January 12, 2011 – RFID is expected to drive greater impact on the retail and manufacturing supply chain business this year, according to new Aberdeen benchmark research.

Currently, only 20 percent of retailers measure and track inventory accuracy using RFID, radio frequency identification tags for detecting and locating objects as well as monitoring an object's condition and environment. However, 61 percent of companies plan to start using RFID-enabled real-time inventory data for managing in-stock accuracy within the next two years, Aberdeen reported. According to Aberdeen’s research, the evolution of RFID as an enabling store technology has prompted retailers to investigate the technology’s value across four goals: process efficiency, product and demand visibility, shrink management, and increasing profits.

Top product categories for RFID tagging include consumer goods, apparel and consumer electronics. Performance benefits are found in store replenishment speed, inventory turnover and accuracy, among others.

Best in class as determined by Aberdeen possessed three key performance criteria: they had 92 percent inventory system accuracy and the last fully physical inventory, an 8.5 percent year-over-year decrease in out-of-stock incidence, and 0.8 percent year-over-year decrease in in-store shrink.

The results show that 79 percent of best-in-class companies are placing high priority on in-store efficiency gains for RFID implementation; 62 percent compare manual or barcode inventory tracking with RFID-related inventory; and 81 percent using RFID have handheld readers as a component of their operations.

Tips from Aberdeen for supply chain and retail looking to gain inventory visibility and improved operational intelligence include focusing on employees who understand store-level RFID implications and leveraging automated alerting for optimized inventory flow, and aiming for deeper store-level RFID functional integration with other retail applications.

For this report, Aberdeen examined the uses, experiences, and intentions of more than 125 retail enterprises in a diverse set of retail segments in an online survey of retail executives. It is available free for a limited time.

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