Brands Track Shipping Accuracy via RFID

Several dozen companies are already using a solution now being commercially launched by SML Group, known as FactoryCare, to eliminate shipping errors and thereby avoid corresponding penalties from retailers.
Published: April 3, 2020

As retailers have been leveraging item-level UHF RFID in their stores at a growing pace, some suppliers are following suit. These companies are taking advantage of the RFID tags they apply to each product for retailers, in order to track the accuracy of shipments from their factories and distribution centers. SML Group intends to provide an opportunity for brands with the release of a solution known as RFID FactoryCare, which the company says has been deployed at dozens of factories and is now being released commercially as a package.

FactoryCare consists of SML’s Clarity software suite, as well as handheld and fixed readers that capture RFID tag read data, send it to the cloud and can integrate with enterprise resource planning (ERP) systems The system includes Zebra MC3100 handheld readers and Microsoft‘s Azure cloud-computing service, with Clarity ported on the cloud as well as loaded on the handheld reader. The software suite has been expanded with solutions specific to factories.

The RFID technology allows retailers to increase item-level visibility throughout their supply chain, while boosting product deliveries for manufacturers.

Most RFID deployments still serve retailers rather than brands, by ensuring inventory visibility on store shelves and in back rooms. This proliferation of item-level RFID tagging not only enables retailers to prevent out-of-stock events and fulfill omnichannel sales, but also helps them identify incorrect shipments from brands and penalize them accordingly. SML’s Clarity-based RFID solutions are being adopted by retailers to better manage their inventory in stores, meet omnichannel requirements and prevent out-of-stock events, and brands often tag products for their retailer customers.

The pressure from retailers, as well as the potential benefits of automatically tracking goods in factories and at DCs is leading brands to seek RFID systems of their own, according to Dean Frew, SML Group’s senior VP and CTO of RFID solutions. In fact, Frew says, penalties related to the inaccurate shipping of goods can cost suppliers millions of dollars annually.

With added pressure from retailers, brands are increasingly seeking a way to employ RFID to ensure shipments leave their facilities properly packed, and thereby eliminate the penalties and the cost of labor required to respond to claims from retailers. SML’s retailer customers have indicated that more accurate shipments from brands will benefit them as well, Frew adds, stating, “We’ve seen more and more adoption in stores, and retailers were asking us to help their suppliers upstream.”

Errors during shipping are relatively common, Frew says. The problem is that distribution centers accept shipments under an assumption that shipping notices are accurate. If a mistake occurs in a shipment, that often isn’t identified until the goods are picked for a shipment to the retailer or its DC. Since the retailers now know exactly what is missing, Frew explains, “More and more retailers have made a significant effort to create claims of mis-shipments against supplier partners. We’ve had multiple customers with seven-figure penalties from retailers,” based on such claims.

Thus far, however, the majority of factories are still not leveraging the RFID tags that they apply to goods. Therefore, some have been seeking a solution that might enable them to employ the tags for quality-checking the labels, verifying boxes are packed correctly and allowing distribution centers to automate the receiving of the goods. “We found there is a coalescing [of RFID] across the supply chain,” Frew says, “so that’s why we launched FactoryCare.”

The FactoryCare solution can be employed first when brands receive UHF RFID tags from their service bureau partner—either SML or another provider. Factory employees then use a handheld reader running Clarity to perform quality checks on tags. They read each tag, and if one cannot be properly read, it will not be applied to a garment, thereby reducing problems in the supply chain.

The tags are next attached to garments and linked to each product. Then, while packing each box, factory workers again use a handheld reader at the packing station to ensure the boxes are packed correctly, according to a specific order. They read the tags, the Clarity software is updated with the items that have been packed, and those goods are compared against the shipping order to confirm no mistakes have been made.

The last use of RFID at the factory would be to read the tags of goods already packed in boxes, so as to confirm that all of the boxes are being correctly loaded with the right boxes and that the correct products are in those boxes. Another read event could occur at the brand’s own distribution center. There, the tags could be read upon receipt, and again when picked and packed to go to the retailer’s DC. At each transfer point, the solution is intended to detect and thereby prevent errors so that retailers will receive accurately packed orders.

Multiple brands (which have all asked to remain unnamed) have already been using the early version of FactoryCare for about a year, SML reports. The company says its customers are located throughout 11 countries. Now, the solution is being launched as a package with the readers and software. Brands adopting the FactoryCare solution are serving retailers that also leverage SML’s solutions or other RFID-based systems.

Several of these brands were early users of the Clarity software platform before FactoryCare was developed, Frew says, and are gaining the benefit of sending accurate shipments and thereby reducing claims from retailers. For instance, workwear and apparel company Dickies began using the Clarity software suite to manage the shipping of products to DCs and retailers as early as 2011.

In 2015, Herman Kay began using RFID for the same purpose (see Herman Kay Gains Packing Accuracy Via RFID). The company is not only using handheld readers with Clarity software, but also fixed readers at its DCs’ receiving and shipping docks, as well as for shipping from the factories. The system identifies mistakes if the wrong items are being packed, or if a product is missing from a loaded box.

In the meantime, Frew says, with the release of FactoryCare, “We’ve got a global sales team working with brand owners around the world taking this to market. We’re seeing a lot of interest.” The demand began with the inventory accuracy RFID provided to stores, he adds. “If retail stores weren’t implementing item-level RFID, there wouldn’t be this up-stream demand.” The use of item-level RFID is global, he says. “We’re seeing it throughout every region of the world, including Central America, China, the Far East, India and Europe.”