Vendor Perceptions of How RFID can Minimize Product Shrinkage in the Retail Supply Chain

Abstract

The objective of this paper is to investigate product shrinkage in the retail supply chain, and to consider how radio frequency identification (RFID) could act as a partial solution toward a retailer's loss prevention strategy. The research uses semi-structured interviews to collect data, and a qualitative content analysis to present the results. Given that the number of RFID deployments in the retail supply chain is limited, RFID vendors, resellers, and associations are instead used to gather the current value propositions. Representatives from nine Australian RFID vendors and associations were interviewed in August and September of 2006. The results indicate that RFID can be used to minimize losses in the supply chain significantly and particularly address product authentication issues. For RFID to be adopted as a loss prevention mechanism, however, organizations must have some visibility of what constitutes product shrinkage in their retail supply chain, and the resultant monetary losses ensuing. All too often, return on investment (ROI) calculations on the adoption of RFID in retail, is calculated only on known sources of product shrinkage, while unknown sources are unaccounted.