December 6, 2006

News & Opinion: RFIDed Books

By: 800-CEO-READ @ 8:35 PM – Filed under: Management & Workplace Culture

I remember learning about RFIDs in my operations and supply chain class back in college. We prophetized that RFIDs would be in every big store within 20 years. Items in your shopping cart would no longer need to be scanned individually; they (or, rather, their RFIDs) would be "sensed" through the cash register. That's just the customer side. The time and money savings for the business owner are equally huge.
Wal-Mart was expected to be the first major player in RFIDs. According to a December article in Business 2.0, now a Dutch bookseller is trying their hand at RFIDs. They "may be the first merchant to tag every single item on its shelves with wireless technology." They started in one store and are going to duplicate the efforts in each of the stories by mid-2008 (42 to go).
What's interesting is that the article says that RFID-store sales are up 25% than averages of other stores. Installation costs will be around $120,000 per store; their CIO Jan Vink predicts the benefit will be an increase in "the chain's overall profit by as much as 40%." Wow.
Each tag costs 25 cents and is typically the size of a piece of tape. No longer does each inventory arrival need to be pieced apart and compared to the order; now the box goes through a "RFID scanning tunnel" which "sees" what's inside. As for taking inventory, before it took a day (requiring a closed store) and costs $800,000 in labor and lost sales; now, it takes "two employees and two and half hours to scan 38,000 books."
Besides an extra shopping day, customers also benefit from the kiosks that "let shoppers pinpoint within seconds the exact location of any of the store's books." No more Dewey decimal system.
Maybe we'll see this more in the US soon. Barnes & Noble is sending its people to check out the mechanics.
*From Business 2.0 article: Tagged for Growth