In the retail industry, RFID technology is expected to replace the barcode technology as it provides much more functionalities without requiring the line of sight of the reader thus ensuring speed and process efficiency. Most importantly it provides supply chain visibility thus resulting in a tighter integrated supply chain which is more efficient and is the foundation for future profitability. This will help the retailers stay at a better competitive edge which is what all retailers are striving to achieve in the modern times of ever increasing competition. Good supply chain management is a key to achieve that. It revolves around three core elements which are availability, inventory, and cost.
According to a recent study, the most significant benefits from RFID implementation for retail industry are improved inventory management, improved in-store operation, integrated business model, and velocity of retail cycle. The initial benefits obtained from the technology for the retail sector is improved accuracy of inventory management which can very easily lead to savings. The next key benefit that is much talked about is the supply chain visibility that can be transformed into huge savings.
The expected growth of RFID usage in the retail industry is because of the perceived benefits that could be obtained by implementing the technology. RFID can provide benefits such as operational efficiency, improved visibility, reduced cost, improved security, improved customer service levels, better information accuracy and increased sales.
The major categories of challenges impeding RFID implementation in MENA are perceived high cost as companies tend not to compare the cost to the massive returns they would get, employee reluctance to change, data integration issues, reliability issues of the technology, and business process redesign required amongst others.
Operational efficiency and improved visibility are the most significant benefits a retailer can get by implementing RFID. Operational efficiencies include: reduced out-of-stock, accuracy, speed and efficiency of process, automated shipping/receiving, reduced inventory, improved efficiency of store operations, improved labour productivity and streamlined process achievement/Leaner manufacturing. Improved visibility means: Real-time visibility, tracking and tracing, improved visibility of orders and inventory, asset management, returns/recall management, tracking shopping behaviour and streamlined reverse logistics. Reduced costs, improved security, improved customer service levels, better information accuracy and increased sales are other benefits gained from implementing RFID in retail.