SPONSORED CONTENT: While apparel retailers were first to adopt RFID in high-volume operations, brands are now getting into the act, too. Phil Fisher noted reasons for this shift in an earlier column in RFID 24-7. The bottom line, according to the CEO of GS1 US, is that more than 40 percent of apparel brands today are source tagging with RFID, and the use of RFID is expanding into other retail areas as well.
The average organization can expect a sales increase of from five to 15 percent from RFID adoption. Thus, for a brand shipping five million units, increasing revenues by an average of 10 percent could mean an annual sales increase of $10 million or more. Moreover, a number of retailers have publicly stated that beginning in 2017 they will begin fining manufacturers/brands both for noncompliance and incorrect merchandise information accompanying shipments. Thus, a brand with 2,000 shipments containing 20 million units per year — using an average industry error rate of six percent — could be facing more than $1 million of audit fines next year, which could otherwise be saved through RFID adoption.
While the increasing use of RFID by brands is a welcome trend, it does present some complexities because of the high number of suppliers, retailers and end customers in the mix. So how can brands get the most ROI with RFID implementations? Here are five recommendations:
Tag at source whenever possible: This will minimize the labor burden in stores and distribution centers (DCs), while maximizing the value of RFID technology throughout the logistics supply chain. For brands working with suppliers, the upside of source tagging is trace tracking capabilities, demand planning, shipment verifications, increased data accuracy, reduced chargebacks and increased profits. Automated tag application at source significantly lowers cost and reduces data errors vs. manual processes at the DC or store level, and negates the need to add additional processes along the supply chain.
Brands and manufacturers can further decrease error rates, reduce additional labor and simplify the encoding process by working with experienced service bureaus when source tagging. Since many of these service bureaus are located in multiple worldwide locations near manufacturing centers, they can design, print and encode tags rapidly to reduce any delays in production or increased costs. Service bureaus can also help manage retailer-specific required data, so retailers can also track merchandise through e-commerce channels.
Standardize tags and processes: Make high-volume tagging as simple and straightforward as possible. You can’t afford one-offs in a high-volume operation. Fortunately, as noted in Umesh Cooduvalli’s RFID 24-7 column, brands have the luxury of using Auburn University’s RFID Lab (ARC) standards, which indicate the tag specifications that are appropriate for each merchandise category. In Europe, EECC has published similar specs. By selecting tags that are certified by ARC or EECC, brands can ensure that tags will be effective for specified categories. Identify the required category and ask label suppliers to provide the best product for that category. This is a simplified and more efficient method, and eliminates the near impossible task of trying to stay on top of RFID label advancements and then testing them.
Likewise, standardize on label sizes within merchandise categories, such as dresses and shirts, wherever practical. This will keep your brand story consistent while reducing RFID label costs and delays. For those considering evolving from hand-held readers to more efficient and effective fixed ceiling systems or other hands-free systems, be open to increasing tag sizes to accommodate larger in-lays. This will provide greater read range and reader compatibility.
Consider high-volume printing and encoding options: Some newer technology can encode, verify and print variable data on high-quality, high-performance RFID tags and labels at 10 to 15 times faster than conventional RFID thermal printers. This provides significant cost savings and faster order turnarounds. Previously, we knew of one retailer that produced millions of RFID tags manually, while also maintaining a separate QA process. The end result was both costly and unnecessarily time consuming. With high-quality, high-performance automated options available now, this should never happen. The most effective option is to work with experienced service bureaus with integrated high-speed encoding processes, where RFID tag data is verified to be correct, unique and matching any barcode on the tag that supports QA practices.
Evaluate DC solutions for shipping and receiving: Every brand has multiple sources – manufacturers, tag/label suppliers, service bureaus, etc. RFID provides more control (regarding what is received and shipped out) with measured payback, including fewer fines and better compliance. While RFID handheld scanning is about 25 times faster than barcode scanning, new development in RFID hardware, software and labels enable even greater high-speed results to meet the needs of high-volume DCs. These range from RFID tables, which may be 50 times faster than barcode systems, to RFID tunnels that work with existing conveyer systems. The latter are 2,000 times faster than traditional processes. These solutions ensure that any errors can be instantly identified and triaged before the shipment leaves DCs, allowing DCs to make necessary corrections and avoid added cost and time. Valid shipments generate automatic advanced shipping notification and are then sent for delivery. Ultimately, such systems increase shipment accuracy and authenticity, reduce workloads, increase throughput at store operations and reduce costly vendor chargebacks and fines. More details on automating DC processes can be found in an RFID 24-7 column by Phil Fisher and Mike Guiher.
Some brands are also benefiting from brand protection. For example, in one case a major retailer discovered that its footwear was being sold outside of authorized retailers. It used RFID to trace shipments associated with unique RFID EPC numbers and uncovered where within the supply chain its products were diverted. It then eliminated the problem to protect its brand and relationships with authorized retailers.
Don’t forget – it’s all about the data: For successful source tagging, RFID tag data must be both consistent and accurate. So employ an EPC number management system to avoid duplicate EPCs that could potentially impair efforts. GS1 has established numbering standards to address this issue. While brands can manage their own EPC data, consider outsourcing EPC management to experts. This can help achieve single source controls that accurately track EPC numbers, while reducing RFID/data quality responsibilities. In either case, numbers management systems should be open so as to not lock brand owners into a single provider to ensure cost benefits as well as meeting production deadlines. Unique EPCs are crucial to avoid system failures. When managing large quantities of variable data, work with service bureaus that have strong data management processes in place, keep specific retailer data separate and verify QA processes for label, printing and coding quality.
If your brand is getting into the high-volume RFID game, you’re in good company. But because of the complexities introduced with high-volume tagging, a number of decisions need to be made to maximize ROI. So consider five of the most important ones outlined here.