RFID could save UK retailers billions

By Leah Vyse

- Last updated on GMT

Related tags Supply chain Supply chain management Igd

Using RFID and improving packaging design could help UK
supermarkets save £1.9 billion (€2.7bn) in lost sales every year
because of supply chain problems, says a new survey from the
Institute of Grocery Distribution (IGD).

The latest results from Efficient Consumer Response (ECR) On-Shelf Availability survey show the most inefficient area of the supply chain is the last 50 metres within the store before the product reaches the shelf.

The study involved observations of the shelf-replenishment process in four major supermarkets and interviews with store managers, identifying several areas for improvement.

Staff motivation, management awareness, inventory accuracy, packaging design, reducing product ranges and increasing the use of RFID (radio frequency identification) technology were all considered as vital to perfecting the art of supply.

RFID, which is currently too expensive to use on individual products, would solve many of the problems allowing for visibility across the whole supply chain, automatic recording of all inbound stock and easier identification and retrieval of stock in the supermarket itself, making the whole process more efficient.

"As technology becomes more robust and better understood more companies will use it (RFID), which will inevitably lower the cost of using the technology,"​ said, analyst at IGD, Tarun Patel.

"Tesco and Asda are looking into RFID, they are holding trials and making progress."

If the larger retailers were to seriously invest in the technology other retailers would follow suit, "this causes a chain reaction amongst suppliers and big suppliers respond more quickly,"​ he added.

As competition between the UK's leading supermarkets continues to mount retailers have been forced to minimise costs and examine why stocks are failing to reach the shelves.

IGD hopes to continue its work with suppliers and retailers until they achieve 100 per cent efficiency.

The study examines on-shelf availability of 200 products across 350 stores in the UK from the consumers' viewpoint, representing an average family weekly shop.

Sarah Harper of IGD told FoodandDrinkEurope.com​ that retailers have been working with representatives from all levels within the supply chain to increase the efficiency of the whole supply process.

"Availability is a huge issue for the industry. We set up the survey so they could identify what the good areas and bad areas were and work together to solve the problem."

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