New Research Reveals Benefits Of RFID For Apparel Suppliers

by Press Release on 2012-01-15 23:11:25


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 today 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 chargebacks. 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 research is available for download from the University of Arkansas Web site.

“The University of Arkansas report published today 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.”

Key Findings

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.”

In addition to the key findings, the research highlights the critical relationship between apparel suppliers and retailers and encourages continued collaboration in the widespread adoption of RFID. As such, AAFA and GS1 US are active supporters of the VICS Item Level RFID Initiative (VILRI). The initiative, formed in 2010, is an inter-industry group of retailers, manufacturers, and industry stakeholders with the mission of exploring the benefits that EPC-enabled RFID technology holds for the retail industry.

Research results for the Phase II University of Arkansas supplier study were captured in a paper available at http://itri.uark.edu/104.asp?code=rfid&article=ITRI-WP159-1211. They were also discussed during webinars hosted by AAFA and GS1 US in December. Recordings are available for replay on the AAFA Web site.

About AAFA
The American Apparel & Footwear Association (AAFA) is the national trade association representing apparel, footwear and other sewn products companies, and their suppliers, which compete in the global market. AAFA’s mission is to promote and enhance its members’ competitiveness, productivity and profitability in the global market by minimizing regulatory, commercial, political, and trade restraints. http://www.wewear.org

About GS1 US
GS1 US, a member of GS1, is a not-for-profit organization that brings industry communities together to solve supply-chain problems through the adoption and implementation of GS1 standards. More than 200,000 businesses in 25 industries rely on GS1 US for trading-partner collaboration and for maximizing the cost effectiveness, speed, visibility, security and sustainability of their business processes. They achieve these benefits through solutions based on GS1 global unique numbering and identification systems, bar codes, Electronic Product Code-based RFID, data synchronization, and electronic information exchange. GS1 US also manages the United Nations Standard Products and Services Code(R) (UNSPSC(R)). http://www.GS1US.org