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THE SUPPLY CHAIN ROI FOR APPAREL
MANUFACTURERS
CNRFID 2011
Who are we?
Purpose: to investigate the business value and implications
of RF technologies
Established in 2005
~ 15 faculty and ~100 students
15 center employees (students and full time staff)
Founding member of GRFLA
RFID Center
15,000 sq. ft. lab in Hanna’s Candle Co.
Replicates RFID in supply chain: dock doors, conveyor,
impact doors, forklifts, pallet wrappers, retail store, etc.
Serves as research and teaching facility
Provides services to the industry (tag type, tag placement,
reader/antenna testing)
Home of Arkansas Radio Compliance
The Three Current Markets of Retail
RFID
I. Retail Operations (established)
Retailer Hardware
Retailer Software
Retailer Integration
Data Analytics
II. Supplier Source Tagging (established)
Inlay Manufacture
Tag and Ticket Conversion
Printing and Encoding
Service Bureaus
Serialization Management
The Three Current Markets of Retail
RFID – Con’t
III. Supplier Operations (emerging)
Hardware for Data Capture
Management and Control Software
Supplier Focused Integration
Change Management and Process Improvements
Data Sharing and Management
Setting the Stage: Current State of
RFID in US Retail
Rapidly Expansion to Item Level Tagging
US – Walmart, Dillard’s, American Apparel, Macy’s, JC
Penney, Bloomingdale’s, Banana Republic, etc.
All denim and basics tagged in all Walmart stores
since July 2010
Recent Macy’s announcement- Tagging Q3 2012
Many-to-Many vs. Vertically Integrated
Various other retail expansions
Investigate - Worked with several retailers to
understand major use cases
Identify - Common use cases among retailers
Feasibility Testing - Evaluated RFID against use cases
in a controlled setting
Collect Field Data - Performed multiple RFID Studies in
real world settings (Walmart, Dillard’s, JC Penney’s,
Bloomingdale’s, etc.)
Validate – Analyzed data for business value, published
results
Business Case Study Process Retailer ROI
Published multiple RFID Studies
Walmart, Dillard’s, JC Penney’s, Bloomingdale’s, etc.
Freely Available on Website
Major Findings
Perpetual Inventory Accuracy (PI Accuracy) 20-30% improvement across multiple retailers
95%+ PI Accuracy in RFID enabled stores
In-Stock Replenishment improvements based on improved PI
Continued Benefits Store Item Location
Loss Prevention
Returns Management
Etc.
Retailer Study Success
Supplier/Brand Owner ROI Study
Q: Exactly what are we trying to do?
A: Find common use cases for RFID in supplier
operations. Investigate if suppliers can find a way to
leverage RFID to improve their operations and save
money without relying on retailer in-stock and sales
improvements
Supplier ROI Study – How?
Phased Approach – Sponsored by GS1 US and AAFA
Multiple phases of the study to allow suppliers to
increase their tagging
Supplier Study takes much more time
Retailers could perform controlled pilots
Suppliers are moving directly into large-scale source tagging
Suppliers focusing on Source Tagging – takes more time to
get to operations and supply chain use cases
Phase I – Released January 2011
Freely available on website
Phase II – Release January 2012
Investigate - Site visits to several suppliers to
understand major use cases
Identify - Common use cases among suppliers
Supply Chain Map – Following Slides
Feasibility Testing - Evaluated RFID against use cases
in a controlled setting
Collect Field Data - Examine RFID against use cases in
real settings (Phase II)
Validate - Understand Many to Many Relationship
(Phase III)
Supplier ROI – Phase I
Supplier ROI Supplier Investigation Oh, The Places You’ll Go
Supplier ROI Use cases
No. Apparel Use Cases No. Apparel Use Cases
1 Outbound automation 31 Plan-o-gram compliance
2 Inbound and outbound audit processes 32 Shelf replenishment
3 Electronic proof of delivery 33 EAS consolidation
4 Right tag on product 34 Reduce cycle count time
5 Supply chain data quality 35 Receiving accuracy
