How RFID can improve supply chain relations.
By Hannah Wilson of Weavabel
Supply chain relations have been considerably strained over the past few years due to the effects of Brexit and the COVID-19 pandemic. For the fashion industry, this has meant plummeting demand, permanent closures of retail stores and a considerable loss of jobs for both front-of-house employees and those working in manufacturing and transport.
The pandemic also highlighted the problems found in the fashion industry’s supply chain, including lack of visibility of inventory, excess stock and returns, availability of raw materials and transport issues. One way many brands have chosen to combat this is through the implementation of RFID.
What Is RFID?
Radio frequency identification (RFID) is used in various industries for manufacturing, inventory control, warehousing and logistics and automatic object tracking, all of which aid in supply chain management.
Data is encoded in RFID tags, which are made up of a circuit and antenna that transmits via radio waves to an RFID reader. This RFID reader then converts this to a usable form of data.
Unlike the traditional barcode system, RFID tags can store up to 1,000 bytes of data that can be used to search, identify, track and communicate with items and people.
When it comes to the supply chain, RFID has the potential to link all of its processes, from the raw materials to the finished product. Vastly improving technology means that RFID chips can now be small enough to be integrated into fabric or logos on products for full traceability across the supply chain.
Benefits of RFID
With traditional unique product code (UPC) systems like barcode labels, retailers are limited to the amount of information they can store. Barcode labels also require line-of-sight reading, so each item should be scanned individually.
With RFID, labels can be read without opening storage and scanning each item. This allows retailers to easily track their products from manufacture and delivery to the point of sale (POS).
Accuracy of stock in-store
Space is a constraint many retail shops have to consider and use wisely. Individual in-store systems can be inaccurate around stock levels, so retailers can manage their stock easily and identify items quickly and correctly by using RFID.
This will tell retailers when to replenish items and reduce ‘out of stock’ lines in stores that only frustrate the customer, retailer and manufacturer.
Improvement of Web Orders
RFID benefits both physical retailers and eCommerce stores. Online retailers can verify product shipments, avoid simple errors and improve customer satisfaction by integrating RFID into their products.
The real-time product information offered by RFID also makes it possible to integrate physical and online retailing with the option of in-store pick-up. Stock of RFID-tagged products can be checked and paid for online and then picked up in store, making the process easier for both customers and retailers.
Fashion retailer Ganni uses RFID to fulfil online orders from stores to eliminate the need for separate stock, ultimately reducing overstocking and overproduction.
Quicker Checkout Times
RFID not only benefits warehouse and logistics processes (see Green Warehousing) but also the customer-facing side of fashion commerce.
Designer Handbag retailer Rebecca Minkoff uses RFID for self-checkout with its stores outfitted with RFID tablets and iPads. This technology allows customers to place the item on the table, identify the item and pay via the iPad.
With RFID, waiting in long lines is no longer necessary for customers, so brands can focus on bringing them a stress-free shopping experience.
Reduction in Sample Loss
Along with regular products, brands are also inserting RFID tags into their samples. When a fashion business is in a position to lend samples of their work, whether this is for editorials or events, it’s essential to keep track of them to reduce costs and losses.
RFID can help monitor which samples have left the showroom, where they are and if they’ve been misplaced. As a result of implementing this technology, fashion companies have experienced an 85% reduction in sample loss.
More In-Depth Insights
RFIDs’ ability to provide real-time data to all stakeholders means that businesses can gain more in-depth insights about their products, where they’re going and who is buying them, as well as any potential trends. This data can then be used for better strategic planning across the supply chain.
Better Relationships Between Brands, Customers and Employees
Ultimately, RFID can make stocktaking quicker, more efficient and more accurate. With real-time data, shop workers can locate products quickly for customers, deliveries can be tracked easily and brands can see where their products are going, providing better experiences for their customers.
Who Is Using RFID?
RFID has enormous benefits for retailers. The technology supports both physical and online commerce and has proven to make supply chains more efficient and improve the customer experience.
According to Accenture, 93% of retailers in the US already use RFID, with 22% of softlines retailers having plans to adopt RFID as a way to support the supply chain and analytics.
Luxury brands are now using RFID to know precisely which products are going to which retailers. This technology is ideal for issues around the grey market, where genuine items are bought and sold outside the manufacturer’s authorised trading channels. RFID can be used to authenticate and track these high-value items.
With RFID, luxury brands can stay in control of their branding and communication with customers while also identifying who is selling which products into the grey market to avoid frustrating leaks and unauthorised sales.
There are numerous ways fashion retailers have implemented RFID into their products. Fashion giant Zara uses RFID in its security tags, which can be reused and reprogrammed for items in the future.
Luxury retailer Burberry uses RFID tags on its hang tags for both ease of tracking and to add more to the customer experience. These tags mean shoppers can interact with products via their smartphones and access extra content from how that specific product was made to recommendations for style.
Other brands are embedding RFID chips to differentiate between fake and genuine products. For example, luxury retailer Ferragamo puts an RFID chip into the bed of its shoes.
Other brands introducing RFID include Mango, Adidas, Nike, eBay and luxury brands such as Vestiaire with Alexander McQueen.
RFID and Sustainability
In both the logistics and fashion industries, sustainability has become a pressing issue. This benefits not only the environment but also companies themselves.
While consumers have to take responsibility for their waste, particularly when it comes to fast fashion, retailers must also be proactive in providing more sustainable clothing options. RFID can help reduce waste from both the manufacturing and customer-facing ends.
The Australian Circular Textile Association (ACTA) found that every season, about 30% of clothes that are made around the world are never sold.
RFID can show retailers which products are and aren’t selling so that they can make quick decisions and adjustments to avoid over-production of stock.
According to Gartner, item-level RFID can deliver inventory accuracy rates over 98%, so retailers can make better-informed decisions around inventory levels. This includes any decisions made at the initial manufacturing stage so that the raw materials required for creating products aren’t wasted.
While the majority of RFID chips are placed in swing or hang tags — often discarded once the garment is bought — implementing RFID into the products themselves via logos means that retailers could follow the garment throughout its lifecycle.
While this idea may have security implications for its wearers, this could be useful for identifying which garments belong to which brands, encouraging them to recycle and dispose of their products responsibly.
RFID can help promote the circular fashion economy — garments can be returned to retailers at the end of their lifecycle to be recycled.
The Future of RFID
According to a report by MarketsandMarket, the global RFID market is expected to grow from $10.7 billion to $17.4 billion by 2026.
For the fashion industry, RFID technology is now being integrated with high-tech concepts such as smart mirrors, interactive fitting rooms and automated tills. This will all improve customer experience by making product recommendations, showing product availability, providing additional information while also increasing sales and giving brands more insight into the way their customers shop.
Joel Goodson, content marketer at Detego, summed up RFID technology by saying: “Smartphones have enabled a digitally connected customer and now RFIDs are making digitally connected products.”
RFID has had a huge impact on supply chains worldwide, from the warehouse to store shelves. From providing more accurate inventory data, improvements in online and in-store shopping and even better insights for brands, RFID has proven to be an excellent method for retailers to make their processes more efficient and boost sales.
Making these processes easier is one of the best ways to improve relations across the supply chain. Less overproduction means more smooth-running manufacturers, profitable retailers and ultimately, happier customers.