The second of three scheduled research projects by the University of Arkansas has revealed benefits for apparel suppliers using radio frequency identification (RFID), according to study sponsors the American Apparel & Footwear Association (AAFA) and GS1 US.
A mid-month news release from AAFA reported that the year-long project found the potential for suppliers to realize both top- and bottom-line improvements via increased inventory accuracy, cycle count reductions and minimized chargebacks.
“The University of Arkansas report ... 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.”
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.
AAFA said researchers measured the benefits that apparel suppliers can achieve by adopting RFID based on GS1 Electronic Product Code (EPC) standards. The effects of EPC-based tracking on improving the suppliers' inventory accuracy were quantified, 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, said the trade organization. The costs of incorrect shipments, including chargebacks, are very high, it noted. 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.
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.
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® (UNSPSC®).
Questions: What other areas of the supply chain lend themselves greater use of RFID technology?
Considering the incorporation of RFID is less than 10 years old, which sectors across the cotton supply chain, from field to consumer, have been quickest to implement the new technology?
Which sector stands to benefit the greatest from the use of RFID for long-term planning purposes?