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The Pros and Cons of RFID in Retail Inventory Management

With the growing competition in the retail inventory management industry, every company focuses on boosting efficiency. They are leveraging their present infrastructure and implementing cutting-edge technologies to upgrade their performance. The operations managers should research and analyse ROI to understand any technology effect on your retail store business’ overall productivity. Radio Frequency Identification (RFID) is a technology that has the power to transform the inventory management industry. RFID tags play a significant role in this industry. This post outlines the pros and cons of RFID retail inventory management, its comparison with barcodes, and other relevant things.

What are RFID Tags?

The RFID technology implementation in inventory management needs a scanner that uses radio waves to interact with an RFID tag. It consists of a microchip that helps people to read and write data to the tag for a real-time update.

Every tag comes with material (plastic/paper) wrap for protection. You can attach it to different surfaces for tracking. Inventory tracking mostly uses passive RFID tags as they are without batteries and reader waves activated.

Active tags are activated and available at a higher price. You can use them to track machineries such as railway cars and trucks.

Now let’s discuss the pros and cons of RFID inventory management in retail stores.

Pros of RFID

RFID application in inventory management offers a good deal of benefits, including quick scanning and fewer labour costs.
Here are the key benefits:

Clearer Visibility

As RFID tags don’t need a “line-of-sight” scan, you can read them from far away, which speeds up inventory processing. You can also read them in any orientation, get clearer visibility into your stock, and timely update and scan locations.

Lesser Labour Costs

Labour costs comprise 50 to 80% of distribution centre costs. With RFID retail inventory management, you can save labour costs. This advanced technology speeds up inventory check-in, calculation, and shipment verification in a small number of scans without the involvement of numerous employees.

Returnable Assets Easy Tracking

If you use returnable assets such as pallets and containers, you need to protect the capital investment. With RFID, you can easily track such assets via the full supply chain loop and get more visibility on inventory locations. The easy asset tracking helps you to boost returns and prevent theft.

Cons of RFID

Though RFID retail inventory management has great benefits, it also has certain disadvantages that hamper usability and security.
Here are the key disadvantages:

Incapacity of Using Cell Phones

It is impossible to use cell phones to scan inventory even though you can use remote and fixed RFID readers. You need employees or drivers in the field to use certain RFID readers for scanning. If the readers fail to display results, you cannot use phones as a backup.

Restrictive Scaling Costs

RFID tags cost much higher than barcode labels. Moreover, they use certain readers that you need to purchase from a restricted number of RFID equipment suppliers. This increases high costs when scaling these solutions with RFID tags and extra for specialised scanners.

Time Consuming

The setup for RFID retail inventory management system needs readers’ integration, wiring, and networking that demands an ample amount of time and resources. You may need to upgrade the full inventory management system as some software doesn’t support RFID.
Real-time asset tracking needs GPS and cellular data for communication which are a burden for inventory management.

Security Issues

Though RFID systems keep on updating and advancing data security, they are prone to hacking. You can use remote devices like cell phones to scan tags closely and copy data. Then, create a duplicate copy or tag the information to another tag that exposes to some risks in the retail industry.
RFID retail inventory management comes with great benefits, but you need to work a lot to streamline operations. Some of the challenges are scaling the solutions cost-effectively and upgrading infrastructure as required to leverage the beneficial features.

RFID vs Barcode in Inventory Management – Comparison

Both RFID and barcode are good solutions for inventory management but differ from each other. So what are those differences? Let’s discuss their comparisons.
RFID is useful for some inventory management activities. But barcode labels are reliable and proven solutions for user-friendly, affordable, and accurate inventory management. Certain labels are sturdy enough to withstand hazardous weather conditions both indoors and outdoors. They add high resistance to solvents, abrasion, and chemicals.
Barcodes are as accurate as RFID tags. You can affix barcodes to any surface material without affecting perfection. Materials like metal tend to interfere with RFID tags’ capabilities of data transmission, and liquid may hamper signals.
Though you can use RFID tags on metallic items/surfaces, you need to use an RFID block-activated special tag. It helps to prevent invention but escalates the overall cost.

RFID Inventory Management System – Cost of Implementation

When it comes to calculating the total cost of RFID inventory management system implementation, you need to consider several expenses. The highest initial cost is mainly the equipment that may include antennas, cabling, and readers.
Passive RFID tags cost approximately $3000 per reader when you consider cabling and other expenses like Ethernet (POE), which you usually need to operate.
When it comes to active reader systems, the equipment costs are approximately ten times lesser than a passive system, as the former is less complicated and sophisticated.
The extra up-front costs may include – asset management software, installation, and feature modifications that vary according to the situation. RFID system ongoing costs include – licensing fees, maintenance, and tags cost.
Passive RFID tags cost approximately 5 to 15 U.S. cents per chip. To use tags with exclusive housings that protect interference against metal objects, you need to pay a higher price.
Active RFID tags usually cost from $5 to $15 each, which is 100 times more than passive tags. The reasons for a higher price are the local power source and more detailed housing design.

RFID Retail Inventory Management – How it Functions in a Warehouse?

RFID Retail Inventory Management - How it Functions in a Warehouse

Both active and passive tags function the same way in a warehouse. The RFID tag/chip that stores crucial item information attaches to the full stock or separate items before a shipment is sent to the warehouse.
Once the shipment reaches its destination, every RFID tag passes information to readers installed in the warehouse. The readers are positioned in strategic locations in receiving and storage sections to catch the possible perfect signal.
The data transmission through electromagnetic waves redirects the readers to a centralised warehouse management system. Then, RFID retail inventory management systems modify and send back information to the tags for recalling later. Due to the data transmission, you can easily perform activities such as advanced transactions and real-time asset evaluation.

Boost Accuracy with RFID Retail Inventory Management System

RFID implementation boosts inventory accuracy by a certain percentage as compared to a traditional and manual tracking system. Maintaining inventory accuracy is a continuous challenge in the retail industry. An automated system helps you to do so easily.
Automation is perfect for your company if you need a high rate of inventory accuracy. But you should always consider the balance between labour and hardware costs. Perform analysis between RFID tags and barcode labels to attain a higher ROI.
Technowave has been offering excellent RFID solutions to clients for the last two decades. easyTRACK, our RFID system, has helped companies in asset tracking and warehouse management at retail and wholesale levels. Furthermore, we also install hardware from Datalogic and Zebra to help you in retail inventory management.

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