Major Retailers, Industry Groups Launch Item-Level RFID Guidelines Initiative

By Claire Swedberg

VICS, GS1 Canada and GS1 US, as well as retailers, goods manufacturers and other retail associations, have teamed up to create the Item Level RFID Initiative, in order to provide recommendations for EPC tagging on the item level, to be used by retailers and their suppliers.

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A group of North America’s leading retail industry members—including stores and manufacturers—as well as retail and RFID associations, have teamed up to begin writing road maps and guidelines for RFID usage at the item level in the retail sector. The Item Level RFID Initiative, under the guidance of supply chain efficiency association Voluntary Interindustry Commerce Solutions (VICS) and standards groups GS1 US and GS1 Canada, is being compared by the initiative’s members with work done in previous decades that made bar-code and electronic data interchange (EDI) technologies ubiquitous in the retail market.

The group’s goal is to provide a set of guidelines that will enable retailers, manufacturers, suppliers and logistics providers (initially in the apparel industry, and eventually in other sectors as well, such as general merchandise) to deploy an RFID system using the Electronic Product Code (EPC) standard that is compatible with other members of the supply chain, as well as of the retail industry. In this way, the group hopes to head off incompatibility issues, such as suppliers being asked to use different RFID tag-data specifications for different stores.


GS1 Canada’s Art Smith

As part of its efforts, the initiative will provide detailed recommendations, including how to go about encoding tags, what data to store and how to train employees to work with radio frequency identification. Early next year, the group will provide specifics regarding which guidelines will be made public, and when. These recommendations will come from several working groups that will focus on different use cases of RFID technology, including security, point of sale and inventory tracking. The initiative’s members consist of retailers, suppliers, industry associations, technology providers, academia and goods manufacturers, such as Levi Strauss, Jockey and VF Jeanswear.

“The significance in this announcement is that there really never has been a call to action by the retail industry before,” says Art Smith, GS1 Canada’s CEO. “Now, they [members of the retail industry] are saying, it looks like this technology is ready for prime time.”

About three years ago, VICS first began researching RFID. To that end, the organization worked with the University of Arkansas’ RFID Research Center, which helped carry out pilots involving the use of item-level RFID tags on products with such retailers as Dillard’s, Bloomingdale’s, JCPenney and American Apparel (see Bloomingdale’s Tests Item-Level RFID and Dillard’s, U. of Ark. Study Quantifies RFID’s Superiority to Manual Inventory Counts). While working on those projects, says Joseph Andraski, VICS’ president and CEO, VICS found that item-level tagging offered the greatest benefit (as opposed to tagging cartons or pallets) for the apparel industry. The pilots involving the University of Arkansas, he adds, proved the technology offered a return on investment (ROI), by making each item more visible, thereby improving the store’s inventory accuracy and replenishment. “RFID offers the industry the ability to have visibility,” he states, “and be significantly more productive.”

Another pilot that helped to prove the effectiveness of RFID technology at the item level was the Bloomingdale’s division of Macy’s, in a store located in SoHo, N.Y. Inventory accuracy at that location is up to 95 percent since the RFID system was implemented, according to Peter Longo, the president of Macy’s logistics and operations, who is also the co-chair of the Item Level RFID Initiative. The group’s other co-chair is Cynthia DiPietrantonio, the chief operations officer for apparel and footwear designing and marketing firm The Jones Group.

Using the results from those pilots as a template, the Item Level RFID Initiative group is now creating smaller working groups to develop specific sets of guidelines. The Getting Started workgroup, for example, will be responsible for creating other working groups that might provide recommendations regarding how to encode a tag, or how to transition a store’s sales staff, operations staff and logistics department to item-level RFID tagging. Initially, guidelines will be offered for specific categories within the apparel sector, though it has yet to be determined what those categories will be.

The initiative will focus on consistency, says Gay Whitney, GS1 US’s senior VP of industry engagement—not only in tag encoding, but also in privacy guidelines and how to capture and store information, as well as how to share that data. Although the Item Level RFID Initiative group is launching its efforts in apparel, she says, within about six months, other general merchandise will also be up for discussion by workgroups, in order to develop similar RFID guidelines. All guidelines will then be made available on VICS’ Web site.

The group is encouraging other members of the retail industry to join the discussions, Andraski says, and to possibly become members of the working groups themselves, in order to help write the guidelines. “This is an all-inclusive initiative,” he says.

“When you go back in time to look at similar initiatives, such as bar codes,” Smith states, “retailers all came together under VICS.” He adds that, “When we decided to roll out EDI, groups again came together under VICS… In a contextual way, this is very similar. We hope to build a road map,” using similar methods of forming working groups and establishing guidelines, as was done with bar-code and EDI technologies.

One member of the group, Wal-Mart Stores, has already embarked on a major item-level initiative (see Wal-Mart Relaunches EPC RFID Effort, Starting With Men’s Jeans and Basics). By the end of 2011, Whitney is hopeful there will be a significant implementation of item-level RFID tagging by several other large North American retailers, in specific product categories. However, Andraski notes, how quickly and aggressively RFID will be adopted depends on numerous factors, including economic conditions and tag cost (based on volumes sold). Whitney and Andraski say they expect “a viral level of implementation,” though both are uncertain as to how soon that will occur.