PapersReference #: ITRI-WP154-0910 Date: September 1, 2010
RFID-Enabled Visibility and Retail Inventory Record Inaccuracy: Experiments in the Field
Accurate inventory records are key to effective store execution, affecting forecasting, ordering, and replenishment. Prior empirical research, however, shows that retailer inventory records are inherently inaccurate. Radio Frequency Identification RFID enables visibility into the movement of inventories in the supply chain. Using two different field experiments, the current research investigates the effectiveness of this visibility in reducing retail store inventory record inaccuracy IRI. Study 1 used an interrupted time series design and involved daily physical counts of all products in one category in 13 stores 8 treatment and 5 control of a major global retailer over 23 weeks. Study 2, which used an untreated control group design with pre-test and post-test, the number of categories was expanded to five and the number of stores to 62 31 treatment and 31 control stores. The results from both studies provide guidance for researchers and practitioners for the deployment of RFID in the retail store by 1 demonstrating that case-level tagging can be effective in reducing IRI with the ecological validity provided by a field experiment, and 2 providing the key insight that the technology is most effective for product categories characterized by known determinants of IRI.