Item Level RFID Initiative Focuses on Supplier Benefits

By Mark Roberti

At a meeting held at NRF's Big Show, in New York, members received an update on retail initiatives and were briefed on the benefits that apparel suppliers can achieve.

The Item Level RFID Initiative (ILRI) held a meeting during the National Retail Federation's annual Big Show, which took place last week in New York City. During the gathering, ILRI members were updated about a number of retail pilots, and were also briefed on research currently being conducted by the University of Arkansas' RFID Research Center regarding the benefits that suppliers can achieve by employing radio frequency identification in the supply chain.

Formed on Nov. 1, 2010, by a group of U.S. retailers, apparel suppliers, industry associations, academia and RFID solution providers, the Item Level RFID Initiative aims to foster RFID's adoption in the retail supply chain (see Major Retailers, Industry Groups Launch Item-Level RFID Guidelines Initiative and Item-Level RFID Initiative Could Be a Game Changer). The recent meeting opened with Cindy DiPietrantonio, the chief operations officer of Jones Apparel Group, and Peter Longo, the president of logistics and operations at Macy's, who provided updates on the progress of their respective companies' RFID projects. DiPietrantonio said Jones Apparel is in a unique situation because it owns its own stores, in addition to being a major supplier to Macy's, Bloomingdale's and other retailers.

"We did a very exciting pilot at two stores in New York City," DiPietrantonio told the audience. "We saw an 18 percent reduction in time staff spent searching for product. That's a big deal because in New York, your storeroom is usually down a flight of stairs in the basement."

According to DiPietrantonio, the pilot showed a 25 percent reduction in the amount of time that workers spent receiving goods at the store, a 92 percent decrease in the time required to perform cycle counts in the store, and an improvement in inventory accuracy, from 85 to 90 percent up to 97 to 99 percent.

"This is the year of the supplier," DiPietrantonio said. "Suppliers should review their supply chain to find efficiencies. I believe there are many to be found, so it is a win-win [for retailers and suppliers]. The technology is here, and it is exciting to see what we now have the ability to do."

Longo reported that Macy's sees RFID's greatest benefit as its ability to improve inventory accuracy, which can help grow sales, increase customer satisfaction and enhance margins.

"We [retailers] have been making decisions daily on fundamentally corrupt data," Longo stated, "because no matter how good the bar code is, it is woefully short of what you can do with RFID."

Longo explained that Macy's deployed the technology at its Bloomingdale's store in Manhattan's SoHo section. "Inventory accuracy went from 70 to 75 percent to 95 to 99 percent," he said. "That's practically stunning. We see that as the most important benefit."

In 2011, Macy's and its Bloomingdale's unit plan to expand their use of RFID to additional stores, in order to learn more about how they can utilize the technology to increase efficiencies and better serve customers.

"A year ago, we used to talk about whether to use RFID or not," Longo said. "The debate is over. Our position is that the technology is here, and it is time. RFID is no longer a jazzy technology being tested by academics and consultants. It's not acceptable to have 30 percent inventory inaccuracy."

During the meeting, Justin Patton, the director of the RFID Research Center, briefed members on the Arkansas Radio Compliance (ARC) Center, recently established to measure how well passive ultrahigh-frequency (UHF) EPC Gen 2 RFID inlays can be read when applied on or around different materials in various environments for item-level tracking purposes (see Arkansas Radio Compliance Center Aims to Avert Clashing Requirements). Based on the results of those tests, as well as a retailer's particular use case, the center will provide a list of acceptable inlays for a specific consumer product and use case to businesses that supply goods to that retailer.

David Cromhout, the RFID Research Center's lab director, then briefed members on the first phase of its research into the benefits that suppliers can achieve using RFID. The center, he told attendees, had identified dozens of potential applications for the technology in the supply chain. These included automating inbound and outbound shipping processes, managing country-of-origin data, tracking returns, reducing internal shrinkage and more (see University of Arkansas Study Finds 60 Ways to Use RFID in Apparel Supply Chain).

The next phase of the research will involve working with select suppliers to narrow down the applications within the supply chain to those that will provide the biggest bang for the buck. Phase three will focus on examining the benefits that suppliers can achieve when multiple suppliers ship tagged products to many retailers.