RETURN ON INVESTMENT

 

     Return on investment (ROI) from implementing RFID systems in the Retail industry supply chain is not well known since RFID system implementation is in its infancy. Additionally, most cited cases revolve around large firms that were early movers in system implementation and these firms have provided few details. 

 

     ROI from RFID system implementation will vary considerably from business to business based on the structure of their supply chain (level of need control) and how they integrate the new technology into their overall Supply Management systems.  Expected ROI “estimates” include:

 

·      Retail industry survey of 59 firms estimate (on average): 33% ROI overall, 37% improvement in customer service and 45% improvement in (distribution) efficiency.13

 

·      Cost savings for supply distribution (estimated by Pennsylvania State University Center for Supply- Chain Research):   80% savings in labor cost, 20% savings in “put away/replenishment and 80% saving in check-in (in distribution center). 1

 

·      Gillette estimates a ROI in 5 years in savings in sales and productivity alone.14

 

Estimates are Wal*Mart will save $6.7 billion a year in reduced labor costs,  $600 million in out-of-stock supply chain cost reductions, $575 million in theft reduction, $300 million in improved tracking throughout warehouse and distribution centers, and $180 million