RFID Fits the New Retail IT Perspective

RFID has occupied a curious position in the retail IT landscape for the past decade. Most observers acknowledge that RFID holds great potential to offer expanded supply chain visibility and collaboration from source to shelf, but aside from a few high-profile programs run by retail heavyweights like Wal-Mart and Target, RFID’s potential still remains untapped after all these years. That may finally be changing.

As recently reported on Chainstoreage.com, American Apparel is automating in-store inventory tracking processes with a wide-area RFID system using technology from Senitron and Impinj, eliminating the need for handheld readers. On a continual basis, the system transmits data from RFID inventory tags with Impinj Monza chips through fixed antennae to a database providing real-time RFID coverage across the store. Benefits to the retailer include improved inventory accuracy, on-shelf availability, security, analytics, customer service and the ability to locate merchandise.

American Apparel deserves kudos for this effort, but here is nothing going on with this program that could not have happened in 2003. However, retailers’ perspective on the role of IT in the enterprise is shifting as IT functionality evolves, and RFID’s capabilities actually fit this new perspective quite nicely. Here’s how.

RFID Works on the Same Concept as the ‘Internet of Things’
The “Internet of Things,” or Web 3.0, is based on the concept of non-computing devices such as appliances and automobiles being connected to the Internet for purposes such as automatically notifying the owner when maintenance is needed. Web 3.0 is also being realized through innovations such as Google Glass that turn wearable objects into mobile computing devices.

RFID is basically the Internet of Things minus the Internet. It turns items in a retailer’s supply chain, or other objects such as store shelves and fixtures, into automated sources of information about themselves and their surroundings. In some ways, the rest of the retail IT world is finally catching up to RFID.

RFID was ‘Big Data’ in 2003
It may seem like retailers have been obsessing about solutions that can filter, store and analyze exponential volumes of data for only the past few years, but RFID has been posing this challenge and opportunity since well before data became “Big.” Much like Big Data, the constant stream of information about item location and movement created by RFID tags and readers also requires sophisticated data warehousing and analysis/reporting tools to be made actionable. RFID data is in fact generally considered part of the larger Big Data stream.

However, RFID data is more manageable than the overall volume of Big Data, and RFID solutions actually offer more concrete ROI than Big Data solutions as they provide hard benefits such as reduced shrinkage, faster inventory turns and automated inventory tracking.

RFID Eliminates Some Hardware
As demonstrated by American Apparel, RFID systems can eliminate the need for handheld devices used to track inventory. This nicely fits the pronounced movement away from hardware-based solutions toward software-based and virtual cloud-based solutions that has been occurring in retail (and industry in general).

Of course, RFID does require the installation of hardware such as tags, antennae and readers. However, some vendors are starting to release cloud-based RFID systems that do away with at least some of the physical infrastructure associated with RFID, and most likely this trend will continue growing.

Was RFID simply ahead of its time? Time will tell, but the use case looks a little clearer in 2013 than it did in 2003.

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