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Five ways that retailer Faconnable will benefit from RFID

Fashion retailer Faconnable recently deployed item-level tagging at 70 of its branded retail stores and distribution centers on two continents, including its 12 retail locations and two DCs in the U.S. The retailer will consume more than two million RFID tags each year, and has been source tagging all the items it sells for nearly two years.

item level tagging for the fashion industry

Retailer Faconnable is applying RFID to all items at 70 of its stores, consuming more than two million tags annually.

While the RFID solution from TAGSYS RFID will enable Faconnable to greatly enhance supply chain visibility, Faconnable vice president of retail and operations Yonni Mrejen recently spoke with RFID 24-7 about the other benefits that the retailer expects to gain from deploying RFID.

Aside from supply chain visibility, Mrejen says that Faconnable will benefit from substantial savings on labor, improved collaboration with vendor partners, a one-tag-fits-all solution including theft deterrent, and more productive stores, which allows the company to make smarter real estate decisions.

Supply chain visibility: By integrating RFID with its third-party logistics suppliers, Faconnable gains 100 percent coverage of the millions of items being sold by Façonnable and its retail partners. Faconnable expects to achieve complete item-level visibility throughout its supply chain through an optimized system for reducing costs and accelerating replenishment cycles.

“We have a complex global supply chain that requires timely and accurate information on all of our inventory,” says Mrejen.

The TAGSYS RFID system goes beyond typical RFID project-level implementations and provides Faconnable a true systematic approach to inventory management at each step of the product life cycle. The system provides Faconnable with the type of visibility and real-time data needed to dynamically make critical decisions on distribution and replenishment, both within its operations and with third-party logistics suppliers and retail partners.

Labor savings: Mrejen says that the biggest benefit from its RFID rollout will occur in the form of labor savings. In the distribution center, the labor savings will be the result of faster processes for receiving and packing, and less errors resulting from an automated system that eliminates manual entries. At the store level, most of the labor savings will result from cycle counting.

“We’ve looked at this from the big picture, and as a retailer I can tell you that payroll (labor) will be our biggest savings,” says Mrejen. “The net result is time and cost savings that ultimately produces a better overall customer experience at the retail level.”

Improved vendor collaboration: Because Faconnable has had to communicate with all of its suppliers around the world to prepare for RFID implementation, the company has experienced the unintended result of solving other supply chain problems unrelated to RFID. “RFID has created a further chain of communications with our vendors, so it has helped supplier compliance through increased collaboration,” says Mrejen.

Simply put, RFID compliance is forcing manufacturers to be compliant on other issues that slipped through the cracks previously. For example, if a shipping list doesn’t match up with a packaging list, the discrepancy was often dealt with when product arrived at the docks in the U.S., which can result in unhappy retailers due to product delays. “Now, this is forcing compliance at the point of issuance or at the factory,” says Mrejen, “so it solves the problem in Asia or Italy before it gets to the U.S. We’re seeing very strong benefits from all of this new collaboration and we think it will translate to very positive results, especially on the store side.”

Expansion plans and more affordable stores: Faconnable plans to open 15 to 30 new stores in the U.S. market over the next three years, many of them located in pricey downtown centers that command high fees for rent.

“One issue that we come across in the U.S. is that the cost of real estate can be high,” says Mrejen. “With many future leases coming up, we’re forced to build smaller and smaller stores and be more highly productive and increase inventory turns. But you obviously need to increase your replenishment ability and your visibility to have better turns.”

Faconnable expects RFID to help its existing stores to turn in better profitability numbers, while new stores will be able to utilize a smaller footprint due to the increased turns allowed by RFID.

Theft deterrent: Because RFID allows for the automated receipt of product and for daily inventory updates, it becomes much easier for retailers to manage shrink. Aside from identifying exactly when and where in the the supply chain that a product might have gone missing, RFID allows the retailer to re-stock the item immediately in order to avoid out-of-stocks as a result of theft. Many retailers and RFID analysts consider loss prevention to be the overlooked sweet spot for RFID in retail.

As part of the TAGSYS solution, Faconnable will be implementing security portals that will allow the retailer to include theft and security on one tag and eliminate the large hard tags it has used for security in the past.

Click here to read our prior coverage on Faconnable from the NRF Bog Show.

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