What is RFID Shipment/Order Verification?
RFID Shipment/Order Verification is the practice of using RFID technology to verify a customer’s order, or that the shipment of goods is correct before it ships to the customer. Typically, order fulfillment is completed manually by personnel, and the shipment is verified by the same person or another employee. Relying on employees to fulfill and verify customer orders can result in mistakes and incorrect shipments due to human error.
The process of determining if a customer’s order is correct is often referred to as Order Verification, Shipment Verification, Pre-Shipment Inspection, or simply as a Quality Control measure or inspection.
Why is Shipment/Order Verification Important?
Let’s take a look at the impact that incorrect shipments can have on a company.
A study focusing solely on B2B ecommerce returns, found these two alarming statistics:
“On average, B2B buyers place an online order with their top 10 suppliers at least once a week. But their online experience is far from perfect, with 44% of buyers experiencing online order errors with their top 10 suppliers at least every 2 weeks.”(2)
“Human error, which includes incorrect product selection, purchase entry, shipping information, and account data entry is experienced by between 23% and 29% of buyers.”(2)
As the statistics show, ecommerce order errors are more frequent then most people would expect. A Shipment/Order Verification system works to prevent human error and helps to:
- Add visibility into daily shipments, inventory usage, and workflow
- Add traceability into each individual item received or shipped
- Reduce errors in fulfillment and shipping, saving company time and money
- Create a better customer experience due to a lower error rate
Why One Wrong Shipment is a Big Problem.
Now, knowing that incorrect shipments occur more often than what companies would like to believe, let’s look at the real cost behind an incorrect shipment.
Loss of Company Money
The negative impact that an incorrect shipment has on a company can be caused by:
- Skewed inventory numbers due to the wrong products being shipped.
- Leads to hours of more work for the operations and accounting departments once inconsistencies are found. More Time, More Company $$$
- Extra time to pick, pack, and ship the correct products to the customer. More Time, More Company $$$
- Added shipping cost to reship correct items to customer, sometimes at a faster ship speed. More Company $$$
- Added shipping cost to ship back the incorrect products. More Company $$$
One of our Custom Solutions specialist, Tim Pribyl, talks a little about the issues his customers have struggled with before deploying an RFID Shipment/Order Verification System.
"…When [the client] ships the incorrect products that were supposed to go to a different client, it is the biggest problem. Not only do they have to deal with the reverse logistics of bringing back the product, but they’ve also doubled the number of clients affected by the error. Also, because of the operational impact/delay that a B2B customer deals with, the client is often penalized a set monetary fee per incorrect shipment.”
- If incorrect products are not shipped back, the company loses the purchase cost of the products. Loss of Company $$$
- Extra time on employees to receive and restock the incorrect products if they are shipped back.
More Time, More Company $$$
- While the return and restock of the products could solve the skewed inventory issue, it could also skew the inventory numbers further, depending on a company’s restocking procedures. More Time, More Company $$$
- If the returned products were unpackaged or used in any way, employees might have to B-stock these items at a lower cost than normal, which would lead to lower profit margins. Loss of Company $$$
- Added customer service time dealing with the problem, including phone or email exchange with customer, creating an issue/ticket in company system, creating a new order in system, creating a return label, notifying warehouse staff, and multiple customer follow-ups. More Time, More Company $$$
- Offering the customer future order incentives in order to make up for the bad customer experience is very common, but usually results in a loss of company money. Incentives can add up more than expected depending on what was offered, especially offers like free shipping or a percentage discount. Loss of Company $$$
Negative Customer Impact
Along with the overall negative experience of receiving the incorrect product, here are the other, non-cost related negative consequences of one incorrect shipment.
- Dealing with customer service is time-consuming and, depending on the company and customer, can be extremely frustrating. A negative customer service experience could cost the company their customer for good.
- Packing and shipping back incorrect products is a hassle for customers. It is perceived that the customer then is ‘paying for’ the company’s mistake which only adds to the negative customer experience.
- The additional lead time expected for the customer to receive the correct product could be too late for the customer’s needs.
- A brand’s overall reputation could be impacted if the negatively affected customer shares the experience on their website or via social media.
- Order cancellations and long lead-times could result from skewed inventory numbers due to the incorrect shipment.
What Does an RFID Shipment Verification System Look Like?
An RFID Shipment Verification System can be setup in multiple ways depending on the amount of data a company wants to gather, preferred level of automation, and the application environment.
The simplest system could utilize a USB reader, desktop reader, or handheld RFID reader to scan items being placed inside a shipment, or items already packaged up. As each product’s RFID tag is read, software can be used to validate the product’s data against a customer’s order and notify the user if the information does not match.
For a more automated approach, some companies replace the desktop or handheld scanning process with custom RFID equipment on conveyor belts, pallet wrappers, overhead systems, or dock doors. Not only do these hardware options create a more automated, hands-free system for outgoing packages, but they can also be used to scan incoming inventory shipments as well.
Each product must have an attached RFID tag in order to be read, which is usually either applied at the time of stocking or applied prior to shipment. If RFID tags must be applied prior to being placed in inventory, then an RFID Inventory Management system can be used in conjunction with Shipment/Order Verification system. Together, these RFID applications can be integrated with a pre-existing Warehouse Management System, or WMS, to create one solution that is incredibly streamlined, efficient, and effective for most all inventory and warehouse functionalities.
Tim explains how a typical RFID Shipment/Order Verification System is usually setup –
“The RFID Order Verification System communicates directly with the existing Enterprise Resource Planning system, Point Of Sale system, Point Of Rental system, or Order Management Systems. When a company receives a new order, the RFID Order Verification System will be notified that the new order contains “X” number of products and will be updated with the product-specific information for each item included in the order.
The Operations Team will begin fulfilling the new order, and the RFID Order Verification System will provide real-time indication on the percentage of order completion, along with information regarding products that are missing from the order, and if any incorrect products have been included in the order.
Stack Lights, Alarms, and LED displays are used to provide the status of the new order for the Operations Team. For example, a visual display can tell a forklift operator that he/she has completed 75% of the order, and that there are 5 pallets of product that still need to be loaded. Another example of a visual indicator is a stack light flashing red and an alarm going off if the forklift operator mistakenly loads the incorrect pallet onto the truck.”
For more information on RFID Shipment/Order Verification Systems and what they provide, comment below or contact us!
To learn more about RFID Inventory Applications, check out the links below!