was read in Receiving at the staples center and the data for each case on the pallet was derived from the Advanced Shipping Notice(ASN) submitted electronically by each supplier. While this process saves time and labor for Staples to register the receipt of goods, it does shift the burden for accurate data collection upstream to the supplier who will now have to read each case one at a time and associate it with a given pallet prior to shipment.
It is hard to see any ROI in the overall process unless RFID can be made to read all the data on the pallet with a high degree of accuracy. This was the initial promise of RFID.
RFID cannot be cost justified if the savings from automatic reading of large groups of tags, such as a pallet load of cases, is not achievable. Thus far, the read rate for cases on a pallet ranges from 50% to 80% depending on the product being shipped. Products with a high content of metal or liquid read very poorly. Products with no metal or liquid still fail to read better than 80% unless they are presented for reading one at a time.
This is a process that can be easily done with Barcode at significantly lower cost. Mr. Soares is right to be concerned about additional costs from his suppliers. In the overall picture, RFID does not offer any increase in efficiency over Barcode.