Dutch Bookseller Goes Its Own RFID Way
By Bill Bittner, President, BWH Consulting
Boekhandels Groep Nederland (BGN), the Dutch bookseller, is testing radio frequency identification (RFID) at the item level. Aside from a few experiments, it is unusual for a retailer to implement item level RFID tagging. The normal implementation is at the pallet and case level.
BGN receives all but two percent of their books from a single distributor. Because most of the books are repackaged for shipment to the store, they are able to put RFID tags on individual books as they are selected. They also put an RFID tag on the shipping container. This puts some extra cost on shipping but reaps many benefits in the store.
When merchandise arrives at the store, it is checked in through the “Tunnel”, which is a conveyor-like device through which all the containers pass. The RFID reader in the tunnel detects the individual book tags and the container tag. The reader results are matched against an advance ship notice from the distribution center to verify that all the tags have been read. Books for special orders are quickly identified and set aside for customers.
Inventories can be taken quickly with a portable reader that is used to scan the shelf areas and count books in stock or locate strays. Customer kiosks are used to display the location and number of copies on hand. Shelf readers have not yet been installed, so the location is still based on planograms.
This solution utilizes software products developed by Progress Software and integrated by CaptureTech. What really makes this approach unique is the decision by the retailer not to wait for book publishers or the general supplier world to catch up with RFID. Recognizing the potential benefits at the retail level, they have decided it is worth the additional cost in the distribution center.
Moderator’s Comment: There is much debate about the benefits of RFID for suppliers. Does it make sense for more retailers to begin attaching RFID labels
themselves? Can it be done at both the case and item-level or does it makes sense to merely do cases at this time?
I really believe there is an opportunity here for some retailers. I have always been an advocate of case labels for selecting merchandise. I really believe
the case labels, if they include the retailer’s internal ID numbers, can do nothing but help the shelf stocking process in the store. This is especially true as more varieties
of an item are carried and English may be a second language for the worker.
So if the labels attached at the distribution center also contained an RFID that gave a unique identity to each container, then retailers could begin to
achieve many of the benefits of RFID without waiting for manufacturers to make their changes. At some point, the total benefits of RFID for all the players in the supply chain
will make source labeling economical, but for now it makes sense that some retailers will want to do it themselves. –
Bill Bittner – Moderator
This isn’t a yes or no question. There are, for example, a variety of “RFID” tags and readers available today and more coming tomorrow. So…what would happen if every retailer suddenly decided to put their own version of a UPC barcode on products? Or install scanners that only read certain products? We really need to work faster on industry standards, not let 1,000 proprietary practices spring up and then try to wrestle them to the ground later.
I’m looking forward to the day when I can carry my items through the “tunnel” as I leave the store and have them automatically billed to my credit card without having to stop at the cash register.
The example here is the “ideal case” test, but not realistic for a broad scale comparison of benefit. This test eliminates many of the “variables” and obstacles that must be overcome to make item RFID source tagging a win / win / win…For the supplier, for the retailer, and for the shopper. Ryan is correct that until uniform standards are developed, the item tagging challenges will remain exponential.
How do you RFID item tag a product with a retail of less than $1, when the cost of the tag and components to read them as well as labor make it financially unfeasible for a supplier or a retailer to do so?
RFID item tagging has solid ROI benefits at this time in certain product SKU’s only, and only if standard tags and readers are implimented, so everyone is speaking the same electronic language.
This application of Item Level RFID is as good as it gets. Unlike the general case, there is no interference from metal or liquid, the tags can be uniformly placed, spaced, and oriented for perfect reading. It would be very instructive to have an independent analysis of this operation in six months to a year to measure performance and ROI.
Some of the questions that need answers are as follows:
1. What is the raw read rate at the tunnel? In similar applications of palletized goods, the read rate for cases on a given pallet ranged from 50% to 80%. And data from the ASN is used to temporarily fill in the missing records until the pallet is broken up. To what degree is this necessary for a case of books?
2. What is the accuracy of the ASN? If the downstream reading rates are poor, the accuracy of the ASN becomes paramount.
3. What is the survival rate of the tags after a year?
4. What is the accuracy rate of in house inventories?
5. What is the read rate at the Point of Sale?
Unless the tunnel read rate approaches 100%, this application can be done with Barcode at a fraction of the cost.
Imagine the cost savings of taking physical inventory twice annually once item-level RFID is in place! A store could do this monthly for less than it expends now semiannually, and with potentially more accurate results.
Imagine the time savings and improved in-stock rates when the receiving process takes minutes, not days. Even the large logistically-savvy big box retailers take days to “book” a receipt at store level, affecting forecasting and sellthru.
Lastly, I applaud the effort of this store to take it upon themselves, rather than push the associated costs onto their suppliers.
In the USA, books are usually low price and low margin items, so the cost of RFID tags would eliminate the retailer’s profit. I cannot tell what this store’s margins are or its average price point. Part of the RFID cost is being subsidized by the wholesaler, and it’s unknown whether there are any other subsidies. The retailer has 40 stores, so they’re experimenting with 1 store. With enough of a subsidy, more American retail chains might run RFID tests. The big picture? RFID will be adopted first where the payoff is fastest. That’s likely to be high price point merchandise and wholesale quantities (pallets, cartons).