rfid in apparel retailrfid in apparel...

RFID in Apparel RetailRFID in Apparel Retail

Scot StelterAlien Technology

Chad WardXterprise

Alien [email protected]

408 782 3900

[email protected]

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Agenda

• The Retail Apparel Challenge• RFID Pays for Itself in Apparely pp• Alien Reader and Tags• Case Study: Retail Fulfillmenty• The Xterprise Clarity Solution• Tips for SuccessTips for Success

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The Retail Apparel Challenge

• Thousands of skus, sizes, styles and colors• Men's Warehouse has over 40 different sizes• Men s Warehouse has over 40 different sizes,

let alone colors and styles• Target lists 990 different “jeans” items• A small retail store may have 15K skus• A small retail store may have 15K skus

• Fickle customers and hungry competition• If it’s not on the rack, the next store will have it,

• Complex, mobile, ever-changing merchandizing layouts

H d t k i d• Hard to keep organized• Expensive and labor-intensive to manage

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How does RFID Help?

• Tells you what you have on the shelf and in the back

• Drives replenishment in real time

• Reduces the cost of managing inventory• University of Arkansas study on labor required to count 97

items on a rounder: barcode: 9 minutes; RFID: 7 seconds

• Lays the foundation for future initiatives• Lays the foundation for future initiatives• E.g.: Intelligent shrink management, assisted shopping

RFID delivers both revenue uplift and cost reduction

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Independent Results for Return on Investment• #1: Out-of Stock Elimination Drives Revenue:

• Reduction in out of stocks by 50% to 90% (IDTechEx, Alien customers)R i t f 2 8% (IDT hE )• Revenue improvement of 2-8% (IDTechEx)

• #2: Cost Reduction Drives Profit:• Labor: Over 90% reduction in basic inventory management tasks (UArk)• Inventory: Improvement in gross margins by as much as 4% (AMR)

• Return on Investment• Payback in as little as 6 months; 12-18 months average (ABI IDTechEx)Payback in as little as 6 months; 12 18 months average (ABI, IDTechEx)

• Sources:• IDTechEx, ABI, AMR, Levi Strauss, University of Arkansas, American

Apparel Information Week RFID Journal NP CollectionApparel, Information Week, RFID Journal, NP Collection

“Retail apparel is the first big retail RFID success story” IDTechEx

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Case Study: Branded Apparel Retailer Uses RFID to Trigger Sales Floor Restocking

Simple Use Case• Tag apparel items at source or when received• Read tags when they enter sales floor and at POS to• Read tags when they enter sales floor and at POS to

trigger restocking

ROIS k f 10% d d 1% 1 K k• Stock outs of >10% reduced to ~1% on 15K skus

• 92% reduction in cost required to restock all shelves• Estimated payback 6 months (IDTechEx)

• Predicted margin improvement of about 4% (AMR)

Additional Benefits:• Revenue bump (est. 2% to 8%)p ( )• Faster checkout• Foundation laid for future shrink-control system

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ROI Estimate Based on Actual Pilot Projects• Revenue per store (annual K$) $ 2,500

• Gross profit improvement (4% of revenue) $ 100

• Cost per store RFID Hardware (K$) $ 10 • Computer hardware $ 5 • Software $ 20 • Services $ 3 • Installation, power cabling, mechanical $ 3 • Support and maintenance 1st year $ 3

• Total investment cost per store $ 51

• ROI Payback (months) ~6

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Sources: Yahoo Finance, AMR, Xterprise, customer interviews, IDTechEx, Alien Technology

Case Study: Jeans Brand/Retailer Accelerates Store Inventory Process in Pilot Project

Simple Use case• Tag apparel items at source or when received• Count whole store inventory using cart mounted reader• Count whole-store inventory using cart-mounted reader

or handheld

ROI on Inventory Process:M l t t k 4 l 2 5 d 10 d• Manual count took 4 people 2.5 days – 10 man-days

• RFID reduced it to 1 man-hour• 80X reduction

RFID d t b 20% t• RFID proved to be 20% more accurate

Additional Benefits:• Enables more frequent countsq• Fewer stock outs especially in high-sku categories

*Source: Direct Alien Interviews + ABI & IDTechEx reports

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Alien offers Tags, Readers, Education & Services

• RFID Silicon IC’s• Highest sensitivity IC• Expanded memory & AuthenticationExpanded memory & Authentication

• Tags• Exceptional Performance• Global Compliance

• Readers• High PerformanceHigh Performance• Easy to Deploy & Manage

• Services• RFID Professional Services• RFID Education


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Alien Tags: Performance Required for SuccessIndependent Validation by EECC

Color KeyTested at 866MHzTested at 910MHzT t d t 922MH

• Alien Higgs-2 performance leadership• Higgs-3 even more sensitive!


