From SCDigest's OnTarget e-Magazine
Feb. 2, 2012
RFID and AIDC News: Is the Tipping Point Really, Truly Here for Item Level RFID Tracking in Apparel Retail?
New Report from Accenture and VICS Says Yes; A Simpler Approach to Thinking about ROI
SCDigest Editorial Staff
Early on in the timeline of RFID adoption in the consumer goods to retail supply chain, circa 2004-05, there was much discussion about when the efforts in the sector (led by Walmart in the US, Tesco in the UK, and others) would reach the magical "tipping point."
Actually, there were a number of so-called tipping points. The most prominent had to do with when consumer goods manufacturers would reach a level of tagging volumes such that that they could move the process from a costly one performed in distribution centers to a less onerous one done in-line as part of manufacturing.
SCDigest Says: |
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| The report says, in fact, that tag prices are much lower than many companies perceive, having dropped rapidly in recent years. In many cases, depending on type and quantity, tags be procured for as little as 10 cents each
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What Do You Say?
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Another tipping point concerned was when enough other retailers would join Walmart in requiring RFID tagging of cases and pallets such that that most other retailers would jump in out of self-defense. Seems to us there were a few other tipping point scenarios discussed besides these two.
Obviously, none of those original tipping points were ever close to being reached.
Now, however, a new report from Accenture for the VICS Item-Level RFID Initiative says we are on the cusp of another tipping point, this one for adoption of item-level tagging in the apparel to retail chain in significant numbers. The report, titled Item-level RFID: A Competitive Differentiator, says that like many other technologies before it that took a long time to incubate, "RFID now appears set to catch fire."
That conclusion comes in part from a survey of 58 suppliers and 56 retailers in North America, conducted by Accenture on behalf VICS (the Voluntary Interindustry Commerce Solutions Association).
That research found that for some processes, such as taking store inventory, RFID technology can now drive improvements several orders of magnitude better than current standard methods. For example, taking store inventory, once a project of days or weeks, "can now be tallied with lightning-fast, near-perfect accuracy."
Driven in part by RFID costs that will continue to decline, Accenture also says that most major apparel and footwear retailers will adopt RFID technology in some part of their business within the next 3-5 years - that is, "if recent momentum continues."
The report rather too neatly summarizes how the initial Walmart-driven program didn't pan out in general retail at the case and pallet level. Regardless, it then says that "Many presumed that RFID’s utility had been exaggerated and never looked back. This obscured the steady progress being made by innovative retailers who began tagging softline merchandise at the item-level, with the simple goal of driving inventory benefits within the four walls of the store."
Evidence of that: current aggressive item-level RFID efforts American Apparel, JC Penney, Macy's, and - interestingly - Walmart itself, with rumors of several others, such as Gap stores, said to be ready to jump in, according to SCDigest reporting.
A number of studies have indicated the payback for soft goods retailers from item-level RFID can be very strong. New research from the University of Arkansas has shown the ROI for apparel vendors can also be strong (we will review that study shortly in SCDigest).
The report also references an unknown company that is said to have shrank its cash-to-cash cycle time by 35%, lifted revenues 10% and generated 5-7% better profit margins as a result of instituting item-level RFID, according to research from Gartner.
(RFID and AIDC Story Continued Below)
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