RFID improves inventory accuracy in apparel sector
New research from the University of Arkansas quantifies benefits that apparel suppliers can gain from the use of radio frequency identification (RFID), it was announced by the American Apparel & Footwear Association (AAFA) and GS1 US, the study's sponsors.
In a year-long project, researchers found the potential for suppliers to realize both top- and bottom-line improvements via increased inventory accuracy, cycle count reductions and minimized charge backs. The results were presented during a workshop held by the VICS Item Level RFID Initiative at the National Retail Federation's Big Show in New York.
“The University of Arkansas report published offers a greater understanding of the many uses of RFID technology for the apparel industry particularly in the area of inventory accuracy,” said AAFA Special Advisor Mary Howell.
“By exploring these use cases, apparel and footwear brands can begin to see the full range of benefits RFID can provide when working to remain competitive in the global market by streamlining the supply chain and continuing to deliver quality, safe, and affordable clothes and shoes to American consumers.”
The research – titled “Supplier Return on Investment Use Case Data Collection and Analysis” – is the second phase in a three-phase study commonly referred to as the “Many-to-Many study.” It focused on three supplier use cases identified during Phase I of this research published in January 2011.
Researchers measured the benefits that apparel suppliers can achieve by adopting RFID based on GS1 Electronic Product Code (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.
In one use case, increased inventory accuracy, researchers discovered that suppliers' estimates for their outbound shipments were much higher than the actual shipment count accuracy, in part because the companies were auditing very small percentages of those shipments. The costs of incorrect shipments, including chargebacks, are very high. With EPC-based RFID enabling audits on 100 percent of shipments, the frequency of incorrect shipments can drop to zero, creating savings equal to the cost of implementing the RFID system.
“The research captures the first efforts of retail suppliers to shift their focus from just playing 'catch up' to retailer source tagging requirements, to truly leveraging the full value of 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 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.”