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RFID Will Benefit Apparel Suppliers

While consumer packaged goods companies struggled to find an ROI, firms that supply apparel items should have no problem justifying an investment in RFID.
By Mark Roberti
Oct 04, 2010When Wal-Mart Stores initially requested that its top 100 suppliers tag pallets and cases being shipped to the retailer, consumer packaged goods (CPG) companies struggled to find a return on their investment in tags, because many of them sold products that were rarely stolen or out of stock. Visibility into the location of goods in the supply chain, therefore, was not deemed critical. The same, however, is not true for apparel suppliers.

There are vast differences between the CPG and apparel supply chains that suggest clothing suppliers will achieve a significant ROI from tagging garments. First, most CPG companies make their own products, while most apparel suppliers outsource manufacturing to countries where production costs are lower, including China, Vietnam and Mexico. That means suppliers do not have the same level of visibility and control of what is being produced and shipped. When a third-party manufacturer ships the wrong goods, a apparel supplier does not find out until those items arrive at a warehouse in Europe or North America. To meet a retailer's order, a supplier sometimes must currier the correct items from Asia at great expense.


Another big difference between the CPG and apparel supply chains is the complexity of inventory. A store might stock, say, 20 flavors of Campbell's Soup and 10 styles of jeans. But the soup might come in one or sizes, whereas the jeans might come in 20 sizes—which means the jeans supplier would need to manage 200 stock keeping units (SKUs), while Campbell's would need only manage 20 or 40. Managing a greater number of SKUs requires additional labor to count inventory and pick orders.

Apparel items are generally more expensive than consumer packaged goods, and are stolen more often. When shipments arrive at a distribution center (DC) and are counted, some items are stolen by employees. Apparel can also be taken while sitting in a warehouse and waiting to be shipped, or they can be stolen during picking and shipping operations, or when they arrive at a store, are sitting in a back room or are being marked down.

RFID can provide far greater visibility and control than bar codes, because items can be counted automatically at each step along the supply chain. Lemmi Fashion, a German manufacturer of children's clothing, had issues with suppliers in Asia shipping the wrong goods, which led to problems fulfilling orders by retail customers, as well as lost sales. Lemmi deployed a high-frequency (HF) system a few years ago, and then an ultrahigh-frequency (UHF) solution. The firm achieved a return on each system, since the technology enabled it to ensure that the proper items were being shipped, and to react earlier if that wasn't the case. Another big benefit for Lemmi is a reduction in time and labor needed to count goods arriving at its German DC. Instead of hand-counting each garment, an entire rack can be read as it is pushed through a portal.

USER COMMENTS

Monto Kumagai 2010-10-08 10:22:10 AM
The Internet of Experiences and RFID Clothing I am looking forward to item level RFID tagging of apparel. This will enable us to personalize consumer products in mobile environments. I have shown that RFID, cell phones, and social networks allow individuals a chance to shout back and announce their unique experiences and impressions of the world. We have crossed the threshold between the supplier and the consumer. Interconnected, global networks allow us to fire off unique, digital beacons. These personal messages reflect moments in time where we are linked to the physical world. Dialing in and exploring common paths, opinions, and destinations have allowed us to discover that we are not alone. We seek to share our experiences with the global community, hoping to find something new that we have never seen before. Look back at the past and then make plans for the future. Collectively, we call this The Internet of Experiences (http://tinyurl.com/3648j45). Don’t forget that the personalization of clothing and sharing of consumer experiences is a new form of advertising. If done properly, it will have an enormous, positive impact on the apparel industry.

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