6 Could eliminate audits & manual inventory 36 Eliminate physical inventory counts
7 Smart Inspect 37 Carton accuracy
8 Country of origin 38 3rd party consolidation efficiency
9 FTZ (Free Trade) 39 Increased store PI accuracy
10 Trade agreements 40 Country specific shipping documentation
11 Traceability through supply chain 41 Country specific care lables and placement
12 Track deffectives & recalls 42 Inventory tracking within DC
13 Pick/ pack speed 43 Prodcut recall
14 Pick/pack accuracy 44 Electronic proof of delivery
15 Detail of available data 45 Counterfiet tracking
16 Item Level data 46 Inbound quality
17 Claims accuracy 47 Outbound quality
18 Potential to eliminate claims 48 PI accuracy
19 Brand visibility in store (integrated) 49 Shelf replenishment
20 Speed and accuracy 50 Dormant inventory reduction
21 Inbound quality 51 Reduce shrink
22 Outbound quality 52 Electronic proof of delivery
23 FTZ and first sale 53 Shopper item interest vs. purchase
24 Track returns 54 Density and space planning
25 Tracking through processing areas 55 Multi-channel inventory management
26 Drive accurate costing 56 Inventory tracking
27 Vendor pack accuracy 57 Security and shrink reduction
28 Case pack accuracy 58 Shrink due to employees
29 Source validation 59 Accurate export documentation
30 Shipping validation 60 Store to store transfers
Supplier ROI Use case process map
Supplier ROI Use case process map
Supplier ROI – Phase I Setting the Stage
Established baseline of supplier preparedness for
Phase II
How much are they really source tagging?
When are they at steady state source tagging?
Established common list of use cases
Increased Supplier confidence in investing in RFID
source tagging
Established protocols for working with suppliers
Retail Brand Owner Academic Study Workgroup
Investigate - Site visits to several suppliers to
understand major use cases
Identify - Common use cases among suppliers
Supply Chain Map
Feasibility Testing - Evaluated RFID against use cases
in a controlled setting
Collect Field Data - Examine RFID against use cases in
real settings
Validate - Understand Many to Many Relationship
(Phase III)
Supplier ROI – Phase II
Supplier ROI Phase II – Sneak Preview Narrowing the Focus
Inbound/Outbound Distribution Center Audit
#1 identified benefit across all participants
100% DC Inbound audit of source tagged items
Sometimes only takes 1 RFID reader
100% DC Outbound audit
Sometimes only takes 1 RFID reader
Validation of Pick/Pack process
Potential for massive impact on Retailer Claims
Claims can be in the millions of $
New data source to check retailer claims
Supplier ROI Phase II – Sneak Preview Narrowing the Focus
Inbound/Outbound Distribution Center Audit
Longer Term Benefits
Process Changes in Pick/Pack
Increased Pick/Pack Accuracy
Decrease labor cost for target Pick/Pack Accuracy
Data Exchange
Claims validation and outbound audit leads directly to data
exchange
Electronic Proof of Delivery – Outbound Audit and data
exchange lead directly to joint use cases such as EPOD
Supplier ROI Phase II – Sneak Preview Narrowing the Focus
Supplier Size Matters
Potentially less cost and shorter term ROI for small and
mid-tier apparel brand owners
Pushing Back Upstream
Customs Exchange and other upstream applications
Upstream International Supplier RFID Operations
Next Steps – 2012 and Phase III
Continued Expansion of Supplier Use Case and
Business Case investigation
Larger tagging volumes, larger percentages of
tagged product
Moving to a true Many-to-Many Environment
More and more retailer implementations
More and more suppliers tagging
Project Sponsors
GS1 US
American Apparel & Footwear Association
University of Arkansas RFID Research
Center Board Members
Special Thanks to the Participating Retail
Brand Owners and Suppliers
Thank You For Your Support
Justin Patton
479.236.5890
David Cromhout
479.856.1120
For copies of white papers, visit
http://itri.uark.edu/research
Keyword: RFID