Aug 01, 2010Several major U.S. retailers are moving forward with projects that use radio frequency identification to track apparel items in stores—but they're being very quiet about their plans, for several reasons. Some retailers see the technology as a competitive advantage, and they don't want to tip off their rivals. Others don't have enough data, or their plans aren't mature enough to share publicly. And some just don't want to be seen as forcing RFID-tagging on their suppliers, especially after the consumer packaged goods (CPG) industry's unsuccessful experience with RFID.
Retailers, such as American Apparel, that manufacture their own goods can apply RFID tags at the point of manufacture and achieve efficiencies throughout the supply chain. But those that sell apparel from different manufacturers have been tagging items either in their distribution centers or when the goods arrive at the stores. The process is slow, labor-intensive and inefficient, so they would like to see their suppliers do the tagging.
Some apparel retailers with solid plans to use RFID are aiming to bring their apparel and footwear suppliers on board by proving there are real benefits for them. To that end, they're participating in pilots to determine the value to manufacturers. One such initiative—a research project by the University of Arkansas' RFID Research Center—receives funding from a consortium that includes the Voluntary Interindustry Commerce Solutions Association (VICS), the Council of Supply Chain Management Professionals (CSCMP), the American Apparel and Footwear Association (AAFA) and GS1 EPCglobal.
Based on case studies of apparel suppliers that have tagged merchandise at the point of manufacture—including the Charles Vögele Group, Lemmi Fashion and NP Collection in Europe—RFID Journal believes there are benefits for suppliers: better tracking of goods made by third-party manufacturers in Asia, reduced time and labor to receive goods into warehouses, and improved packing and shipping accuracy. Lemmi Fashion, for instance, tags goods only for its internal use, and the German supplier of children's apparel says it gets more than enough benefits to justify the cost.
While other manufacturers have adopted RFID to improve their operations, most suppliers see RFID as an additional cost and believe that all the benefits go to the retailer. If the research pilots show there is, indeed, value for manufacturers, more suppliers might consider RFID tagging, just as the RFID Research Center's study of RFID's impact on inventory accuracy helped propel adoption among retailers. But if apparel retailers really want suppliers to tag voluntarily, they could establish industry practices that will benefit suppliers. Here are five suggestions that would go a long way to encouraging apparel makers to tag individual items.
1. Establish clear guidelines for what identifiers will be used and what data will be stored on the tags. Many apparel manufacturers sell to a wide variety of retailers. The last thing they want is to have to use one numbering scheme for Dillard's and JCPenney and another for Wal-Mart and Target. Establishing an industry standard for what numbering scheme will be used—most likely the broadly accepted Electronic Product Code—is essential. Retailers must also agree on what data will be stored on the tags. Will it be just the EPC, or will additional information, such as store numbers, be written to the tag? The more practices are standardized, the more likely suppliers are to support them.
2. Establish clear guidelines for what types of tags will be used and where tags will be placed. Most apparel pilots have involved UHF Gen 2 EPC tags, but not all EPC tags are alike. Impinj, a major UHF RFID chip provider, recently introduced its Monza 4 family of chips, which enable a user to reduce the tag's read range and replace its EPC with a random serial number. NXP, another major chip provider, has introduced chips that can replace the serial number with zeros. Will these features be required by some—or all—retailers? Consensus means clarity for apparel makers, and RFID vendors can ramp up production accordingly. If some retailers require the ability to hide the EPC and others don't, it could create additional cost and complexity for suppliers.
Apparel makers complain that retailers have a lot of data about sales that they don't share with suppliers, and they are skeptical that any RFID data collected will benefit them. Retailers could get suppliers to embrace tagging if they establish standards for sharing data about what was sold, as well as when and at what price. They could go even further by providing information about where the supplier's goods are in the retail end of the supply chain. This would enable apparel manufacturers to save money, by reducing safety stocks and, perhaps, increase sales by improving responsiveness to changes in demand at the stores.
4. Make electronic proof of delivery an industry practice. This idea will stir up controversy, but it shouldn't. If retailers want suppliers to shoulder the cost of the tags, they should agree that if a tag is read in their facilities, the apparel maker has delivered the item, and they have accepted and plan to pay for it. This not only reduces disputes over what was shipped but also allows the apparel supplier to automate the billing process. Each time a tag is read, the data is transmitted back to the supplier, which updates its records and invoices accordingly.
5. Establish clear policies to protect consumer privacy. Tagging clothing doesn't have to be controversial, but consumer advocates fear that tags will be sewn into clothes and people will be tracked without their knowledge. The industry must establish clear guidelines to ensure that items are not linked to individuals, and that privacy is protected— not just in the store, but after the sale as well. RFID tags should be positioned on or in price tags that are removed and discarded before the item is worn; if tags are sewn into the clothing, the unique identifier should be written over at the point of sale. This protects not just the retailer, but also the company that manufactured and tagged the merchandise.
More apparel retailers should speak at RFID and retail industry events, too, to encourage others to adopt the technology. Those who have shared their stories with RFID Journal know it doesn't compromise their competitive edge; retailers compete on price, styles, image and other factors. Sharing information about RFID-tagging projects simply encourages broad industry adoption, which benefits all participants and lets all companies avoid losing sales because items weren't on store shelves when customers wanted to buy them.