Companies are leveraging a GS1 US resource created to help brands and retailers use Electronic Product Code (EPC)-based RFID technology to target claims compliance. This spring, the standards organization released the guideline, known as the “GS1 US Claims Compliance Implementation Guideline for the Apparel Industry,” to help those implementing RFID solutions to realize benefits, first by addressing shipping inaccuracies that canlead to claims. The goal, according to the organization, is to focus on ways that businesses can avoid or detect carton packing or shipment errors before packages leave a facility, and to enable the receiving facility to automatically confirm carton packing accuracy, thereby eliminate claims or return costs.
The guideline provides implementation recommendations to help those beginning their RFID technology deployment, specific to each step of the supply chain RFID process, as well as best practices for internal testing. Walmart, Nordstrom and other retailers have begun mandating item-level use of RFID with GS1 standards to enhance store operations and inventory accuracy (see Walmart Recommits to RFID and Nordstrom Issues Supplier Mandate for RFID Tags).
The new guideline is aimed at RFID users who may already have the technology in hand.
Thus, GS1’s new guideline is intended to help brands that are launching RFID tagging programs, as well as other members of the supply chain, share RFID-related data and address the cost of claims, among other benefits. The guideline expands on an existing study from the Auburn University RFID Lab‘s Chain Integration Project (Project CHIP) which provided a business case for blockchain-based RFID data sharing in the retail supply chain (see Chain Integration Project (CHIP) Panel and Chain Integration Project (CHIP) – Can Blockchain Strengthen the Retail Supply Chain?).
Jonathan Gregory
Claims reduction serves as an early use case for such RFID data sharing that will provide substantial return on investment, says Jonathan Gregory, GS1 US’s community-engagement director. He likens the applications for RFID deployments to the falling of dominos, each prompting further benefits. The guideline for claims reductions is, therefore, intended to be one of the early dominoes—it is aimed at RFID users who may already have the technology in hand, Gregory explains, and want to better leverage the data for their own benefits, as well as share it with other members of the supply chain.
The premise is this: If suppliers attach RFID tags to apparel or other products as they are manufactured, those tags can be read onsite and be associated with the corresponding items and the case or carton in which they are packed. This starts the digital record for each product, and the data can be shared with other supply chain members. While distribution centers with conveyors traditionally need to create physical space to isolate and manually count or inspect each carton and identify what is in it, the guideline points out that this would not be necessary with RFID.
With a fixed or handheld RFID reader, tags would automatically be read as cartons were received, without needing to be opened. That information could then be cross-referenced with the data received from the factory via Electronic Product Code Information Services (EPCIS)-enabled software. The EPCIS standard was originally released as part of an effort to enable collaboration between trading partners, by enabling them to share information regarding tagged objects. The purpose of EPCIS-enabled software, then, is to allow disparate applications to create and share visibility event data, within and across enterprises. Ultimately, this is aimed at enabling users to share a view of objects as they move through the supply chain.
Elimination of Claims and Chargebacks
By using RFID and sharing data, apparel brands, for instance, can provide automatic confirmation of their carton-packing accuracy and thus assure that there will be no claims due to missing goods or incorrect packing. First, a factory generates an EPCIS event by linking a product’s serialized item-level data to the carton in which goods are packed. The brand’s distribution center can then use EPCIS-enabled software to anticipate and confirm carton packing as the product is received, repacked and shipped. Gregory says there are several ways in which RFID can reduce claims regarding shipping or packing errors.
For instance, when a product is received at a distribution center, the items inside that carton could be automatically validated. When goods are repacked onsite for shipping, an RFID reader captures that data during or after the pick-and-pack process, thus reducing the need for more manual counting and inspection. Ultimately, the brand can share the shipping data with the retailer so that the latter can view details indicating when the goods were packed and shipped, as well as what specifically is in each carton or case. The brand also could hide portions of the data to avoid revealing sensitive business information, the guideline explains, such as the factory of origin.
The guideline cites data alignment requirements as a challenge to be addressed—for example, ensuring that the advanced shipping notice (ASN) and electronic data interchange (EDI), along with the ID number assigned to each product, are not contradicted by any RFID EPC numbers. According to the guideline, the ASN could signify that the number of items within a specific carton is 60, and the EPCIS software could then identify the unique IDs of those 60 items.
Business-Friendly and Non-Technical
The guideline, for the most part, is intended to make the introduction of RFID—and the leveraging of its data—as business-friendly and non-technical as possible for companies that may not be using data on the RFID-tagged products they handle, Gregory explains. The audience is expected to comprise solution providers and IT personnel, as well as factory operations managers, brand and retailer distribution center operations managers, and third-party logistics operations managers.
With the guideline, Gregory says, “We are really standing on the shoulders of Project CHIP.” The effort, he adds, is to take the broad data-sharing capability illustrated by the Chain Integration Project (previously run by the Auburn University RFID Lab) and bring it to real business action. In the long run, he predicts, claims elimination will just be a starting point. “That is a huge unlock for a lot of things,” Gregory maintains, including product authentication and the grey-market movement of goods. “Claims just happen to be one best first step.”
That, in part, is due to the high cost the apparel industry faces related to claims, Gregory notes. “I think there’s a lot of appetite and movement,” he states, “as the industry moves forward and says ‘OK, we’re going to leverage RFID source-tagging to give us serialized item-level visibility across the supply chain.’ Once we use this solution to address claims, why not use it for these other purposes?”
RFID Pilots to Follow
The guideline specifies best practices for avoiding or detecting packing or shipment inaccuracies, and it also highlights use cases for processes that can be automated or enhanced using RFID. GS1 US intends to follow up with several pilot projects in which participants in an apparel supply chain will share RFID tag-based data. Although details about the pilots have not yet been determined, they are expected to take place later this summer, Gregory says, and will involve multiple companies such as apparel brands, warehouses and stores.
GS1 plans to share the results of those pilots to educate RFID end users. To further support this process, the organization also intends to host a series of webinars in October 2022. Gregory will speak publicly about the pilots and the guideline during the coming months as well. While the initial focus is on the apparel industry, he says, similar claims reductions could be accomplished in other sectors, such as the production, transportation and sale of food.
Key Takeaways:
- An early benefit to the use of RFID technology can be in claims reductions for companies in the apparel industry.
- GS1 US’s guideline serves as a map for apparel brands and logistics providers to leverage their RFID-tagged products to gain business value, and to then share that data with other constituents.