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The problem to be addressed at Funko Pop is that after an inventory boom of 50% in the
last year, they were forced to throw away $30 million worth of plastic figurines. In Funko’s
search seeking ways to improve inventory management and decrease future chances of
overstock, could RFID technology solve this present issue? This analysis will explore the RFID
technology, evaluation of the problem, impact assessment, implementation, and the impact from
the perspective of Human Resources.
Radio-frequency identification (RFID) technology is used for a variety of purposes across
different industries. Its primary use is for automatic identification and tracking of objects or
assets using RFID tags. These tags contain electronically stored information that can be
wirelessly captured by RFID readers which enables real-time inventory management. RFID as a
new technology has created large amounts of interest in the field of supply chain. Young M. Lee
in his research paper explores the impact of RFID in this area when he covers how inventory can
be tracked more accurately in real-time which results in reduced processing time and labor. This
visibility passes throughout the supply chain from the manufactured shop floor to warehouses to
retail stores. (Lee) The concept of a traceability system like RFID is relevant in the Toy industry,
especially when it comes to the topic of overstock and warehouse space as in the case of Funko
Pop. The 50% inventory bloat and limited warehouse capacity followed by a sales plunge of 49%
in late 2022, left Funko with no choice but to dispose of their product. As the company
witnessed, liquidating stock is extremely costly and can devastate a business. Implementing a
traceability system can assist Funko Pop in solving its limited warehouse space and prevent the
chance of overstock before it reaches such extremes and is prepared for any future potential drop
in sales.
The Global Economic Conditions play a significant role in shaping the demand for
adopting this technology due to economic fluctuations in the shift of consumer spending. Most
recently, consumers bought less toys in 2023. Circana, a leading advisor on the complexity of
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consumer behavior, reported that in 2023, some challenges affected the economy, like prices
going up, people having less money saved, and more debt on credit cards. Because of this,
people spend less money, mostly buying only essential things and avoiding extra spending. By
the end of the year, sales dropped by 8% compared to the year before. (Circana 2024) The year-
end gifting season accounts for a large chunk of toy company’s annual sales and with consumers
purchasing fewer toys, this can lead to inventory accumulations and potential losses for toy
companies like Funko Pop. Secondly, analyzing competitors within the toy industry like Lego,
Mattel, and Hasbro, it’s prominent that these toys are all equipped with RFID tags assisting with
accurate and fast inventory. Funko Pop needs to adopt these practices to not get behind the rest
of the industry and ensure safety in further potential decline of sales.
Based on relevant research, a report by The Business Research Company forecasts global
sourcing of RFID tags to have a compound annual growth rate of 11% through 2025 which totals
an $18.94 billion evaluation. Future innovations for RFID technology include more durable tags
with the advancement of 3D printing technology that would authorize direct printing of
electronics in products as rendered. Another advancement that will impact the future of the
supply chain is new cloud-based capabilities. These applications and services can take the
majority of lifting away from IT and will enable coordination from anywhere. This can even
create just-in-time production a possibility across borders. (The Business Research Company
2023)
To measure the success of adopting RFID technology, Funko Pop should record the
accuracy and efficiency of inventory tracking and management processes before and after RFID
implementation. This would include assessing the reduction in inventory discrepancies and
improvement in data accuracy. Mississippi State University surveyed in 2013 on the effects of
profitability and efficiency in retail supply chains where they performed a regression analysis on
140 companies over eight consecutive data years. The results of the analysis read: “Comparing
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RFID companies’ ratios to the non- RFID companies’, RFID retailers have better performance in
inventory management efficiency of DII and ISR and labor cost efficiency of PEC in both period
1 (2008-2011) and period 2 (2004-2007). ” (Shin 2013)
The impact RFID technology creates in the Supply Chain is also effective regarding
Human Resource Management by combining RFID’s role of sending the information and HR’s
role of receiving it. The International Journal of Science, Technology, and Management covers
this effectiveness through their investigation of Effective HRM in Organizations Enabled by
RFID. By integrating RFID systems into employee ID cards, organizations can automate
attendance tracking and monitor employee movements within the workplace. This enables HR
managers to analyze patterns of behavior, such as time spent in different areas of the company
and frequency of interactions between colleagues, even in large organizations with thousands of
employees. With accurate data gathered automatically, HR departments can make informed
decisions about resource allocation, modify organizational policies, and optimize workforce
performance. Additionally, RFID technology offers advantages such as enhanced security, lower
costs, and easily documented information, reducing the need for manual tracking and minimizing
opportunities for manipulation. (Sekhara pg 358)
The Bible is a great resource to use when analyzing the importance of being aware of
one’s resources and staying resilient in difficult circumstances. Involving being aware of one’s
resources, Proverbs 27:23 says: “Be sure you know the condition of your flocks, give careful
attention to your herds." (ESV) In connection to the RFID Analysis, this highlights the
significance of businesses like Funko Pop being mindful of their financial resources through
maximizing efficiency and monitoring economic conditions. Philippians gives another principle
relating to contentment and finding resilience in all circumstances. Philippians 4:12-13 says: "I
know what it is to be in need, and I know what it is to have plenty. I have learned the secret of
being content in any and every situation, whether well-fed or hungry, whether living in plenty or
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want. I can do all this through him who gives me strength." (ESV) Businesses should conduct
adaptability and rely on faith to navigate through times of economic abundance and scarcity,
knowing all things work together for the goodness of God.
In conclusion, the study of RFID technology and the question of whether it could solve
Funko Pop’s inventory management issue revealed several key findings. Firstly, RFID
technology offers significant benefits in its ability to accurately track inventory producing less
process time and labor. This technology is prevalent in the toy industry and can be used to assist
Funko in preventing the chance of overstock. Secondly, the successful adoption of RFID requires
consideration of factors such as global economic conditions, competitors, and the technology's
future. Based on the decline in toy sales and the adoption of RFID from Funko’s competitors, as
the technology continues to advance, Funko needs to focus on not being left behind. Lastly, it's
important to measure the success of RFID implementation through regression analysis and
examining the effectiveness it’s had on other areas of business like HR.
Citation
Lee, Y. (n.d.). (PDF) exploring the impact of RFID on Supply Chain Dynamics. Exploring the
Impact of RFID on Supply Chain Dynamics.
https://www.researchgate.net/publication/4111908_Exploring_the_impact_of_RFID_on_supply_
chain_dynamics
Circana (Ed.). (2024, January 25). US toy industry sales decline 8% in 2023, while remaining
$5.7 billion above 2019 sales, CIRCANA reports. Licensing International.
https://licensinginternational.org/news/us-toy-industry-sales-decline-8-in-2023-while-remaining-
5-7-billion-above-2019-sales-circana-reports/
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The Business Research Company. (n.d.). Radiofrequency Identification (RFID) Tags Global
Market Report 2023. In Research and Markets (2023rd ed.). introduction.
Shin, S. (2013, August). Effects of RFID Technology on Profitability and Efficiency in Retail
Supply Chains. https://core.ac.uk/download/pdf/301360255.pdf
Sekhara, K. (2016, January). EFFECTIVE HRM IN ORGANIZATIONS ENABLED BY RFID:
AN INVESTIGATION. International Journal of Science Technology and Management.
http://www.ijstm.com/images/short_pdf/1453109383_272I.pdf
English Standard Version Bible. (2001)
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