Retailers Get Savings of 5 Percent of Inventory Cost and 7.5 Percent Of Warehouse Labor Costs; Manufacturers Face Cash-Flow Hit
Retailers can expect extensive inventory and labor cost savings from the adoption of radio frequency identification (RFID) technology, but some consumer product manufacturers will face higher costs and delayed benefits from adopting the technology. That is the conclusion of a new report on RFID and the Electronic Product Code (EPC) from global management consulting firm A.T. Kearney.
The analysis was conducted as retailers and manufacturers begin to consider the costs and benefits associated with adopting the technology as mandated by retailer Wal-Mart and the U.S. Department of Defense.
A.T. Kearney estimates retailers will see benefits in three primary
— Reduced inventory through a one-time cash savings estimated at 5 percent of total inventory
— An annual benefit from a reduction in store and warehouse labor expenses of 7.5 percent
— A reduction in out-of-stock items resulting in a recurring annual benefit of $700,000 per $1 billion in annual sales for retailers who reengineer their current shelf fulfillment processes.
My spin: Hmm. What happens when technology collides. A technology enhancement helps one group of people but does not help another. Interesting dilemma – but what’s the solution?
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