How RFID Tracking Solutions Can Help Prevent Inventory Shrinkage

‍

In a survey conducted by the NRF’s National Retail Security Survey, the rate of retail shrinkage in 2022 climbed from 1.4% to 1.6%. This shows that inventory shrinkage is a big problem for businesses. Shrinkage occurs when real inventory falls short of the recorded inventory due to theft, errors, or damage. Most businesses incur losses from shrinkage. 

Businesses are now using RFID tracking solutions to counter the problem of inventory shrinkage. In this blog, we will learn how RFID solutions are improving and making inventory management more precise.

How RFID Technology Works?

RFID stands for Radio Frequency Identification, and it plays an important role in inventory management. The technology employs special readers and tags. All products have an RFID tag with a small chip containing product information. RFID readers send signals to tags, which reflect information. It is more convenient to trace products without the need to scan them. RFID tags are quicker and hold more information than barcodes. 

Why does Inventory Shrinkage Happen?

The average accuracy of retail business inventory is only 66%. The 33% inaccuracy is due to shrinkage. Shrinkage can take place in many different forms. One is theft, which can occur when customers or employees steal products. Another cause is miscalculation, which can happen when employees miscount the products in inventory. Products sometimes get lost in the warehouse. Defective products are another cause of shrinkage, as damaged or spoiled products cannot be sold. All these factors contribute to inventory shrinkage and can impact businesses considerably. 

How RFID Reduces Shrinkage

RFID tracking provides real-time information. Businesses always know where their inventory is; they can easily track it if it's stolen. RFID also makes audits easier. Instead of scanning products one by one, businesses can scan them all at once. This is more effective and reduces errors.

RFID also discourages theft. When an individual attempts to steal an item, managers are notified. RFID tags can even be associated with alarms. When an individual attempts to take an item away, an alarm sounds. This discourages thieves from stealing.

RFID also reduces errors. Labourers do not need to type in product data; the system scans tags, reducing human errors. Products no longer go missing in the warehouse, as RFID specifies their position precisely.

Cloud-Based Inventory Management System

RFID is compatible with an online inventory system, which stores the data online. The owners can see inventory at any time from any place. When a store is out of stock, they can reorder instantly. Cloud systems also update in real time. When a product sells, the system reduces inventory in real-time, eliminating overstock or stockouts.

A cloud-based inventory system also helps with security. Data is stored safely online, and only authorized people can see it, reducing fraud and errors. Businesses can also track inventory in different locations. Whether a company has one store or ten, it can monitor everything from one system.

Retail Inventory Management System

RFID offers significant advantages to retail shops. Most shops lose products to shoplifting, which continues to dominate retail shrinkage statistics. Both internal (29%) and external theft (37%) continue to dominate. RFID tags are used to prevent this. Exit doors use security scans on RFID tags. If a person attempts to leave with an unpaid product, alarms sound, making it easy to capture shoplifters.

Small Business Inventory Management Systems

Small businesses also face inventory problems. They do not typically employ many people, and mistakes in tracking stock can result in enormous losses. RFID makes it easy for them. Workers do not need to scan each product manually; the system automatically adjusts for stock.

Small enterprises also utilize cloud storage. They can view how much of a product they have in the store even when not present. If they run out of a product, they are reminded to stock it, keeping their customers smiling. Another advantage of this technology is cost savings. Small companies cannot afford to lose significant money due to theft or mistakes. RFID traces every product, reducing errors and removing lost stock.

Pharmaceutical Inventory Management

Pharmacies need precise tracking to keep track of their products. Medicines expire, and expired drugs cannot be sold. RFID makes monitoring expiry dates easy, guaranteeing safe drugs reach customers.

Thefts also take place in hospitals and pharmacies. Drugs are expensive and are stolen. RFID tags prevent that from happening. Employees are notified by the system when someone tries to steal a drug.

RFID also improves patient safety. Drugs can look similar, and when the wrong drug is given to a patient, it can hurt the patient. RFID ensures the right drug is given every time, avoiding mistakes in hospitals and pharmacies.

Healthcare Inventory Management in Dubai

Dubai hospitals use RFID to track their supplies more efficiently. They have tens of thousands of medical supplies, and monitoring them by hand is not feasible. RFID makes it easy for them. Hospitals also need instant access to supplies. During an operation, a surgeon may need a tool that must be readily available. RFID places all the tools where they belong. Another benefit is tracking reusable medical devices. Some devices are cleaned and used repeatedly. RFID tags track them, eliminating loss and upholding cleanliness.

The Future of RFID in Inventory Management

RFID technology improves yearly, and more businesses will use it in a few years. New RFID tags are smaller and cheaper, making them viable for small businesses. Cloud-based solutions are also on the rise. Companies will increasingly keep inventory information online, making monitoring even easier. Businesses will also use artificial intelligence (AI) with RFID. AI can predict product demand, allowing for stocking the right amount of products. RFID will also become more secure. New encryption will prevent hackers from accessing it. This guards information.

Contact Innovent for Trustworthy RFID Solutions in UAE

Inventory shrinkage should not be taken lightly. In 2023, the US retail losses from inventory shrinkage hit $142 billion, showing a staggering 25% increase from last year. To prevent shrinkage due to theft, damage, and inaccuracies, Innovent provides reliable solutions in the UAE.

We provide cutting-edge RFID tracking solutions for businesses. Our cloud-based real-time track system protects pharmacies, hospitals, and retail shops from shrinkage. With us, organizations minimize losses, enhance efficiency, and expand. Invest in Innovent's RFID today and manage your inventory.

References:

https://invue.com/resource-center/blog/6-retail-shrinkage-statistics

https://www.meteorspace.com/2025/01/16/important-inventory-management-statistics-you-should-know/

https://www.uvionix.com/post/142b-in-losses-due-to-inventory-shrink-in-2023

‍