How can RFID be leveraged in the Consumer Packaged Goods industry?

Many opportunities throughout the CPG supply chain exist in which RFID can be adopted and leveraged.ÝÝ For companies interested in improving supply chain efficiencies through reduced costs and/or improved customer service, RFID is relevant.Ý ìIn the CPG industry alone, firms lose a collective $9 billion a year due to incorrect shipments and unsaleables ñ which are the result of bad data and manual processes.î (May 2002 Forrester Report, ìCutting The Fat Out of CPG Logisticsî)

Companies should consider adopting RFID technologyÖ

… when issues of out of stocks significantly impact salesÝ

… when shrinkage (theft/missing product) significantly impacts costs

… in conditions where a typical barcode would be damaged due to heat or chemicals

… when greater security is needed versus credit cards (in transaction applications like Speedpass)

… when product movement needs to be monitored in real time

… when increased automation is required (i.e., to reduce human error, to compensate for constrained resources, to minimize cumbersome invoice and inventory management)

… when high profit margins and high susceptibility to theft exists ( i.e., over the counter drugs, cosmetics, and cigarettes)

… when real time demand visibility and accuracy are needed to manage inventory and improve manufacturing efficiencies

All streams of the Consumer Packaged Goods industry, from manufacturer to consumer, can leverage the use of RFID.Ý

Manufacturer Benefits:

• Supply chain improvements such as automated back door check-in will enable suppliers to use fewer trucks and spend less time checking in at the retailerís back door, thereby reducing transportation and labor costs.
  
  
• Inventory Management:

• Production better matched to actual demand, thereby reducing costs that stem from the occurrence of out of stocks and excess inventory levels
• Automatic ordering/replenishment resulting in reduced labor costs
• Closer monitoring of product offers the potential to reduce ìshrinkî or product theft.Ý
• Shelf inventory monitoring combined with automated ordering brings the ability to minimize lost sales due to out of stock products and, as a result, minimize the consumer dissatisfaction that stems from the inability to find a particular product.
• Asset tracking (e.g. trucks, equipment, product) within facilities but also outside of facilities when linked to GPS.
  
  

• The vast amounts of new data to be collected as products move from the shelf to the shopping basket to the checkout should yield many new insights into consumer purchase behavior.
• Quality:

• RFID facilitates the identification of out-of-date and expired products and, as a result, the removal of the old products from inventory.ÝÝ
• Additionally, the RFID technology offers the potential to insert sensors in the product to monitor the temperature or identify the presence of pathogens.
• Faster product recall process

Retailer Benefits:

• Sensors built into store shelves can tell store staff when a product needs replenishment vs relying on more laborious visual inspections.
• RFID product tags will facilitate supply chain capabilities that large retailers such as Wal-Mart would like to see implemented.Ý For example, ìpay-on-scan,î the concept of delaying the retailerís payment for a product until the consumer actually purchases the product, would be more accurately implemented with RFID technology (since the tracking of products would be much more precise and reliable).
• The vast amounts of new data to be collected as products move from the shelf to the shopping basket to the checkout should yield many new insights into consumer purchase behavior.
• Retail Sales:

• Quick check-out
• Facilitates additional market research
  
  

Consumer Benefits:

• Rapid check-out and more security from credit number theft
• Minimized out-of-stocks
• Direct ordering of products from home.Ý For example, a refrigerator with this technology could recognize the absence of a product and automatically transmit an order for that product.
• Reduced occurrence of old or out-of-date products.

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