November management briefing: Part III - RFID applications become increasingly diverse
With the rapidly escalating use of RFID at all levels of the supply chain, there are literally hundreds of shapes and sizes of tags and readers - not to mention software and associated electronic systems - available on the market. RFID tags or transponders can be as small as a grain of rice or as large as a credit card, and readers likewise vary in capability, complexity and price.
No one size fits all. Tags, readers and software are often highly customised to the needs of individual businesses.
According to Andreas Schneider of leading RFID consulting firm GCS Germany and spokesperson for the Germany-based RFID Fashion Group, a significant distinction should be made between the technology and its functionality.
"The important thing to keep in mind here is that we are talking about product serialisation. Where it makes sense you use RFID, where it doesn't you use something else," he says.
Most commonly available RFID tags are flat, either sewn into the garment like a care label or glued onto a hang-tag. Each one is made up of a chip and an antenna with a range of anything from a few centimetres to 10 metres or further.
The chip contains an Electronic Product Code (EPC), a standard that is effectively replacing the Universal Product Code (UPC) used in traditional barcodes. The EPC differs from a barcode UPC in that a product can be tagged with a unique identifier containing a myriad of information about that single garment (size, colour, fit, model, origin, date of production, etc).
Latest tag innovations
According to market research specialist Dr Peter Harrop, author of the 'Apparel RFID 2011-2021' study, the latest tag innovations include woven fabric labels with a chip embedded in them able to withstanding washing and heat.
The tags can contain information such as care instructions or return information that could be useful post-sale, but their use in Europe could be limited thanks to the recent European Union (EU) recommendation that will see tags 'killed' at the point of sale.
Tags operate on different frequencies according to their use and context, although ultra-high frequency (UHF) that permits a greater range and reading speed has become the generally accepted apparel industry standard.
Together with the second-generation air interface protocol developed by EPC Global, this emerging item-level standard is commonly referred to in product documentation as a passive EPC Gen 2 UHF tag.
With simple item-level disposable hang-tags hovering around 8-10 cents a piece, and infrastructure that can cost hundreds of thousands of dollars to install, it's not a technology for everyone.
"Probably only around 15-20% of retail spaces will use the technology," notes Mr Schneider "but the benefits for who can use it are huge."
Mr Schneider says vertically managed operations have been best-placed so far to integrate and reap the benefits of RFID on an item level.
"They can see the clear advantages in the speed and accuracy of inventories and the fast replenishment of shelves that also means an increase in sales performance."
Vertically managed operations also have the advantage of being able to better control the essential information and software systems that collect and process RFID data, and to dictate to their suppliers how and where the tagging will occur.
Theft and counterfeit protection
As well as increased accuracy in inventory and stock management, many companies are also looking to RFID to protect against theft and counterfeits that can cost millions every year.
According to the latest Global Retail Theft Barometer, published by the UK-based Centre for Retail Research, global retail shrinkage through theft in 2010 is worth US$107.3bn, with apparel ranking as the second hardest-hit retail sector.
Although counterfeits are more difficult to quantify, counterfeit clothing and accessories in just one country like Italy have been valued at EUR2.6bn a year according to a 2009 report by the Censis Institute (the Italian Institute for Social Investment).
Brand protection is a particularly sensitive issue in the country and the marketing manager of Italian RFID supplier Aton SpA Roberto Baldassar says that there is intense interest in RFID on the part of medium and high-end brands, particularly with regards to curbing counterfeits and the notoriously hard-to-monitor grey market.
Aton has recently assisted Italian high-end fashion firm G&P Net, producer of luxury sportswear labels Peuterey and GeoSpirit, to roll out RFID solutions across its production.
Mr Baldassar says his company has found in general a six-month return on investment (ROI) for its apparel RFID solutions. And he expects the number of companies employing the technology to rise slowly but steadily, particularly in businesses with a higher average cost per garment such as high-end sportswear.
Return on investment
ROI also featured in a comprehensive public study into the commercial application of RFID that wrapped up last year.
Funded to the tune of EUR7.5m by the European Union, the BRIDGE (Building Radio frequency IDentification for the Global Environment) project undertook empirical studies of the application of RFID to various commercial settings that in the apparel sector included a department store, a hyper and supermarket and an SME (small and medium enterprise) manufacturer.
As part of the BRIDGE project, German manufacturer Gardeur and department chain Galeria Kaufhof (owned by retailing giant Metro AG) trialled a series of RFID applications. These included tag and trace functions that follow the flow of garments around the store, 'smart' retailing functions such as shelves that register when an item is taken off and replaced on a shelf, and 'smart' dressing rooms and mirrors.
Smart dressing rooms
Prada pioneered the concept of smart dressing rooms in many ways with the opening of its completely RFID-enabled New York Soho store in 2002.
Mirrors registered the presence of RFID tagged garments to enable sales people to suggest accessories, while the customer could get more information about the garment and how it had been made via strategically placed monitors.
The objective was an enriched (and beautifully designed) shopping experience, although the technology was at the time not perfected and led to glitches in the functioning of the store.
Since then the technology has developed considerably. The MagicMirror for example, developed by Italian design firm thebigspace and leading global RFID supplier Avery Dennison, scans a RFID tag in front of it and makes a series of fluid and informative suggestions to the consumer. This is just one of a series of products readily available on the market.
Dr Harrop says that customer experience of RFID capability through smart functions is very important. "When the tag is on a pallet in the warehouse it's just a backroom thing, and the customer doesn't really care about that. But when you can enable interactivity through magic mirrors for example, the consumer can appreciate the benefits of the technology."
By Lee Adendoorf.
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