Minimizing Product Shrinkage across the Supply Chain using Radio Frequency Identification: a Case Study on a Major Australian Retailer

This paper identifies the contributing factors of product shrinkage and investigates the current state of anti-theft technology as part of the loss prevention strategy for a major Australian retailer. Using a case study approach a total of eleven interviews were conducted with employees of the retailer to identify factors contributing to product shrinkage and ways to overcome these through the use of radio frequency identification (RFID) technology. Known sources of product shrinkage included: warehouse discrepancies, internal and external theft, product recalls, shop return fraud, extortion, human and system error, poor stock control, poor rotation of stock, misplaced product items, lost products, product spoilage and damage. Each of the retailer´s stores, in the chain of approximately 700, loses about 350000 Australian dollars to product shrinkage every six months. This paper argues that RFID would act as a partial solution toward the minimization of the retailer´s product shrinkage and provide greater visibility throughout the supply chain.