Nov 19, 2010After testing the use of radio frequency identification to reduce the incidence of out-of-stocks at several of its stores, German clothing firm s.Oliver Bernd Freier is now pondering the project's results, and is trying to ascertain whether to adopt the technology permanently.
The company, which reports annual sales of more than €1 billion ($1.4 billion) and employs 6,500 staff members worldwide, sells clothing and accessories for men, women and children, with a focus on young fashion. The company's business is 24 percent retail, with the remainder comprising wholesale and franchise operations. In the stores that it operates, s.Oliver wants to make sure that certain items are always in stock. It surveyed its customers, and 17 percent indicated they would not return to a store if unable to find the items they were looking for.
The company ran its proof-of-concept test from June to September 2010, in order to gain experience with RFID, and to find out if the technology could be used to increase sales by improving logistics and making sure its stores are adequately supplied with what it calls never-out-of-stock (NOS) merchandise.
"We learned that the technology is reliable and ready to implement," Florian Oechsner, the company's head of commercial international retail, told attendees at RFID Journal LIVE! Europe 2010, held in Darmstadt, Germany, in early November. "Our staff was able to get comfortable with using it." The system detected 3,500 tags per hour, Oechsner said, and read rates were close to 100 percent. During the test, none of s.Oliver's customers said they were worried about privacy breaches with RFID; employees also reacted positively, saying the technology helped them keep the store floor stocked with NOS items by making it easier to conduct inventory.
Next month, s.Oliver's board will take a vote next month regarding whether to proceed with the RFID project, by calculating a business case for the company, and will then deliberate about that question at a later date.
On the ceiling above the front entrance of an s.Oliver store in the Stuttgart area, the company installed an RFID reader antenna from Logokett, as well as an interrogator from Deister Electronic. It also installed the same hardware between the store floor and the storage room in the back of the store. These devices were used to interrogate tags on select items that passed by. At two other stores—a second s.Oliver location, and one of the company's Comma stores in the Stuttgart area—the test was conducted using RFID handheld readers from Nordic ID.
At its distribution centers in Rottendorf (near Wuerzburg) and in Munchberg (near Bamberg), s.Oliver utilized an Avery Dennison RFID printer to encode unique ID numbers to EPC Gen 2 RFID labels, which it then attached to 12,000 items for the three stores. Before the tagged products were sent to the stores, each tag was interrogated by a reader installed beneath a table in the shipping area. The receiving store was notified electronically that the shipment had been dispatched, and a DC employee printed out a packing list and inserted it into the shipping box.
If the products were not needed immediately, they were moved to the storage room in the back of the store. At the store with the fixed infrastructure, the tags' ID numbers were read again when a worker carried a box past a wall-mounted antenna and reader. The system was then updated to show that the items were in the back room. Twice weekly, employees used a handheld reader to take inventory of the NOS items, and to determine if what was actually in the store matched the inventory list in the store's enterprise resource planning (ERP) system. Any discrepancies discovered were corrected, and the missing items were ordered. Consequently, this led to the sale of articles that would not otherwise have been purchased without the RFID cycle count, according to Uwe Quiede, the project's manager and a senior consultant at Tailorit, a consulting firm that helped s.Oliver conduct its proof-of-concept test.
At the store with the fixed infrastructure, the final reading of an item's RFID tag occurred as a customer passed the RFID antenna installed above the front door. At that point, the product was deleted from the RFID database, thereby updating the store's inventory of goods.
The company also tested the use of RFID for replenishing particular sizes of items at all three locations. Store assistants using the handheld reader took inventory of a particular type of garment—such as purple shirts for women—and the system detected if any sizes were missing. The workers were then advised on the handheld's display screen if the missing size was available in the storage room. If so, an electronic picking list was created, and employees could immediately retrieve that item and place it on the store floor. When the assistant carried the clothing to the sales floor, its tag was read by the wall-mounted interrogator, and the system was again updated regarding that product's whereabouts.
To keep the project simple and reduce the time and cost necessary to carry it out, s.Oliver did not attempt to integrate the RFID solution with its own information systems, Quiede told attendees. Instead, the test was conducted using a separate IT solution from Gebit, consisting of middleware operating on a separate PC installed in each DC and store, and connected to an RFID server located at the company's headquarters, in order to exchange article data.
Tailorit managed the entire project, Quiede said, from creating the concept to identifying and acquiring the test equipment to analyzing the results. It also supported the technical installation and execution, and trained s.Oliver's staff. If s.Oliver's board votes to calculate the business case for RFID, he noted, Tailorit will support the company in doing so.
