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NRF day one update: the RFID use case for suppliers

As day one of the NRF Big Show draws to a conclusion, there is a strong emphasis being placed on the supplier benefits when it comes to retail RFID apparel tagging.

The topic was the subject of a morning educational session, during which Macy’s chief administrative officer Tom Cole told suppliers that the first suppliers to adopt RFID will benefit most by selling Macy’s more product. (See some of Cole’s other comments about RFID here.)

In addition, the University of Arkansas released a new white paper that examines the benefits of RFID for apparel manufacturers, including one use case that resulted in a return -on-investment in less than a year.

During the 12-month research project, sponsored by GS1 US and the American Apparel & Footwear Association, researchers from the University of Arkansas unveiled the potential for suppliers to realize both top- and bottom-line improvements from increased inventory accuracy, cycle count reductions and minimized chargebacks.

“The simple concept behind the study is to answer the question, What happens when suppliers move beyond EPC tagging just for their retail partner’s sake, and begin to internally capture and use EPC data from their tagged items?” said Patrick Javick, vice president, industry engagement, GS1 US. “Retailers use standardized RFID technology to improve inventory accuracy, and now with EPC, suppliers can also feel confident of the high level of accuracy in their shipments.”

Researchers measured the benefits that apparel suppliers can achieve by adopting RFID based on GS1 EPC standards.  They quantified the effects of EPC-based tracking on improving the suppliers’ inventory accuracy, along with the effects on their productivity, costs, and revenues.

When it comes to inventory accuracy, researchers discovered that suppliers’ estimates for their outbound shipments were much higher than they actually were, in part because the companies were auditing very small percentages of those shipments. The cost of incorrect shipments, including chargebacks, can be staggering. However, since RFID enables audits on 100 percent of shipments, the frequency of incorrect shipments can drop to zero, a cost savings that pays for the entire deployment of the RFID system.

Keep in mind that University of Arkansas researchers identified dozens of use cases for apparel manufacturers, meaning even more potential for a stronger ROI equation.

“The research captures the first efforts of retail suppliers to shift their focus from just playing ‘catch up’ to retailer source tagging requirements, but to truly leverage the full value item level tags by discovering the benefit and the value in their own supplier operations,” said Justin Patton, Managing Director, ITRI/RFID Research Center, University of Arkansas.

The research is available for download from the University of Arkansas Web site.

 

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