Nov 25, 2015For the past year, Moods of Norway's clothing suppliers have been RFID-tagging all garments sold by the stores that the Norwegian retailer operates. The company announced that its suppliers are now using Checkpoint Systems Zephyr 2 EPC ultrahigh-frequency (UHF) RFID labels, which employees read weekly at 14 of its stores in order to improve inventory accuracy. Based on how the RFID system has improved stock-level accuracy, says Hans Petter Hübert, Moods of Norway's supply chain manager, the store is able to ship goods to online customers from the store location closest to each shopper. That, he says, would have been impossible without RFID, since inventory accuracy was simply not high enough to ensure that goods were available.
Moods of Norway is also testing fixed RFID readers at its distribution center for receiving and possibly shipping. The company has already tested a fixed reader at one store for inventory-tracking purposes, with future pilots in the works for 2016, both at stores and the DC.
The retailer operates 18 Moods of Norway stores—most are in Norway, with the exception of one in Sweden and another in California—and three of those 18 shops are discount outlets. It sells clothing and accessories at each store; approximately 90 percent of its sales are clothing rather than accessories. All 14 of the company's Scandinavian, non-outlet stores are now equipped with handheld RFID readers provided by Nedap, while the firm is still in discussions about implementing the system at the California store.
In January 2014, Moods of Norway began testing RFID technology and selected Nedap's !D Hand handheld RFID reader to enable personnel to perform inventory counts on a weekly basis (see Norwegian Apparel Company in Good Mood Over RFID). Employees walked through the store carrying an !D Hand and an Apple iPod, capturing the ID numbers of all garment tags in the store-front and back rooms, and the reader then forwarded the collected data to the iPod via a Bluetooth connection. That information was forwarded to Nedap's cloud-based server, which displayed a dashboard viewable by company personnel.
Initially, only men's shirts and suits were being tagged, but suppliers are now attaching tags to every garment sold at the 14 participating stores. Moods of Norway recently switched to Zephyr 2 RFID labels due to their low cost and the availability of Checkpoint production services to get the labels to suppliers worldwide. The majority of suppliers are currently located in China, though Hübert says about half of all products will be made in Europe by next year. Whether in Asia or Europe, he notes, Checkpoint can quickly provide the RFID labels that suppliers need.
The data is being stored and interpreted on Nedap's cloud-based software, which is integrated with Moods of Norway's enterprise resource planning (ERP) system. In September 2014, all of the retailer's clothing suppliers had begun attaching a different make and model of tag to each item, with a total of 30 to 40 manufacturing sites involved, and then shipping the goods to Moods of Norway's distribution center in Norway. The company has been testing the use of an RFID tunnel at the DC to expedite the receiving and shipping of goods to stores (the test does not include integrating that data with the inventory-management software). The RFID tunnel, consisting of an RFID reader and an Impinj Brickyard antenna supplied by Norwegian systems integrator HRAFN, captures the tag IDs of items received by, or shipped from, the facility. To date, the testing has focused on determining how well the tag IDs are captured, and on how effective the RFID-enabled process is compared with manual methods of checking goods as they arrive at or leave the facility.
Once the goods arrive at the stores, they are placed in the back room or on the sales floor. (The company doesn't gain value from reading tags when products arrive, because shipping orders from the DC are typically very accurate.) Then, each week, a store clerk walks through the inventory and reads each tag, updating the inventory-management software. In that way, the company knows which products are onsite at any given location.
The retailer uses an automated replenishment system that employs sales data to trigger the reordering of goods from the distribution center. One benefit of using RFID, Hübert says, is that there is less confusion regarding these replenishment orders. Stores often complained that the DC was sending the wrong items, he explains, or failing to send items that needed to be replenished. However, he says, with the weekly inventory counts at the stores, the company has learned that the picking of goods for replenishment orders at the distribution center is highly accurate, and that the confusion was being created by inaccurate inventory information at the stores. Because store personnel didn't clearly understand what did and did not require replenishment, they didn't realize that the DC shipments were, in fact, correct.
Su Doyle, who heads Checkpoint RFID industry programs, says that her company offers quick availability to Moods of Norway suppliers based on its Check.Net automated ordering system, fast production times and production plants located close to major manufacturing centers around the world. "We provide affordable pricing through print-on-demand capability, which produces high-quality tags in variable size batches without many of the upfront costs of offset printing," she says.
Last summer, prior to adopting the Zephyr 2 tags, Moods of Norway tested an Impinj xArray reader at one Norwegian store, working closely with Impinj and Nedap to deploy the system. The companies tracked 700 tagged items around the store and found that they could accurately view the locations of those goods in real time. More testing will be needed, Hübert says, to determine whether this kind of fixed reader would be permanently deployed. The company is also considering installing readers in checkout counters to interrogate garments' tags at the point of sale, or a fixed reader at the doorway for electronic article surveillance (EAS) detection.
Other retailers are showing interest in RFID on a global scale, says Checkpoint's Doyle. "Apparel brands are releasing more collections, more frequently, to provide shoppers with something fresh and new every time they visit," she states. This shortens the design-to-delivery cycle for merchandise and labeling, resulting in goods that are constantly redesigned, prototyped and released to market, sometimes in small batches, sometimes in high volumes. "Our in-house design services, print-on-demand services and automated production shorten turnaround time, helping apparel brands and retailers adapt to faster cycles and variable demand."
Since the RFID system was implemented last year, Hübert reports, online sales are now up by 20 percent thanks to the ability to ship goods from stores. When a customer places an online order, the purchased goods are shipped either from the central warehouse or from the closest store. By better knowing the inventory at each location, the company can have goods shipped faster, thereby leading to increased sales. RFID-tagged goods have been outperforming comparable to non-RFID tagged items since the solution was installed, he says, simply because the products were more likely to be on the shelf and available to shoppers.
According to Hübert, inventory accuracy since the RFID system was implemented has approached 100 percent. "Ninety-eight percent inventory accuracy gives you a much better service level and shelf availability compared to the typical 70 to 80 percent that we had before RFID," he states, adding, "This is always more important at the end of the season, since [the quantity of the promotional] sales is higher and accuracy without RFID is at its lowest."
During a period of six weeks, Hübert estimates, the improvement in revenue pays for a full year's tag supply—which is, he says "by far the main cost driver in a project like this."
The RFID system still requires some adjustment as the company moves forward, Hübert notes. For instance, in some instances, goods from a supplier have been arriving at the DC without having been tagged. This has happened in the past, he says, when the suppliers simply didn't have enough tags on hand and thus chose to ship goods without them. In the future, Hübert says, Moods of Norway plans to charge its suppliers a fee for every item shipped without a tag.
