Finnish Fashion Designer Begins Item-Level Tagging

By Claire Swedberg

Naisten Pukutehdas, maker of the NP Collection line of women's clothing, anticipates that RFID will increase the speed and accuracy of its shipments.

Finnish clothing designer Naisten Pukutehdas (NP) has begun an RFID rollout to track its NP Collection garments. Implemented in August, the system is helping the company track goods manufactured in Eastern Europe as they arrive at its distribution center and six retail locations in Finland.

Naisten Pukutehdas sells women's fashion, marketed under the NP Collection brand, at 500 retail locations throughout parts of Scandinavia and Russia. The company is now in the process of opening its own stores as well—it currently owns and operates six such stores, and expects to have 10 in 2008. NP's clothes are manufactured at multiple factories in various locations, owned and operated by third parties, with half of its clothes made in Eastern Europe and the other half in China.

Risto Rosendahl

NP has installed its RFID supply chain management system at the six stores and distribution center it operates in Finland, as well as at one factory in Estonia. All the Eastern European factories, however, attach tags containing UPM Raflatac EPC Gen 2 RFID inlays to garments they ship, says Risto Rosendahl, managing director of systems integrator and software provider Rosendahl Digital Networks (RDN). NP first began testing the system in June 2007.

At the Estonia factory, workers attach an RFID tag—created and pre-encoded with a unique Electronic Product Code (EPC) by apparel packaging company SML Group—to each garment. The workers link the tag's EPC to other data they input, such as the outfit's size, style and color. The data is then stored in NP Collection's own ERP data management system. Rosendahl estimates that in 2008, there will be 250,000 garments tagged. The Estonian factory reads the tags of the items it is about to ship to NP's distribution center, then sends an advance shipping notice (ASN).

NP's distribution center uses fixed readers provided by ADT Security Services to capture the tags' EPC numbers as the shipments arrive and leave the center. RDN's Business Set software suite translates data on its centralized Web-based server so it can be transferred to NP's ERP system. As the products leave the distribution center, ASNs are automatically transmitted to retail shops via the Internet, providing the stores with time to plan shelf space before the goods arrive.

In the second phase of RFID deployment, expected to begin in January, the six retailers will employ RFID-enabled sales-floor shelves and fitting rooms with ADT RFID antennas to capture the location of the garments within each store, says Markus Rosendahl, RDN's CEO. In addition, the factories in China will begin tagging the clothes they make.

NP's long-term goal, Markus says, is to encourage its other retailers to deploy RFID handheld readers, as well as interrogators integrated with their point-of-sales (POS) system. "In the POS system," he explains, "the consumer privacy issues [will be] carefully considered. The RFID labels can be removed after the transaction."

According to Markus, the main benefit NP expects to derive from RFID is increasing the speed and accuracy of its shipping process. "One of the main problems in the logistic chain is shipping errors," he says, "so that was one of the main problems [being addressed by the RFID implementation]." NP Collection also hopes to expedite the shipping process by eliminating manual checks of inventory as it leaves the manufacturing or distribution site, as well as reducing the need for phone calls and other searches for products within the supply chain.

"The system is working well, currently," Markus says. He estimates that six months from now, NP will have recouped the cost of its RFID deployment—a calculation, he says, that is based on the cost savings that should result from reducing errors. "The mistakes are costing a lot of money," he notes. "Also, decreasing the out-of-stock and out-of-shelf situation has a major effect [on] the ROI."