Status of RFID in the Apparel

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  • 1. Presented by: Philip Calderbank Director Global Marketing RFID/Security Retail Information Services INFORMATION SYSTEMS COMMITTEE Spring 2007 Meetings
  • 2. Agenda
    • Overview AD Retail Information Services (RIS)
    • Business Drivers Supplier/Retailer
    • Supplier Benefits
    • Retail Benefits
      • Uses
      • Case Studies
    • Retail Information Services
      • Ticket Express – We do it for you
      • Starter Kit – Do it yourself
  • 3. RFID in Retail + =
      • Focused on apparel and footwear industries
      • Billions of price tickets, hang tags, woven / care / heat transfer labels every year
      • More than 40 Service Bureaus / Ticket Centers worldwide
      • Custom RFID item tags specifically developed for apparel applications
    Avery Dennison Who are we ?
  • 4. Avery Production Facilities HK – Germany - USA Converted RFID Label RFID Inlay RIS Label Production RFID Label Manufacture Print & Convert
  • 5. RFID a Major Time Saver
    • RFID avoids the need for line of sight and provides the ability to read multiple tags at the same time
    Track & Trace Match Shipment To Purchase Order Exit loading dock 5 READER
  • 6. A Perfect World Increased Revenues Reduced Costs Increased Profits RIGHT PRODUCT RIGHT PLACE RIGHT AMOUNT SECURE ENVIRONMENT RIGHT TIME € € €€
  • 7. Avery Dennison’s RFID position Chip Design and Manufacturing Label Converting Inlay Assembly Pre-programmed RFID tags (Service Bureau) / Printers / Applicators Antenna Design and Manufacturing Avery Dennison RFID Division Avery Dennison - Retail Information Services Other Converting/ Printing Partners Chip Partners User (Factory / DC)
  • 8. Business Case Economics Business Objectives Maximize Economic Value Added (Maximize Operating Income while Minimizing Capital Costs) Increase Revenue Increase Revenue Reduce Operating Costs Reduce Operating Costs Optimize Assets Employed Optimize Assets Employed • Increased on - shelf availability • Improved customer service ­ More responsive production ­ Reduced order cycle times ­ Automatic replenishment ­ Enhanced collaboration • Eliminate manual physical inventory counts • Increased shipping and receiving efficiency and accuracy • Faster picking process in the warehouse • Reduced number of unsaleable products (spoilage, seasonal & promotional items) • Improved stock visibility and traceability • Reduced inventory levels • Improved forecast accuracy • Improved visibility • Reduced warehousing requirements • Improved productivity through JIT delivery and information sharing RFID Benefits RFID In Retail Enhance Safety & Quality Control Enhance Safety & Quality Control • Reduced shrinkage • Enhanced responsiveness to product recalls and food safety concerns • Reduced exposure to public safety risks (e.g., hazardous materials) • Better monitoring of cross - border shipments • Increased visibility into recycling RFID enabled Retail supply chain - Right Product – Right Place – Right Time Increase Sales/Reduce Costs
  • 9. RFID Retail Mobile Stock Taking Permanent Inventory Taking Searching of Articles, Product Information Cashing
  • 10. On-shelf availability Benefiting Retailer & Supplier
    • A Recent IGD survey showed that the grocery sector in the UK achieved 90% availability, and a 4% improvement would yield a 1% increase to the bottom line (1)
    Store Reader Improved on-shelf Availability
      • An RFID solution provides
      • accurate information about what’s in store
      • accurate information about back room versus shelf
      • the ability to improve handling / rotation of fresh / perishable
      • tighter control over theft / shrinkage
  • 11. Out-of-stock / revenue opportunity management
    • Minimizing out-of-stocks increases revenue potential
    • Increasing visibility to sale data and inventory levels helps
      • speed accurate on shelf replenishment
      • Ensures Right Size – Right Style
    • Sharing inventory and consumption data with suppliers for a more efficient supply chain
  • 12. RFID Store Example Sales Floor Back Room
    • Automatic preparation of replenishment orders for OOS items
    • RFID reader at POS counter
    • Automatic generation of sales order / inventory reduction
    • Compare on-shelf “RFID inventory” to model stock and restock accordingly (see also Case 1)
    • Once a day, store associates take full inventory of products on display
    • Identify cartons via RFID handheld
    • Previously received ASN contains carton contents
    E Replenishment D POS C Stocking B Shelf inventory A Receiving
  • 13. Case studies illustrating these RFID benefits 1. Reduced out-of-stocks in store 2. Faster / better customer service Case Studies 3. Backroom / in-store efficiencies
  • 14. Reduce retail out-of-stocks
    • Take “RFID inventory” once a week
    • Compare to “system inventory” / planogram
