Rewriting Cost-per-Use, Staples Trials Reusable RFID Tags

Written by Evan Schuman
June 8th, 2007

Traditional arguments against item-level RFID use is that it only makes economic sense for products costing more than $100. But that assumes one-time use. With a trial with re-usable tags, Staples is throwing out all the old rules.

Staples in Canada started its trial this month at one of its Montreal stores, selectively tagging about 2,000 items representing some 300 SKUs out of the 7,500 SKUs in a typical location, said Joe Soares, director of process engineering for Staples and Business Depot.

The tags themselves are higher-end active tags, which would typically cost Staples between $5 and $8 each. For the six-week trial, though, Soares said, “it’s not costing us anything” because the costs are being picked up by partners, including Fujitsu and AbsoluteSky. Soares later clarified that comment to say that Staples had to purchase one new server for the trial, but that, if the trial failed, the server would just be redeployed elsewhere, making it not a pure cost of the trial. “Fujitsu has put in the services and the tags,” he said.

Asked why such an extensive project is being given only a six-week trial, Soares said the nature of what was being tested wouldn?t take that long. “It either works or it doesn’t, from Day One. It’s either right or wrong. There’s no inbetween about it,” he said. Thus far, Soares said, it’s been working flawlessly.

Typically, Soares said, RFID passive tags are used for supply chain. But Staples’ Canada operation receives all products as they are shipped directly from various suppliers. “We therefore have no warehousing so, for us, improving the supply chain doesn’t give us a huge advantage,” he said.

The need comes in the store when an associate wants an accurate inventory as well as the precise current location for a product. “It took us to yesterday to validate,” Soares said last week. “We tagged ten items and our system said that we had 10 items.”

With their manual system, he said, that rarely happened. Sometimes they would have more of an item in stock than the computer would show because, for example, a different item was sold under the first item’s SKU. A shortage might be explained because a product was damaged and removed from the store, but no one remembered to delete it from the available inventory list.

With every item using an active tag, “it is 100 percent accurate,” Soares said. It also tracks merchandise as it moves through the store, knowing that when “it passes through the POS, it changes from saleable inventory to a sold item” but it also retains all of the movement history, he said. “It flags all of the exceptions.”

The exec added that the store is starting to see some labor savings because “we no longer have to cycle count those products.”

But the cost change that makes this trial unusual is the store’s ability to repeatedly reuse the tags. “You can reuse these over and over again” Soares said, adding that he expects at least a five-year life for each tag, which would be removed at the POS. “If over a five year term, you get 200 uses out of it, it comes down to 3 cents a use,” he said.


3 Comments | Read Rewriting Cost-per-Use, Staples Trials Reusable RFID Tags

  1. David Cox Says:

    I think that it is not a bad idea but as far as product return fraud. At the RFID item level tagging process, when a customer returns a product it can be identifed to know whether it was actually purchased or not by reading the information written into the tag at the point of sale. When a customer returns the product at the service counter a reader will be able to read the tag to make for it is a good return.

  2. Bob Amster Says:

    It is not suprising that Staples is trying the Item-level use of RFID. The true benefit of RFID tagging is at the item level, much more so than at the supply chain level.

    The reason that most pilots started at the supply chain level is simple. It has been cheaper to enter into such a pilot.

    The additional concept of appying re-usable active tags is a further display of creativity that will no doubt result in validating our continuing belief that item-level RFID tagging will succeed and “will deliver the goods.”

    The industry needs creative, bold thinkers–IT leaders with balls–to act in order to reap the benefits of what i think is a highly promising technology.

  3. Chris Kapsambelis Says:

    The main reason retailers have trouble maintaining accurate inventory with bar codes is the lack of discipline needed to scan the item as it moves through the system. Most retailers have not gone beyond doing price lookup at POS with bar codes at the item level.

    The Staples scheme is based on tagging items as they enter the system, entering the data into a new server, and maintaining the flow automatically. Aside from the additional cost, it is hard to believe that retailers can enforce the needed discipline in tagging, and data entry when they are not able to enforce the needed discipline in reading bar codes.


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