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RFID Improves Efficiencies and Reduces Shrinkage for Retailers

accuracyAdvance shipping notices (ASNs) can drive up efficiencies and accuracies by reducing discrepancies – which experts estimate happen about 30 percent of the time -- between invoices and the orders a retailer receives. That's because ASNs provide the retailer with detailed information on how the goods were packed for shipment, how many items are in the shipment, as well as product descriptions, carrier information, and even order information. ASNs also alert retailers that the goods have been shipped so they are ready to receive them.

But ASNs and other EDI processes aren't the only solution retailers have. Efficiencies and accuracies get even better when vendors and retailers employ automated technologies, such as barcodes and Radio Frequency identification (RFID) to track shipments as they are picked, packed, shipped and then received. Although more work needs to be done, there has been progress in modifying EDI transactions so that EDI forms can leverage a product's Electronic Product Code (EPC) through typical order-to-cash processes. An EPC, by the way, is an RFID-friendly encoding scheme that represents the same GS1 identifiers used with UPC bar codes, enhanced to identify a specific instance, or a type of trade item or asset.

Interestingly, a newly released report indicates that retailers are considering RFID as a means to reduce shrinkage, as well. According to the Global Retail Theft Barometer, an annual study conducted by the Centre for Retail Research and underwritten by Checkpoint Systems, a supplier of electronic article surveillance (EAS) and RFID systems, more than 78 percent of retail shrinkage – losses caused by theft and fraud as well as procedural failures and accounting – is due to shoplifting by dishonest customers or retail employees. New products in categories such as electronics, perfumes and sportswear are among the most likely to be stolen.

Retailers are taking action, however. Of the 50 most stolen products, the number of items protected from theft has increased from 60% in 2007 to 75% in 2011, with EAS source tagging and special high-theft solutions implemented by more retailers each year.

While a little more than one-third of loss prevention managers thought the primary driver of RFID in their organizations was driven by inventory visibility and management, about 19 percent saw RFID as being driven primarily by the retailer's loss prevention needs. The study found that there has also been a significant growth in spending on loss prevention equipment, representing about 31 percent of loss prevention in 2011, including electronic surveillance, software, access control, and communications.

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