Clothing Manufacturer Invests Its ROI in RFID

By Rhea Wessel

Aug. 21, 2006—Gardeur AG, based in Moenchengladbach, Germany, manufactures pants and jeans for men and women, and supplies them to department stores and upscale boutiques. The company sews its garments at wholly owned plants in Germany and Tunisia, and at order manufacturers in Eastern Europe. Founded in 1920, Gardeur reported sales of 93 million euros in 2005, delivering 2.8 million garments—about half of which were exported. Gardeur also runs more than 630 boutiques in stores worldwide.

In 2003, Gardeur decided to deploy an RFID system to get a better view of its supply chain, reduce shrinkage (the loss of goods), increase its efficiency and gain experience with the technology. At the time, the company didn't know how many garments arrived at its main warehouse and distribution center, nor was it able to confirm that all goods shipped from production sites were actually delivered to the warehouse. And when garments did arrive, employees had to spend a lot of time manually sorting and counting the different styles, sizes and colors. In addition, as a supplier to Galeria Kaufhof, a Metro Group member that plans to use RFID across its supply chain, Gardeur knew it would be required to tag garments in the future.



Gardeur chose to work with Infineon's RFID division because it felt secure about the company's technology know-how, says Dominik Berger, managing director of RF-iT Solutions GmbH in Graz, Austria. Infineon's RFID Software and Solutions division spun off and became RF-iT Solutions in June 2005. For the RFID pilot, the company decided to track clothes moving from its production site in Augustfehn, Germany, to its central distribution warehouse in Moenchengladbach. Individual items were tagged and placed on a trolley. Before loading them onto trucks, workers read the tags as the trolley passed through a gate equipped with an RFID interrogator. The tags were read again when the clothes arrived at the central warehouse and distribution center.

Deployed in October 2004, the pilot ran for three months. Gardeur continued to use the system to track inventory for a year and a half, then decided to roll it out company-wide. Within the first year of operation, the RFID system met the goals Gardeur had set-and more: It produced a return on investment sooner than expected.

"RFID has helped us reduce manual labor and allowed us to better account for goods shipped and received," says Thomas Ballweg, who heads the project at Gardeur. He attributes the ROI to the fact that the system reuses RFID tags, reducing the cost of hardware. Other ROI benefits come from better inventory management, more precise fulfillment of manufacturing orders, less shrinkage and fewer customer rebates due to a more reliable delivery process.

"Our savings will allow us to invest in the extension of the RFID solution," says Ballweg. "The system's functionality is so convincing that our customers on the retail side have already shown interest in extending the solution to their part of the supply chain."