RFID defined

There are many definitions of the components of RFID but at its simplest it’s a method of automatic identification of an item or a container with many items within it. There are two parts: an RFID “tag” or transponder which contains a small piece of data (typically a SKU code) and a device which reads that data to identify the item or container.

As an item with a tag attached to it comes within range of a reader, its data can be captured and with a link to a product database further information about the item can be displayed.

Applications range from logging inbound containers from countries of origin, to receipt in a DC and dispatch to stores. Interestingly, only relatively recently have more applications been considered before and after the logistics element of a retailer’s processes. See below.


Background

The potential benefits of radio-frequency identification (RFID) in the latter stages of the supply chain have been well-proven for some time now. Technical glitches apart, RFID has delivered a level of automation in transport and DC operations that wouldn’t have been possible 20 or even 5 years ago.

If you read industry predictions, you may have seen estimates ranging from millions to trillions of whatever currency units you’re dealing with where you’re reading this. It doesn’t actually matter because the basis for those estimates is at best semi-scientific – with no references made to the effects of chaos theory or the butterfly effect therein.

What matters is that there is little doubt in my mind that RFID will become a driving influence in speeding further the agile supply chain. It has already delivered very significant benefits to the apparel industry but what has held it back from further adoption, especially down to item level, has been one or more of these factors:

  • Cost of RFID tags at item level
  • Accuracy of some of the readers
  • Conflicting standards
  • Not high up enough on the average retailer’s agenda to think beyond the logistics applications
  • Security concerns
  • Unclear ROIs


 

What’s changing?

In the past year or so retailers’ ideas are meeting lower costs, especially at item level, and agreements on RFID standards: the landscape is definitely becoming more interesting. At the PDP we’ve been looking at how RFID technology and opportunities can be blended with the processes affected by product development and PLM – we have some interesting ideas of our own as a result.

In the ideas that are being generated, changes are also happening to the direction of data flow.  is also being questioned.

Security is still a concern – an increasing one in some parts of the world. The 13-page report from the Department of Homeland Security in the US suggests that while there are number of benefits to using RFID technology, such as the quality, speed and ease of information transfer, these don’t outweigh the potential dangers that RFID poses to the American public. In addition to the widely-known issues of skimming and eavesdropping, in which unauthorized third-parties can illegally gain access to private information, the report stipulates that RFID may bring unwarranted surveillance by the government itself.

Ironically, RFID could also play a part in improving national security through enhancing identification of workers in key areas such as airlines and other modes of transport. It could also play a part in monitoring security of goods being transported to help prevent tampering.

There are also concerns over the perception of privacy invasion for the individual. These can be addressed by the retailer being completely transparent about what they’re doing with tags and what data is contained – I wouldn’t belittle these concerns at all because if people are concerned, well they’re concerned. Retailers need to address those worries in a sensitive way.

But back to those ideas….


How could RFID be used in new areas?

In a store:

  • When goods are received from the DC, an immediate (and quick) reconciliation of what was sent against what was received
  • Low stock levels
  • In the fitting room, information displayed (on a mirror?) about alternative colourways and sizes or fits of the product being tried by the customer, cross-sells and up-sells
  • The store management will have an idea of what products have been tried most (or least)
  • Estimate shrinkage through theft, sweethearting, etc by comparing received goods with actual goods less what has been legitimately sold – with the stock-count, this will give the store management team a true picture of what needs to be replenished, thereby maximising sales and minimizing out-of-stocks
  • Fast location of products (for customers and staff alike)
  • Quicker access to extended product data
  • Reduced waiting times at tills because of mass reading of tags (and therefore prices), as well as other initiatives
  • Reduced time to process returns because of the speed with which checks can be made – on the original purchase, on the authenticity of the product, etc
  • Quick identification of products whose safety has been questioned


Other areas:

  • Reducing the incidence of out-of-date food products being offered for sale
  • An increase in the number of handheld and/or mobile devices which feature RFID readers, such as PDAs which also contain a cut-down version of the product database
  • Integration of RFID signals with SMS, IM and other communications channels, as well as other wireless technologies
  • RFID has been a long time gestating but it looks like the time is approaching when it’s embraced end-to-end in the apparel industry’s extended supply chain. We’ll wonder how we lived without it…..