We are living in an era of constant change, constant technological evolution—and now and then a revolution that fundamentally changes the way we do business. Few would doubt that the development of electronics, computers and the Internet has had an enormous impact on our society, and there is more to come. RFID (radio-frequency identification) is such a technology, and I believe that it will change the way the retail industry does business and improve efficiencies throughout the supply chain.
Research from the University of Arkansas has demonstrated the business case and value of item-level RFID tagging to the retail apparel industry. Pilots utilizing item-level RFID in retail have pointed to inventory accuracy rates of more than 95%, the ability to count 5,000 items per hour using RFID vs. 200 items per hour using barcodes—a time savings of 96%, —and out-of-stock reductions of up to 50% which translate to improved customer satisfaction and sales increases. Not to mention improved security and coordination throughout the supply chain.
The technology is here, but it needs to be adopted on a wide scale if we are to profit from it, which is why leading apparel retailers and suppliers got together several years ago, and decided that there is a need for a joint-industry effort to explore the potential benefits of standards-based, item-level RFID in department stores.
The result was the Item-Level RFID Committee, which was initially organized by the Voluntary Interindustry Commerce Solutions (VICS) and the American Apparel & Footwear Association (AAFA). It didn’t take long before the Council of Supply Chain Management Professionals (CSCMP), GS1 Canada and GS1 US joined the effort, adding their support to laying a foundation and setting the objectives for the joint-industry project. The Committee grew with the backing of additional retailers, suppliers and solution providers, as well as leading associations including the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA).
At the beginning of November the Committee announced a broad-based initiative to guide the adoption of Electronic Product Code (EPC)-enabled RFID in retail, and I am proud to be a part of it. Known as the Item-Level RFID Initiative, our initial focus will be within the apparel sector. We believe that now is the time to raise awareness of—and respect for—the value of this technology in the retail supply chain and we encourage others to join us in this exciting and strategic juncture in retail history.
This is one of the most significant technological initiatives since the introduction of the bar code. It follows a true collaborative effort where retailers, suppliers, academia, solution providers and associations have come together to identify opportunities, effective strategic initiatives and unique value added benefits heretofore not considered.
Members of the Item-Level RFID Initiative will create a strategy and a framework for industry engagement, education, adoption and responsible use of existing EPC/RFID technology. We believe it will foster innovation, improve business efficiencies, and lead to a better consumer shopping experience.
Here at the VICS team, we are so very proud and honored to be able to play a role in the adoption of a technology that was first brought to the industry by GS1US. It was the groundbreaking effort by EPCglobal that laid the foundation for an efficient consumer-driven supply chain and the future development of RFID.
The Item-Level RFID initiative could very well pave the way for other technologies, standards and guidelines that require a holistic approach to successful implementation. One of the lessons I would like to highlight is the importance of understanding and embracing organizational change and process development, whether on a company or industry level. Another and maybe the most important lesson is that such strategic change takes senior management support and true buy in.
Please stay tuned for item-level RFID progress reports and expect this technology to be coming your way soon.
Joe Andraski is president and CEO of VICS and a member of MH&L's Editorial Advisory Board