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From the Boardroom to Reality: RFID in the Fashion Apparel / Textile Industry - Articles Surfing
Many 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 operations.
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 RFID initiative:
Market Observation: Talking to business specialists, they gather information on technology accuracy and reliability, costs, and future trends.
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 re-stocking refinements.
Costs savings include staff time allocations, counting / checking, shrink reduction.
Costs include hardware and software technology (tags, readers, software & middleware), integration, training, roll-out and systems operation.
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 business case.
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 Centers.
Initiative related costs include: Investment in hardware facilities, middleware, integration, RFID tags, and roll out costs (training, implementation, etc)
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 a pilot.
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.
Copyright © 1995 - Photius Coutsoukis (All Rights Reserved).
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