Asda used the Chipping of Goods Initiative to evaluate RFID's capacity to reduce shrinkage in the music and video sector and learnt some hard lessons. Asda Stores' Kate de Fraja reports
Music and video is one of the worst areas in our store for shrinkage. This is caused by many things including theft, fraudulent returns [including counterfeit product] and errors in the supply chain. A desire to see if RFID could help understand these issues was one motivation for getting involved in the trial. Another motivation was a curiosity to see RFID in action in a live situation.
There is much speculation about the potential benefits of the technology in the future but very little real experience to draw on in the present, particularly on the tracking of individual items through the supply chain.
The supply chain for CDs in Asda is also quite a challenge in terms of its complexity as it involves a distributor, Handleman UK, handling products direct from the manufacturer and picking orders for distribution to Asda Stores.
The simple objective of the trial was to track individual CDs from Handleman UK into two Asda stores, out of the store at point of sale, back into the store if returned, and then back through the supply chain to Handleman UK and finally to the manufacturer EMI.
The tag used in the trial could not be used as a security tag as this functionality is not currently available from RFID tags. The position or orientation of the tags significantly affected the performance of the equipment, particularly the readers. The actual presence of the CD caused much of this variability.
In order to create the trial environment, a number of additional processes were introduced into the supply chain.
These included the insertion of the tags into the product, the scanning of the product at the critical points such as arrival at the store, and, if the product was returned, by the customer.
During the trial there were technical issues with the equipment, which will no doubt be overcome as the technology evolves. There were more issues regarding the use of the equipment and following processes.
These problems were an important reminder that, no matter how sophisticated the technology, it must be easy for real people to use. The failure of an operator to capture data at any of the critical points in the chain undermines the value of the data.
What did Asda learn?
The biggest potential benefit the trial identified was in supply chain integrity. There are two areas where the technology could have benefits. Firstly, in the integrity of what products our suppliers invoice us as opposed to what we physically receive.
Discrepancies arise currently either deliberately or, more commonly, as a result of mistakes, such as mispicks or mix up of orders. They can also occur because of operator input error at the point of receipt.
These discrepancies can clearly cause shrinkage but they also cause errors in our perpetual inventory systems, resulting in inaccurate orders and eventually lost sales.
So the second area of benefit is automatic updating of the perpetual inventory system as the product enters the back of the store.
This would require a reader which can read multiple tags in a delivery and eliminate the need for manual scanning.
The development of the technology must be directed at simplifying processes for operators and at ease of use. If something is difficult, operators will always find a way around it!
The technology must be integrated into existing processes and must not create additional processes. In the trial, most of the operator issues were down to people forgetting to scan the RFID tag at point of sale as well as the bar code.
In relation to CD counterfeiting and fraudulent returns, the CD would need to be tagged with a unique number rather than the CD case.
There are probably three important hurdles to overcome before the potential benefits of the technology can be realised at item level in the retail environment.
Firstly, the availability of cost-effective, reliable, easy-to-use reader equipment.
Secondly, tags at a cost which makes it viable to tag individual items.
Finally, the implementation of global standards in relation to technology and information.
Overall, the trial was a very useful learning experience for all the stakeholders involved.
Each stakeholder has different interests and potential benefits to gain from the technology and it needs an integrated approach in order to realise all those benefits.
The most important piece of learning for everyone is – DON’T FORGET THE END USER!