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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.
Oct 04, 2010—When 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.
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.
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