Shoe store chain publicly dumps RFID

By SCDigest Editorial Staff

JULY 16, 2015

Through a special arrangement, presented here for discussion is a summary of a current article from Supply Chain Digest.

In an odd press release, Peltz Shoes, a six-store chain in Florida, announced it was dumping RFID tagging of its shoe boxes over technical issues as well as higher labor costs.

Peltz began its RFID journey in 2009. At that time, CEO Gary Peltz felt that RFID "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 found that using RFID tags resulted in high labor costs to apply the tags, high label costs and inaccurate inventory levels.

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 put the wrong label on a box, the inventory would not be counted correctly. An unexpected labor cost was then incurred to remove the tags from the boxes, to re-label and re-inventory.

Source: Peltz Shoes Facebook page

Scanners also sometimes failed to read some of the tags. Even if the readers were "99 percent accurate, the one percent [misreads] caused a big increase in labor. If scanning 300,000 pairs of shoes, one percent 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."

Finally, high total costs — including printers, labels, thermal ribbon and scanning equipment — also factored into the decision to discontinue RFID. The statement said, "Although seemingly small, the 11 cents per-label cost was the main reason for cancelling the RFID program. Every box needed to have a label to prevent inventory inaccuracies, which meant all of the retail stores plus the warehouse had to have an RFID label printer and supplies to keep up with the inventory."

A move to rely solely on bar code scanning for inventory control resulted in better inventory counts and lower inventory reconciliation levels.

Interestingly, the 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 — preventing mismatched boxes and tags as well as theft. It adds that RFID is "a great tool, but for all of the inaccuracies and associated high costs, it will not be a viable solution until a significant manufacturing change at the wholesale level occurs."