Levi Strauss & Co. was a pioneer when the company invented blue jeans in 1873. All these years later, the company is still innovating with its use of RFID technology. This week Levi’s received the Operational Excellence Award from GS 1 US for its use of EPC and RFID to realize significant operational efficiencies by moving its RFID tagging upstream from the distribution center to the manufacturing source.
Levi’s sells its products in 50,000 outlets in more than 110 countries. The company began its RFID journey close to 10 years ago with a simple pilot for one customer in the U.S. and with limited tagging for retail stores in Mexico. The program eventually grew to 12 million items tagged per year. As it grew, the DCs started to experience capacity limitations. The global supply chain team at Levi Strauss & Co. made the decision to move tagging from the DC to the source of manufacture, and began to work with their 50-plus manufacturing partners to educate them on EPC standards, sourcing RFID tags, the application of tags (per GS1 Standards), compliance requirements, and the overall benefits of RFID. Within 18 months, the Levi’s team scaled from tagging 100 percent downstream to over 85 percent upstream at vendors for U.S. volume, with plans to further scale the program.
Last year RFID 24-7 reported that Levi’s consumes about 60 million tags annually for tagging of men’s jeans. Ernesto Hochkoeppler, director of logistics planning and PM for Levi’s, said at the time that number would exceed 100 million units in 2016 as the retailer begins to tag men’s shorts and more women’s lines.
Operational efficiencies and customer satisfaction results have been impressive. The DCs saw significant improvement in productivity and realized double digit cost savings as they moved tagging upstream. Levi’s execs credit GS1 standards for helping make their adoption, use, and implementation journey easier, including the 2014 release of the GS1 US Tagged Item Performance Protocol (TIPP) Guideline, which enabled Levi’s to meet varying tagging requirements from their vast community of retail partners. Last fall Levi Strauss & Co. announced an RFID pilot in three of its U.S. retail stores—with a goal to improve inventory accuracy and visibility so consumers can locate items easier.
Levi Strauss and Intel are also working with Smartrac to harvest the information from the tagged items, which is then pulled into the cloud and is translated into insight that is dispersed to company executives, store personnel and to the supply chain for help with forecasting and inventory planning.