    • Restock accordingly to ensure on-shelf availability
    • Benefits both Retailer and Brands
    “ It’s Retail 101 – if you restock according to your planogram every morning, your sales are going up. That’s why you plan an optimum shelf count in the first place” VP IT, Retailer Marks & Spencer Case Study 1
  • 15. Hardware Cart-based RFID reader RFID hang tags on garments Case Study 1
  • 16. Reduce retail out-of-stocks Pilot Results …
  • 17. Case Study 2 Faster/better customer service
  • 18. Faster customer service
    • Back room and supplier DC inventory tagged with RFID
    • Store associates have handhelds that show inventory by size / style (in back room and DC)
    • RFID enables faster customer service – immediate response to inquiries and less time spent in back room
    Footwear retail example (Japan ) Case Study 2
  • 19. Faster customer service Case Study 2
  • 20. RFID in Footwear Retail - Results Source: Kurt Salmon Associates
    • 10% lift during busy Oct-Dec holiday season
    • Status quo; no sales lift
    • Customers more trusting when shown on computer
    • Customers doubt accuracy of paper inventory book
    • 3 pairs shown every 12 minutes
    • 1.8 pairs shown every 12 minutes
    With RFID Without RFID
  • 21. Case Study 3 Backroom and In-store efficiencies
  • 22. Increased efficiencies at retail
      • Every single garment is tagged with RFID at DC
      • RFID read points in store e.g. at receiving, POS
      • Associates use handheld RFID readers
    How can RFID save cost in a retail store? Case Study 3
  • 23. Increased efficiencies at retail How can RFID save cost in a retail store?
      • Speed up goods receiving – processing 650 items in 30min compared to 2 hours
      • Taking full store inventory in 45 minutes (one employee) instead of two days (four employees)
      • Inventory accuracy: 80%  99%
    “ Everybody claims that their inventory is accurate, but only with RFID do we really find out where we stand” Retailer Case Study 3
  • 24. Item tagging Benefits Supplier Benefits 2. RFID in Logistics = Reduced Cost of Logistics
      • Checking product shipments against PO / less charge backs
      • Real time visibility & order accuracy / less safety stocks
      • Less safety stocks /less warehousing/less handling
      • Identify Choke Points/speed up delivery
    • RFID in Store = Order Uplift
      • Real time visibility = Improved Order Accuracy
      • Accurate Stock Counts = Correct Stock Replenishment
      • Right Product – Right Place – Right Time = Sales Increase
  • 25. Service Bureau / Ticket Express ™ US “Master” Customer Factory / Contract Manufacturer Ticket Center Purchase Order Pre-printed tags / tickets / carton labels
    • Via EDI/…
      • Ship to
      • UPC
      • Vendor
      • Barcode …
  • 26. Changing Vendors US “Master” Customer Contract Manufacturer 1 Ticket Center Contract Manufacturer 2
    • Via EDI/…
      • Ship to
      • UPC
      • Vendor
      • Barcode …
    Purchase Order Purchase Order
  • 27. Two Implementation Models for RFID Description Implications
    • Pre-programmed RFID labels ordered from 3 rd party
    • Labels pre-programmed, shipped to facility, held in inventory until applied to case/pallet
    • Lower investment / technology risk (still requires reader and software investment)
    • SKUs, labels must be pre-defined in advance, must stock SKU specific labels
    • Facility invests in RFID programming equipment
    • RFID labels programmed in the customer facility (plant or DC) either in batch or real-time
    • Must invest in RFID programming equipment / have data management capabilities
    • Only hold non-SKU specific label inventory
    RFID Service Bureau In-house Programming
  • 28. RFID Source Tagging - Overseas RFID Service Bureau / Ticket Express* RFID Supply Chain Software (In-house programming)* (*) Simplified US Vendor Service Bureau Data incl. EPC Asian Factory RFID Labels Vendor DC (US) Retailer DC (US) Cases/pallets Retailer DC (US) Vendor DC (US) Cases/pallets Asian Factory US Vendor RFID Labels RFID Supply Chain Software
      • Label format
      • EPC generation
      • P/O management
      • ASN generation
  • 29. Summary
    • RFID Source Tagging has a number of benefits for vendors
      • Improved supply chain visibility
      • Cost reduction
      • In order to implement RFID Source Tagging, vendors need to consider …
      • Factories’ data management capabilities
      • Logistic process restrictions
      • Pre-printed tags vs. in-house programming overseas
    • Start analyzing your processes and involve suppliers soon!
  • 30. RFID Product Offering (1) Plus external reader (optional), software and installation support Two easy RFID solutions from Avery Dennison RIS RFID Ticket Express® (Pre-Printed/Pre-Programmed RFID Labels) “ We can do it for you …” “ We can enable you to do it yourself …” RFID Starter Kit (RFID Printer + Blank RFID Labels) (1)
  • 31.