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RFID Delivers Unexpected Benefits at American Apparel

A major reduction in employee theft, fewer processes errors and lower employee turnover add to the company's return on investment in RFID.
By Mark Roberti
"We have a very effective process in place for rolling out the system to new stores," Shulman says. "We can start the process at 30 new stores a month without adding more staff. We are being slowed down, in all honesty, by constraints among some of our tag and reader suppliers that can't meet the demand for faster turnaround times on our orders."

The company's goal, Shulman notes, is to install RFID technology at all of its retail, distribution and manufacturing sites as quickly as possible. She says she is unable to provide a timeframe regarding when that will happen, however, noting that it will depend on suppliers, as well as on internal resources. The RFID team does not want to put undue stress on normal operations, she says.

American Apparel initially deployed RFID to improve inventory accuracy within its stores, and to more effectively replenish items purchased or stolen. The system has succeeded in achieving an inventory accuracy of 99.8 percent, Shulman says, though she is not sure what the accuracy level might have been without the use of RFID. "We don't know with certainty what inventory accuracy is in non-RFID stores," she states. "No one does, until they do a wall-to-wall count. Frankly, you can't dependably know what your inventory accuracy is until you start measuring it at least weekly."

Improved replenishment is an important benefit, Shulman says, but it is only one of the advantages that RFID has delivered for American Apparel. "Everything starts with inventory accuracy," she says. "That is the foundational element. [Higher inventory accuracy] allows us to do things that were never possible, such as target our cycle counts, or allow a customer to order online and pick up the item in the store. With RFID, we know with confidence the item will be in the store."

At RFID-enabled stores, a cycle count—whereby a store's staff physical counts the on-hand quantity of a particular product—is performed whenever the point-of-sale system indicates that the store contains a quantity of a certain type of merchandise but the RFID system reports that that product is out of stock. This targeted cycle count allows for constant reconciliation between what the RFID and back-end systems each claim is available in the store.

American Apparel, however, does not plan to rely on RFID as its sole means of combating shoplifting. Instead, it intends to combine the technology with its conventional electronic article surveillance (EAS) system. "I'm not sure RFID will work as an EAS solution," Shulman says. "We want to combine it with our existing EAS system to deter theft. EAS will help deter external loss [shoplifting], while RFID is targeted toward internal loss. We've found that when you combine RFID with EAS, it is at least 30 percent more effective than EAS alone."

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