Experimental evaluation of business impacts of RFID in apparel and retail supply chain

Abstract

The purpose of this paper is to present and quantify the business benefits that can be achieved through the deployment of Radio frequency identification (RFID) technology in the apparel and fash- ion supply chain. The goal is to provide quantitative results regarding logistics and store processes, as well as different areas and processes that could be affected by RFID, including both operational aspects (e.g. shipping and receiving, inventory counts, etc.) and strategic issues related to garments try-ons, store replenishment, inventory management, customer satisfaction and sales volume. Results presented stem from an experimental campaign carried out in Italy in 2010. We applied RFID UHF gen2 tags to approximately 20,000 garments of the spring/summer and fall/winter 2010 collections, shipped from a distribution centre to a retail store of a major Italian fashion brand. We monitored the flow of goods through the logistics pipeline by means of mobile and fixed RFID readers, and collected the related data. Through proper elaboration of those data, we provided an estimate of the RFID benefits, both at operational and strategic levels. The main findings of our research have to be found in a punctual assessment of savings and increase in sales volume that can be achieved in the apparel supply chain through RFID deployment, with a special focus at the store level. Specifically, RFID is proven to provide benefits at operational levels through increased visibility of materials flows, labour reduction and higher accuracy of the store operations; moreover, it is demonstrated that the greatest contribution of RFID lies in its ability to provide new data, which allows consistently increasing sales and improving customer satisfaction.