Andrea Volpi

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

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.

Reducing out of stock, shrinkage and overstock through RFID in the fresh food supply chain: Evidence from an Italian retail pilot

Abstract. The paper shows how to leverage RFID technology in fresh fast moving consumer goods(FMCG) industry, and, in particular, to optimally manage stock levels on shelves, shelves replenishment,and shrinkage prevention for fresh perishable products.We deployed a pilot project on a FMCG retail supply chain, encompassing a distribution centre andtwo stores of a major Italian retailer. About 60 products have been RFID tagged at case level. We real timetracked cases of products for 4 months, through the distribution chain all the way to the stores, where theRFID deployment made it possible to punctually monitor shelves stock levels, backroom stock levels andproduct shrinkage.We demonstrate that the out of stock (OOS) problem is just one piece of a broader picture, that is shelvesstock optimization. The higher the stock level on the shelves, the lower the need for shelf replenishment,and thus the likelihood of an OOS. However, the capital holding costs and the risk for product shrinkageincrease. The latter issue is particularly relevant for fresh perishable products. This pilot demonstrates thata retailer could reduce OOS, shrinkage and capital holding costs all together, by means of efficient RFIDdata management. Potential savings for fresh products account approx 1.7% of sale turnover.This study is the first pilot project which assesses the impact of RFID technology on the supply chainof fresh perishable products; a full roll-out of the project is being planned for the next future.Keywords: RFID, out of stock, fresh perishable fast moving consumer goods, pilot study

The Benefits of RFID and EPC in the Supply Chain: Lessons from an Italian Pilot Study

The adoption of RFID has undoubted economical advantages in the fast moving consumer goods (FMCG) supply chain, where it allows reducing labor costs, out-of-stock expenses, warehouse management costs, and inventory levels. Such improvements, however, are only a part of the overall RFID benefits, which also include new business opportunities and strategies. The purpose of this chapter is to quantify the potential benefits of RFID technology and EPC Network on the overall FMCG supply chain. The analysis performed and the data presented are based on the results of a recent pilot project developed at the RFID Lab of the University of Parma (Italy), and named “RFID Logistics Pilot.” The project involved 13 major players in the FMCG industry, either manufacturers, 3PLs, or retailers. The deployment was carried out by Parmacotto, an Italian manufacturer of ham, salami, and other processed meats and Auchan, one of the top 5 retailers in the Italian market. RFID tags were used to identify and track 12,000 cases and 800 pallets of sliced ham, sandwiches, and other fresh foods as they moved from production to the retail store shelves, between May and September 2008. The results of the project show that the largest part of the benefits of RFID can be achieved through collaboration between multiple supply chain players. Examples of such benefits include: (i) automation of supply chain processes, with benefits for all players; (ii) better inventory management and decrease in safety stocks, thanks to plain supply chain visibility; (iii) streamlining of other processes (e.g., administrative activities, such as billing); and (iv) increase in turnover due to better management of promotions, reduced stock-out, and increased service level delivered to customers. This latter, in particular, results from the possibility of improving the quality of product delivered to the final customer, in term of increased residual shelf life.

RFID-enabled business intelligence modules for supply chain optimisation

The implementation of radio frequency identification (RFID) for product identification and electronic product code (EPC) for information sharing has the potential to generate a wide amount of data, and to make those data real-time available between supply chain players. However, data need to be interpreted to derive value-added information, which could generate economic benefits from the introduction of RFID technology. This paper aims at addressing the issue of how to exploit EPC data generated by RFID technology to provide value-added information, which could be usefully exploited to optimise supply chain processes. To achieve such aim, a panel of experts, composed of information technology, logistics and supply chain managers of major manufacturers and distributors of fast-moving consumer goods (FMCG), has been involved in the definition of relevant value-added information to be derived from RFID reads. On the basis of the suggestions from the panel members, appropriate business intelligence modules (B...

Shrinkage reduction in perishable food supply chain by means of an RFID-based FIFO management policy

The objective of this paper is to point out how Radio Frequency Identification (RFID) technology can be used to improve the First In First Out (FIFO) policy of fresh products warehouses in the large-scale retail channel. The relatively short shelf life of fresh products forces to maintain a punctual control of the rotation of cases in the warehouse. The implementation of an RFID system enables to real time monitor the supply chain processes an item is subject to; in particular, the present work focuses on the process of shelf replenishment, by moving cases from the backroom to the shop floor. By means of an accurate monitoring of this process, the errors caused by noncompliance with the FIFO policy were pointed out, and the economic savings resulting from the use of RFID technology in that context were evaluated. Results show that the deployment of RFID technology has potential to help manage the FIFO policy of fresh products, thus generating interesting savings for the food supply chain.

