Jan 18, 2011A report released by the University of Arkansas' Information Technology Research Institute (ITRI) has found 60 unique business cases for the use of item-level RFID in the supply chain, as determined by apparel suppliers. The researchers who carried out the study are now looking to launch pilots involving some of the more far-reaching use cases on the list (those that touch the most supply chain participants). The research team will select supplier companies to conduct those pilots or accept volunteers, and then measure each pilot's success.
The report was based on information solicited in the fall of 2010 from a wide range of companies in various countries, and in many different types of facilities, including sewing, assembly, knitting, finishing and distribution. The group employed multiple research methodologies, such as site visits, in-depth interviews, reviews of extant literature and case studies, logical deduction, and the application of existing theoretical frameworks. Altogether, six garment suppliers participated in the study, with facilities in the United States, Bangladesh, China, the Dominican Republic, Honduras and Nicaragua. In each case, researchers visited the participating supplier's facilities, examining each aspect of that company's processes, in both scheduled and unscheduled on-site tours. ITRI did not include retailers and third-party transportation firms in its survey, according to David Bradley Cromhout, ITRI's codirector. Retailers' operations, however, "constitute the handle of the bull-whip effect on supply chain inventory movement," he says, "and therefore were a constant factor in much of the supplier investigation," as were logistics providers.
The resulting list of 60 business uses offers few surprises, Cromhout says—the suppliers interviewed cited such use cases as the tracking of returns, pick-and-pack speed, shelf replenishment and item-level data. But for the university researchers who conducted the study, the results are significant. For one thing, the data provides confirmation of what the group had merely hypothesized until now: that for suppliers—who have not been studied as extensively as retailers have, when it comes to RFID implementations and the advantages they provide—item-level RFID tracking offers numerous values.
"The biggest takeaway is the extent and scope that RFID reaches across the supply chain," Cromhout says. With this list, "logistics guys can see that RFID touches every aspect of the supply chain," he notes, adding that the study is "an academically neutral confirmation of the use cases that exist." The researchers determined that the 60 business cases fall under three categories: quality management, inventory management and inbound and outbound. (The inbound-outbound category comprises movements of materials and data either from a physical node, such as a dock door or a store back door, or from ownership of one party to the next within the supply chain.) The use cases included outbound automation, pick-and-pack speed, shelf replenishment, receiving accuracy, shrinkage reduction, the tracking of returns, electronic proof of deliver, and density and space planning.
The Phase I survey found that because there are so many use cases throughout the supply chain, item-level RFID tagging in the apparel industry could reduce each case's touch rate (the number of times that staff members would need to handle a case of goods) as it moved from a manufacturer to retailers, as well as yield more accurate shipping data from the point of manufacture, and increase a store's apparel sales.
According to those companies queried, item-level tagging provides apparel manufacturers with visibility into the contents of each carton being shipped, thereby allowing automated auditing that can reduce errors and decrease the number of customer chargebacks that result if the wrong items are shipped, or if goods are not shipped at all. The researchers went on to find that because RFID has the potential to decrease the need for returns, its use subsequently reduces return-related costs and product markdowns.
The research and the resulting report, entitled "An Empirical Study of Potential Uses of RFID in the Apparel Retail Supply Chain," constitute the first phase of a three-part study, known as "Many-to-Many," that the University of Arkansas is conducting with funding from GS1 and the American Apparel and Footwear Association (AAFA). The Many-to-Many project is intended to focus on the benefits to the apparel supply chain of deploying EPC Gen 2 passive RFID, as opposed to the benefits for apparel retailers, on which many previous item-level RFID apparel studies have focused. The term "Many-to-Many," the researchers wrote in their report, refers to a system whereby "suppliers provide RFID-tagged apparel to multiple retailers through a multitude of methods and channels and where retailers receive tagged apparel from a host of different suppliers using similarly disparate methods."
With Phase 1 completed, researchers will now study some of the more far-reaching use cases on the list (those touching the most supply chain participants). Following that step, the group plans to launch Phase III to oversee and measure the results of a full pilot, to include multiple suppliers, distribution centers and retailers from various companies.
Since completing the report describing the study's results this month, researchers have begun the process of selecting business use cases that it will test, as well as the apparel companies that will participate in the pilot during Phase II. Cromhout says he expects at least one pilot project to focus on inbound-outbound benefits, since that is a widely adoptable use-case category for suppliers. "They [suppliers] all have a door where stuff goes in, and they all have a door where stuff goes out," he states. In addition, the group will likely select a business case that represents inventory management, and another that falls in the quality-management category. He speculates that Phase II pilots will be completed by the end of 2011, while Phase III will be more challenging since it will require the participation of many retailers and suppliers within the industry. The date for that study has not yet been set.
A copy of "An Empirical Study of Potential Uses of RFID in the Apparel Retail Supply Chain" can be downloaded for free at the RFID Research Center's Web site.
