RFID/EPC Technology for Apparel Business

In the USA the whole apparel industry from Walmart to Saks Fifth Avenue is taking item level RFID/EPC in use. Manufacturers, suppliers, retailers, department stores, academia, and GS1 US co-operate. In Europe Gerry Weber is already utilizing the technology. Should we do now something in Finland too?

Barcodes are very familiar to all of us as consumers. The cashier reads optically the barcode at the point of sales (POS) and the item is recognized. At the same time the information of the transaction is recorded in the information system.

At the POS and goods receiving the human operator looks for the barcode, aligns it with a reader, and takes care that the code is read only once.

With RFID/EPC one does not need a direct visibility between the reader and the code. One can read hundreds of products into the system in just one second. The reading range can be adjusted as needed in the application from centimeters to meters. With RFID/EPC technology one can also read products placed inside a closed case accurately. This cannot be done with barcodes.

In the evolution RFID/EPC is the next step after the barcode.

However, these two will coexist and this has been taken into account in the GS1 standardization organization. In the GS1 system the markings can be done with barcodes or RFID/EPC’s  to different levels: item, case, or pallet. In the item level the barcode contains the product code. This information is also on RFID/EPC tag, but, in addition it contains a unique serial number. This way it does not matter when the same product marked with RFID/EPC is read several times at the cashier or when an inventory is carried out. The information system uses the serial number and counts each item only once.

When enterprise resource planning (ERP) systems are considered the more automatically and with less work we manage to gather information about the goods flow the better. Visibility leads to better understanding of our operations and processes. What you can see you can manage and improve. The EPC architecture enables accurate, immediate and cost effective visibility of information throughout the supply chain.

The goods flow is monitored from the ship to the retail store.

If everyone in the value network manufacturer, supplier, distribution center, retailer, department store, after sales, is using the same standardized GS1 markings from the beginning of the chain everybody can benefit. Barcode is inexpensive because it is printable. RFID/EPC tag has a small microchip and an antenna. RFID tag can be placed for example in a price or a care label.

When receiving the goods the products are identified as they are moved with a forklift and pass a RFID gate. A handheld RFID reader is used when the stock is counted in the warehouse, backroom, or sales floor. The most important is of course interfacing all the gathered information seamlessly to the ERP system.

With RFID/EPC the receiving of the goods becomes faster and accuracy improves.

The logistical benefits occur in several places in the value network almost always when goods are dispatched and received.

Stocktaking in the shop floor takes hours instead of days with handheld RFID/EPC readers. The products misplaced by the customers can be found and returned to their proper places. Better understanding of the goods in the shop improves replenishment. There are no out-of-stock situations. According to a research carried out by the university of Arkansas RFID/EPC increases sales even 2% to 15% due to improved on-shelf-availability.

The new electronic article surveillance (EAS) systems are compatible with RFID/EPC tags. All the items are already equipped with a tag in the manufacturing and no additional EAS tagging is required.  With RFID/EPC based EAS we also know exactly what was stolen and can immediately do replenishment.

There are also more benefits for the consumer than on-shelf-availability. When goods are marked with RFID/EPC they can be identified in a smart fitting booth. With an application and a touch screen the consumer can browse the different product variants, and look at the product information. In some cases the consumer can find additional products that match with the product she or he is interested in.

Taking RFID/EPC into use in a company is a rational decision to enter an internal development project. There are investments, benefits and payback time. In GS1 Uconnect  conference in June, 2011Macy’s told that the return on investment (ROI) in their RFID/EPC investment will be the biggest one in their whole history!

Christian von Grone, CIO, Gerry Weber explained in the annual RFIDLab Finland Spring Seminar in May, 2011 that Gerry Weber will make money with its RFID/EPC investment. And even more money if all the other players in the apparel industry including the competitors are also utilizing RFID/EPC. He also explained that leveraging only the benefits in logistics does not provide enough payback. One must also include the potential benefits from the shop floor.

On the global level there is no doubt any more whether RFID/EPC is taken into use in the apparel value network. The more relevant question is how to cope with the scaling to high volumes.

According to a survey by IDTechEx in 2011 RFID/EPC tags are first time being used more for tagging apparel than all the other RFID applications combined. This indicates that in apparel the companies classified as the early majority are now joining the early adopters.

Apparel is one of the fastest growing RFID markets, estimated to increase 8.9 times in value 2011-2021.This rate is about double the overall RFID market growth. For apparel in 2021 20 billion RFID/EPC tags would be sold annually, creating a market of $1 billion spent on tags, and In addition $670 million per year will be spent on RFID/EPC infrastructure.

Apparel RFID/EPC is landing into Finland too. Retailers will soon notice that the products coming from aboard have RFID/EPC tag. In that case it is important to have knowledge about potential benefits and how to take advantage for your own company and your consumer customers.

It is expected that RFID/EPC tag will be required in practice for apparel that are exported and sold for example in North America or Central Europe. Preparing in advance secures the current market share and may even enable growth of the market share in this change.

Jukka Wallinheimo

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