From SCDigest's OnTarget e-Magazine
- July 15, 2015 -
RFID and AIDC News: Small Shoe Store Chain Peltz Decides to Publicly Dump RFID
Says Costs were Much Higher than Expected, Inventory Accuracy wasn't being Achieved, as it Goes Back to Bar Codes
SCDigest Editorial Staff
In a somewhat odd press release, Peltz Shoes, a chain of six stores in the Florida market, announced it was dumping RFID tagging of its shoes boxes over what it said were technical issues as well as higher labor costs.
It isn't often a company makes a public announcement about a decision to drop system or technology. What drove that move is perfectly unclear, but here's what the company had to say.
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Interestingly, press release concludes by observing that if manufacturers applied RFID labels at the factory inside of the actual product, it would be much more beneficial.
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What Do You Say?
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Peltz began its RFID journey in 2009. It says the RFID tag on the boxes wasn't just being used for its radio frequency identification capabilities alone, but was also being used to provide detailed label information on the shoe boxes on the brand, style, color, size, and price data, which apparently were not clearly labeled on the boxes previously.
At that time, CEO Gary Peltz felt that the RFID technology "could increase efficiency in tracking and inventory management that would ultimately contribute to one goal: accurate inventory. The intention was to provide customers with the correct quantity on hand within the back office system and the e-commerce site," the press release said.
Apparently, it didn't work out that way.
After the system was rolled out, Peltz said it found that using RFID tags resulted in high labor cost to apply the tags, high label costs, and inaccurate inventory levels.
Inaccurate inventory levels? Isn't that the problem item-level RFID is supposed to solve?
Peltz says part of the problem was that the RFID printers being used would print unactivated (i.e., un-encoded) tags, and that these faulty tags could not be detected until inventory cycle counts were initiated. Also, if an associate mistakenly put the wrong label on a box, the inventory would not be counted correctly. Both of these issues caused another incurred cost: unexpected labor to remove the tags from the boxes to re-label and re-inventory.
The release says that although a key feature of RFID technology is ability to quickly read tags when performing cycles counts, another issue Peltz faced was that scanners sometimes failed to read some of the tags.
Even if the readers were "99% accurate, the 1% [misreads] caused a big increase in labor. If scanning 300,000 pairs of shoes, 1%, of those, or 3,000 pairs, would need to be manually verified for accuracy. The time and effort involved to correct such inaccuracies did not warrant the extra costs when compared to the low expense and accuracies of hand-scanning the entire inventory." We assume here in the last phrase Peltz is comparing RFID to traditional bar code scanning.
(RFID and AIDC Story Continued Below)
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So Peltz made the decision to no longer utilize RFID and moved to rely solely on bar code scanning for inventory control. It says this has resulted in better inventory counts, lower inventory reconciliation levels, and has helped to ensure customers receive proper inventory counts as they make their purchases. 