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Abstract
Phase I of an empirical study of potential uses of radio frequency identification (RFID) in the apparel supply chain was conducted in the fall of 2010. This Phase of the research was designed to identify potential use cases for the use of RFID in an apparel supply chain and was funded by GS1 US and the American Apparel and Footwear Association (AAFA). The three-phase Supplier ROI study is commonly referred to as the Many-to-Many study. Phase II will involve the measurement of ROI for select use cases identified in Phase I. Phase III will study the effect of RFID on multiple suppliers simultaneously through an experiment. The use cases were solicited from a wide range of companies, in several different countries, in many different types of facilities, and thus reveal where the industry collectively believes the greatest RFID benefits reside. Over a period of several months, we collected more than 60 use cases. The findings of Phase I show that the potential benefits of item-level RFID in the apparel supply chain reach beyond the retailer and include apparel manufacturers.
Summary
The findings of Phase 1 show many potential benefits of RFID in the apparel retail supply chain, namely improvements to top-line sales and inbound/outbound operations. The specific practical improvements come from RFID’s ability to create more visibility in the supply chain as a whole. For example, improvements to top-line sales happen because RFID reduces out-of-stocks- It's more readily apparent when an item is out of stock on retail shelves, so they’re restocked quicker, and more of that item is sold. Inbound and outbound operations are improved because less manual labor is required to keep track of units, thus lowering labor costs.
Even further improvements can be found with item-level tagging, as individual cartons and units can be audited with an automated process, reducing deductions and chargebacks. All of these improvements come together to reduce inventory, shipping/receiving, and ordering costs in the apparel retail supply chain.
