Posted by: Geoffrey Barraclough  |   Comments  No Response

Back in 2004, we thought RFID was going to be really, really big. Whole supply chains would be transformed by the provision of accurate, real-time information on the location and status of shipping cases, containers and reusable packing, all equipped with radio tags.

 

Tesco had announced its deployment in 1500 stores by Christmas, Wal-Mart had mandated its suppliers to put tags on all inbound consignments and the consultants had whipped themselves up into a frenzy of excitement.

 

Then nothing happened. Wal-Mart’s progress slowed to a snail’s pace; Tesco, dis-heartened that it couldn’t get the technology to perform, gave up and the consultants moved on to the next big thing.

 

Marks & Spencer, an early pioneer, soldiered on with its highly pragmatic approach. It adopted the simplest technology in its food supply chain and restricted item level tagging to an uncomplicated in-store stock-counting application. M&S (with BT as prime contractor) has now tagged over 250m items and is clearly getting real value from its “intelligent labels”.

 

The grocers, focused on supply chain improvements, still seem too burned by their early dabbling to contemplate putting a foot back in the water. In stark  contrast, fashion retailers are now leading the way. I’m wondering if we’re about to witness RFID’s second coming. Here’s why:

 

  • The rag-tag of start-up vendors whose financial instability worried retailers in 2004 have coalesced into a smaller number of trusted, solvent technology providers such as Motorola, Avery Dennison and Checkpoint.

 

  • The standards have been locked down and agreed and the technology works reliably.

 

  • Over the past few months, there has been a steady stream of announcements from apparel and footwear retailers around the world.

 

Marks & Spencer has never published any metrics on its use of intelligent labels so this release of a thorough return on investment study by American Apparel is very welcome to all of us who believe the technology has a future.  

 

American Apparel has (like Marks & Spencer) a particularly complex product assortment and typically keeps 12.000 SKU’s on the shop floor at any one time. Once an item is sold, it should be immediately replaced from the store room but this doesn’t always happen. Consequently, out of stocks have been running close to 20%. In the pilot, RFID tags embedded in the garment labels were scanned at point of sale and automated replenishment lists sent to store staff. Out of stocks were reduced to <1% with a consequent increase in sales. American Apparel intends to roll the solution out to all its 260 stores over the next 18 months.

 

Swiss retailer Voegele this week announced plans to use item level garment tagging throughout its European supply chain. This follows a successful pilot in Slovenia and is also targeted at improving inventory accuracy.

 

Serge Blanco, the fast growing French sporting goods brand, will use item level tagging to speed throughput at its main distribution centre in Toulouse. Automating the receipt and dispatch of garments guarantees error free shipments to stores and has freed enough space for Serge Blanco to postpone moving to a larger DC.

 

The steady drip of positive news indicates that RFID is slowly coming back into fashion, at least on the continent, although each seems to have a subtly different business case. Mastering these different uses of RFID will present the next big challenge both to retailers and their technology suppliers.

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