A quantitative evaluation of the impact of the RFID technology on shelf availability

Abstract

In this paper, we aim at analyzing and punctually quantifying the benefits of the adoption of Radio Frequency Identification (RFID) technology for a better management of shop floor operations and reduction of out of stocks (OOS). To this extent, we first selected a panel of about 100 products belonging to different consumer packaged goods categories (i.e. dry foods, fresh foods, frozen products, health and beauty care) and then we identified 30 retail stores to be monitored, including both hypermarkets and supermarkets.We audited availabilities by daily mapping the number of items on the shelves at store level. In the case an OOS occurred, a store associate promptly provided the OOS root causes, chosing among 8 possible options. By combining pieces of information related to OOS magnitude, RFID impact on each root cause and customer behaviour in response to OOS, we quantified the potential benefits which could be generated by RFID adoptions, in terms of turnover increase for the retailer as well as for the manufacturer. Results obtained indicate that RFID technologies could be sustainable from an economical point of view for both the retailer and the manufacturer, when they are exploited not only for improving accuracy or efficiency of logistics processes but also for increasing sales through OOS reduction.