The value of RFID in the fresh FMCG supply chain: Evidence from field projects

This paper is aimed at illustrating the results of RFID logistics pilot III, a research project carried out at RFID Lab university of Parma, to field measure the benefits that can be gained through case level RFID deployments in the fast moving consumer goods. More specifically the research shows that besides upstream benefits in the supply chain, data stemming from store replenishment from the backroom to the store area can have a significant impact in reducing out of stock, product shrinkage and freshness, and the amount of capital frozen in safety stocks. Two field RFID trials were designed and deployed in 2011-2012. We applied RFID tags at case level for different product categories. Cases were tagged in a major retailer DC and followed downstream to two stores. We punctually and real time assessed inventory levels in the backroom and in the store area, thus out of stocks, inventory levels and shrinkage due to poor FEFO (first expiring first out) rotation. Overall, store area replenishment policies based on RFID data can have a significant impact on sales (up to 1,24%), shrinkage (up to 1,54% of sales) capital costs (0,33% of sales) and product freshest to end customers (up to 18%). Practitioners can exploit our results to build an ROI for RFID deployments; researchers can try to start from our research and expand it under different conditions and product categories.