RFID tagging, the process of applying RFID tags at an early stage in the supply chain, plays a crucial role in enhancing inventory visibility, reducing operational inefficiencies, and improving overall stock accuracy. Now more than ever, we are seeing an increasing number of retailers eager to understand the processes and options that best suit their organizations. There are multiple options to consider as you start your source tagging journey, each with its own advantages.

1. Assess Business Needs – Identify key objectives, such as reducing shrinkage, improving inventory accuracy, or enabling self-checkout.
2. Choose the Right Tagging Location – Based on operational structure, supply chain complexity, and cost considerations, determine where tagging makes the most sense.
3. Align with Suppliers & Stakeholders – If opting for manufacturer tagging, ensure suppliers are onboard and capable of implementing RFID tagging.
4. Invest in the Right Technology – Select appropriate RFID tags, printers, and encoding solutions that integrate with existing inventory systems.
5. Pilot Before Scaling – Conduct a test run in a controlled environment to measure effectiveness and identify process gaps.
6. Train Teams – Whether at the DC or store level, ensure staff understands RFID application best practices and proper scanning procedures.
7. Measure & Optimize – Track key performance metrics (e.g., read accuracy, tagging speed, impact on inventory counts) and continuously refine the process.

Now that you’ve thought through your strategic goals and have aligned your teams, focus on the first step of execution.

1. At the Manufacturer (Source Factory Tagging)
   Benefits:

   • Ensures consistent tagging for all items.
   • Reduces labor costs downstream since tagging is done at the point of origin.
   • Minimizes the risk of missed items, improving overall accuracy.
   • Tags are applied in a controlled environment, ensuring proper placement.
   • Enables seamless inventory tracking from production to point-of-sale.

2. At the Warehouse
   Benefits:

   • Provides a checkpoint to verify and tag any untagged items from manufacturers.
   • Offers flexibility in tag application if different retailers have varying requirements.
   • Allows businesses to tag only necessary items, reducing costs.

3. At the Distribution Center (DC Tagging)
   Benefits:

   • Allows businesses to tag items closer to the final retail destination.
   • Provides a chance to address any gaps in tagging from previous supply chain stages.
   • Ensures that only products destined for RFID-enabled stores are tagged, optimizing costs.

4. At the Store
   Benefits:

   • Offers control to retailers, ensuring all products entering the store are tagged.
   • No dependency on suppliers or upstream tagging compliance.
   • Useful for products with unpredictable demand or short lifecycles (e.g., seasonal items).

Source tagging enhances inventory visibility, accuracy, and efficiency. The optimal tagging location depends on business goals, supply chain structure, and resources. Manufacturer-level tagging maximizes efficiency, warehouse tagging offers flexibility, and store-level tagging ensures last-mile control.

A strategic source tagging initiative can significantly improve inventory accuracy and operational performance but every retailers’ journey is different and should be custom built based on their unique circumstances and objectives. During exploration, ensure you are aligned with a partner who can provide the expertise to build out each unique rollout to scale to meet you and your team wherever you are, and the services that take the load off ensuring you can focus on your most valuable asset – your customers.

Get Started: Sensormatic RFID: Retail Loss Stops Here

Shak Sani is the RFID Inventory Intelligence subject matter expert at Sensormatic