From the Boardroom to Reality: RFID in the Fashion Apparel
/ Textile Industry
by: Phil Blasco
Fashion Apparel / Textile companies - particularly those with a
large network of stores - are well underway in terms of streamlining
their supply chain and optimizing sales forecasts and distribution.
They are now looking for ways to enhance revenues and market share
by adopting modern ways of managing stores and inventory. RFID has
now become a centrepiece in their strategic thinking. Some companies
are also stepping up the process into actual implementation.
A new business model for Fashion Apparel and Textile chains
Leading Fashion Apparel / Textile companies have significantly
modified their business model.
Shifting away from manufacturing, Fashion Apparel & Textile
companies have built competitive advantage, based on new ways of
delivering value to their consumers.
A new business model has developed and stabilized based on a centralized
approach to design and logistics. A typical business model now includes
central design, hundreds of external suppliers, (most often in Asia),
and one or two central warehouses that serve as a logistical hub
for stocking a large networks of retail outlets.
The new frontier is in the retail store
The cost cutting side of supply chain management is to a large
extent behind us. It has already yielded most of its benefits.
The time is coming for additional revenue generation. Today, most
large network Fashion Apparel & Textile companies focus on improving
the "store side" of their supply chain and distribution
Active Fashion Apparel & Textile chains are absolutely confident
that the first benefits of RFID implementation will come from store-level
applications such as real and/or near real time inventory linked
to stock management systems and store re-stocking processes.
Typically, industries go through 5 steps in implementing a store-level
Market Observation: Talking to business specialists, they gather
information on technology accuracy and reliability, costs, and future
Business Case: Metrics are designed and implemented on core store-level
and DC-level processes. Consumer behavior is assessed.
The upper line of the business case is built upon additional sales
related issues, improved inventory, stock management, and store
Costs savings include staff time allocations, counting / checking,
Costs include hardware and software technology (tags, readers,
software & middleware), integration, training, roll-out and
Technology Test / Adaptation: Companies implement a simulated store
environment and test accuracy and reliability in boxes, on shelves,
and on hangers. This step lasts for a period of a few months.
Real-size test: Companies implement a live test in one or several
stores to prove the business case and check applicability of store-level
processes in a live environment. Assessment metrics are those of
the business case (additional sales and cost reduction). This step
lasts about six months.
Deployment / Rollout: Rolling out to the network. It is envisioned
that rollout should be as fast as possible in order to realize a
quicker Return on Investment. A critical preoccupation is also to
avoid the coexistence of several processes and to drop legacy processes
as soon as possible.
Building the business case: Network size is the multiplier
A quasi consensus emerges in the Fashion Apparel & Textile
Industry: With tag prices at about 10 cents per unit, and reading
accuracy at 98-99%, RFID applications in the store offer a compelling
Better inventory management and better re-stocking generates additional
revenues, reduced % of missed sales, and lower shrinkage.
Cost savings are mainly generated in the Warehouses / Distribution
Initiative related costs include: Investment in hardware facilities,
middleware, integration, RFID tags, and roll out costs (training,
Obviously, the larger the network the higher the return. Proactive
companies are considering rolling out to their whole network as
quickly as possible.
Other potential benefits not covered in the analysis are: Better
staff time allocation in the stores, reduction of transportation
costs, and specific processes automation at the DC level (such as
increased automatic picking).
Taking the RFID issue from the boardroom to reality
Moving from market observation to development of a business case
is typically a Management Team initiative.
Typically, the role of the CEO is to initiate the business case,
to assess the results with the Management Team in terms of competitive
advantage and created value, and to decide whether or not to launch
Senior Executives involved are most often the Chief Operating Officer,
the Logistics Manager, the CTO or IT Manager, and the CFO. In the
case where a Network Manager is in the organizational matrix (the
person who manages the stores network) this individual is also involved.
Most often, Fashion Apparel and Textile industries have built lean
organizations, based on an intimate knowledge and control of their
processes and metrics. They therefore tend to develop their business
cases internally, with limited or no help from external parties
such as consultants.
Conclusions: RFID at the turning point
The Fashion Apparel / Textile Industry is at a crossroad in terms
of RFID applications.
Obviously, in the short term, store-level applications are seen
as the most promising ones mainly because of their direct impact
on customer satisfaction and revenues.
RFID represents a new opportunity for delivering value to both
customers and shareholders. They try to maximize value by adopting
an end-to-end approach to RFID adoption.
About The Author
TAGSYS (http://www.tagsysrfid.com) is the global leader in item-level
RFID infrastructure. TAGSYS provides RFID systems and tags for end-to-end
item-level tracking that automates labor-intensive processes, authenticates
and safeguards goods, and enables real-time inventory and asset
visibility. The company is headquartered in France's Smart Valley
with offices in the USA (Doylestown, Pennsylvania) and Asia (Hong
Kong). More information on TAGSYS can be found at http://www.tagsysrfid.com.