Performances of RFID, acousto-magnetic and radio frequency technologies for electronic article surveillance in the apparel industry in Europe: A quantitative study

The purpose of this paper is to explore the potentials of implementing UHF Class 1 Gen 2 RFID technology to support Electronic Article Surveillance (EAS) applications in the apparel supply chain. The study consists of two parts. The first one aims at quantitatively assessing the technical performance achievable by means of RFID technology, and is carried out through an extensive experimental campaign, considering 14 different common stealing patterns, derived both from the literature and from the suggestions received from a panel of experts belonging to 6 major Italian fashion companies. The same tests were performed exploiting two common EAS technologies, such as acousto-magnetic (AM) and radio frequency (RF), so as to provide a quantitative comparison of outcomes for each theft scenario. The second part of the study examines the economic feasibility of replacing traditional AM or RF technologies by RFID technology for antitheft purpose. The assessment is grounded on a real case example, derived from the analysis of three fashion retail stores. Results of the tests show that RFID and AM perform better than RF in most of the scenarios examined, and that both RFID and AM technologies have some strengths and weaknesses. As regards the economic analysis, the business case shows that the investment required for implementing RFID technology for antitheft purpose in a typical fashion retail store is limited, and can be quickly paid back, thus providing an economic justification to this technology. This study represents a good starting point for the apparel industry to look at RFID as a promising technology for EAS applications.

Reengineering and Simulation of an RFID Manufacturing System

We present a discrete event simulation model reproducing the adoption of Radio Frequency Identification (RFID) technology for the optimal management of common logistics processes of a Fast Moving Consumer Goods (FMCG) warehouse. In this study, simulation is exploited as a powerful tool to reproduce both the reengineered RFID logistics processes and the flows of Electronic Product Code (EPC) data generated by such processes. Due to the newness of RFID adoption in the logistics context and to the lack of real case applications that can be examined, we believe that the model developed can be very useful both to understand the practical implications of the technology applied in such field, and to provide a “proof of concept” to substantiate the adoption of RFID in the FMCG industry. Moreover, through the simulation tool, we also address the issue of how the flows of EPC data (Matrix) generated by RFID technology can be exploited to provide value-added information for optimally managing the logistics processes.

RFID technology for blood tracking: An experimental approach for benchmarking different devices

OBJECTIVE: The objective of the paper is to design a testing protocol to measure performances of RFID devices applied to blood supply chain, and to implement an experimental campaign in order to collect performance data. The protocol matches operational conditions in blood supply chain and is particularly tailored to some critical processes, which can benefit from RFID adoption. The paper thus strives at benchmarking performances of inlays, fixed and handheld RFID readers, when deployed in the blood supply chain processes. DESIGN, METHODOLOGY, APPROACH: The adopted testing protocol enables the assessment of performances of RFID devices in processes of the blood supply chain, since it has been developed peculiarly to emulate critical logistics processes. The testing protocol has been designed jointly with hospital personnel involved in every day operations on blood bags and tubes in order to improve processes, in terms of safety and reliability. The testing protocol has been applied to 3 inlays, 2 fixed readers, 1 mobile handheld in 3 logistics processes, all operating according to UHF EPC class 1 gen 2 protocols and ETSI regulations. We measured and compared read rates, accuracies and read times. FINDINGS: The results of the test give a direct insight of performances to be expected from different RFID devices when deployed in a real-world environment. Therefore, it is possible to give answers to how a specific piece of hardware —such as an inlay or a reader —performs, and how it can be effectively used to improve security of patients in healthcare. At the same time, researchers focusing on the business process reengineering of blood supply chain can assess the technical feasibility of the RFID-reengineered logistics processes in order to improve the safety of end users.

Life cycle assessment of RFID implementation in the fresh food supply chain

The purpose of this paper is to assess the environmental performance and burdens of radio fre- quency identification (RFID) technology. The RFID application involves additional environmental impacts to the life cycle of the product to which it is applied. Environmental burdens are caused, for instance, by the emissions and energy requirements that occur during the tag production, transportation and disposal. At the same time, when RFID technology is applied to tag fresh food products, some environmental benefits can be achieved. As an example, food waste can be reduced by optimizing the supply chain processes; therefore, the related environmental impacts can be avoided. The environmental sustainability of the RFID technology is evaluated through the Life Cycle Assessment (LCA) methodology, considering its application to a fresh product, namely fresh milk. The assessment was made exploiting the midpoint indicators recommended in the International Reference Life Cycle Data System (ILCD) Handbook, edited by the Joint Research Centre of European Commission. Results show that the RFID application reduces the environmental impacts in all the categories considered, and that, overall, the environmental benefits resulting from the food waste reduction significantly overcome the tag impacts (more than 5 times). Given the lack of studies focusing on the environmental impact of RFID technology, this work might represent an important addition to the literature.

The role of radio frequency identification (RFID) technologies in improving distribution and retail operations in the fashion supply chain

Abstract: This chapter examines the benefits achievable when radio frequency identification (RFID) technology is implemented into the fashion supply chain, and is based on two of our earlier studies in this field. A theoretical feasibility study demonstrates how the logistics processes of a typical fashion retail store (RS) and distribution centre (DC) should be reengineered to implement RFID technology successfully, and provides a quantitative evaluation of the impact of applying RFID technology to those processes. These preliminary findings are confirmed by the main outcomes obtained from an in-field implementation, the RFID Fashion Pilot (RFP) study. The results of our economic analysis could be useful for companies operating in the RFID area or in fashion, and help to provide an economic justification for implementing RFID in the fashion industry.