The RFID smart label revolution helps the construction of the Internet of Things system
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Of course, recent innovations have drastically reduced the price of such labels and improved their performance. The prospect of low-cost labels excites retailers. Take clothing retailers as an example. If every product uses this kind of label, the retailer can improve customer service and reduce turnover loss, which usually accounts for 5% to 15% of sales. RFID technology can be used to find misplaced products, prevent theft, and even provide customers with personalized sales services through the display installed in the fitting room. Eventually, such tags and readers will replace barcodes and manual checkout counters together. Low-cost RFID tags are also significant for the Internet of Things: because all electronic product codes (EPCs) are unique, they can be tracked when products that are tagged in the factory are transported along the supply chain. The resulting inventory levels and visibility of material flow can lead to huge savings.
Retailers and consumer goods manufacturers that use RFID can cut the total cost of warehousing labor by nearly 3%, mainly through more efficient receiving, shipping, and exception handling. Even more promising is the potential impact of RFID on supplier managed inventory systems. By exchanging information collected by RFID readers on the Internet, consumer goods manufacturers can more efficiently manage the inventory replenishment of their key customers, saving both parties 20%-40% or even more in terms of inventory and out-of-stock costs. However, companies such as retailers and suppliers should be keenly aware of the current state of the technology.
The main value of RFID is that it no longer needs to handle goods separately, such as enabling the distribution center to automatically receive mixed goods pallets. However, if the label itself is not strong, unreliable, and unable to withstand improper handling, then the savings will be lost. Obviously, a previous experiment conducted by the automatic ID center found that even when two tags are installed, pallets with RFID tags may still fail; only 70 to 80% of pallets with different tags can be accurate To read.
Companies should avoid focusing only on the price of a tag and ignoring the expensive enterprise resource planning (ERP) software upgrades required by RFID technology. For relatively simple tasks such as measuring inventory levels, simple additional software may be sufficient. However, to deal with complex applications, including tracking individual commodities throughout the supply chain, ERP needs to be upgraded, which may cost tens of millions or hundreds of millions of dollars for large enterprises. Servers and network infrastructure will also need to be strengthened to handle thousands of additional data processing for each product. Therefore, for retailers and consumer goods manufacturers, the slogan is: Be careful! For most retailers, long-term investment in RFID technology is still risky. Only a few dominant companies in the industry can do this because they have the ability to influence suppliers and the financial resources to deal with the ups and downs caused by the use of an early technology.
For consumer goods suppliers, a careful analysis of the characteristics of the existing supply chain will find that the cost is for the time being, even now, it is possible to generate a positive return on RFID investment. Companies that often lose revenue due to retailers’ out-of-stocks can use labels to eliminate the source of the problem. In addition, companies whose products reach consumers through several channels (such as car tires and medicines) should use RFID tags to help offset the high costs caused by rare events (such as product recalls) by providing third parties with quick access to product information. In the process of moving forward, companies should turn their excitement about the potential of RFID into a solid business case just like any technology.
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