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Tested at 922MHzTested at 953MHz

Innovationin Fulfillment Operationsin Fulfillment Operations

Xterprise Proprietary Information – Copyright © 2009 – All Rights Reserved 13

Innovation in Fulfillment Operations

A North American market leader in branded identity apparel programs and facility servicesfacility services– Over 100 year old publically traded

company– Direct delivery uniform rental and facility

services– Steady, organic and acquired growth -

2008 revenues exceeded $1BEmploys over 10 000 people in the US– Employs over 10,000 people in the US, Canada and Ireland

Face competition nationally and locally– Compete with outstanding customerCompete with outstanding customer

service and product innovationInvesting in technology to offset soft economic conditions


– Goal is to driving consistent, profitable growth

Business Challenges

Reduce the high Reduce the high cost to ser e andcost to ser e and

Compete with Compete with c stomer ser icec stomer ser ice

Scale to 170 Scale to 170 locations in the USlocations in the UScost to serve and cost to serve and

automate manually automate manually intensive processesintensive processes

customer service customer service excellence without excellence without

breaking the breaking the companycompany

locations in the US locations in the US and 30 in Canada and 30 in Canada supporting over supporting over

175,000 customers175,000 customersp yp y ,,How to translate tribal How to translate tribal knowledge to business knowledge to business

rules?rules?

How to increase fill How to increase fill rates while driving rates while driving

down costs?down costs?

How to deploy a How to deploy a repeatable, scalable repeatable, scalable

solution?solution?


Solution Approach and Results

oo Individual garment level RFID tagging at central fulfillment hub Individual garment level RFID tagging at central fulfillment hub with wash resistant tagswith wash resistant tagsReduce the high cost toReduce the high cost tooo Automated daily cycle counts for inventory accuracyAutomated daily cycle counts for inventory accuracyoo Capture all sourcing and fulfillment “tribal knowledge” as Capture all sourcing and fulfillment “tribal knowledge” as business rules to drive order fulfillment and sourcing business rules to drive order fulfillment and sourcing ooDirected picking processes to quickly locate garmentsDirected picking processes to quickly locate garments

Reduce the high cost to Reduce the high cost to serve and automate serve and automate manually intensive manually intensive

processesprocesses

Compete with customer Compete with customer service excellence service excellence

without breaking thewithout breaking the

oo Met customer service level targets with reduced inventoryMet customer service level targets with reduced inventoryoo Increased order fill rates by 50%, while reducing inventory Increased order fill rates by 50%, while reducing inventory levels 30%levels 30%oo Warehouse efficiency gains of 25% or moreWarehouse efficiency gains of 25% or morewithout breaking the without breaking the

companycompany

Scale to 170 locations in theScale to 170 locations in the

oo Customer business rules drive the operation increasing overall Customer business rules drive the operation increasing overall customer satisfactioncustomer satisfaction

oo Established a proven, highly scalable solution that can be Established a proven, highly scalable solution that can be i kl li t d t th t i “ d ” N thi kl li t d t th t i “ d ” N thScale to 170 locations in the Scale to 170 locations in the

US and 30 in Canada US and 30 in Canada supporting over 175,000 supporting over 175,000

customerscustomers

quickly replicated to other customer service “pods” across North quickly replicated to other customer service “pods” across North AmericaAmericaoo CustomerCustomer--centric fulfillment rules vs. local tribal knowledgecentric fulfillment rules vs. local tribal knowledgeoo Savings per location in the range of $2500 per Day!Savings per location in the range of $2500 per Day!


Fulfillment Center OperationsDeployment Topology (Single Pod)

Stock Room 1•100k garment inventory•5,000 skus•2k new daily•500 orders/day4 d i t (2 t l C t l •4 read points (2 tunnels,

1 HH and 1 cart)Central

Stock Room 4•80k garment inventory•5,000 skus•.5k new daily

Stock Rooms 2 & 3•60k garment inventory•5,000 skus•.5k new daily•100 orders/day•4 read points (2 tunnels •100 orders/day

•4 read points (2 tunnels, 1 HH and 1 cart)

•4 read points (2 tunnels, 1 HH and 1 cart)


Fulfillment Center OperationsDeployment Topology (Single Pod)

CentralLegacy

ERP Solution

Facility / Edge

StockRoom #1

StockRoom #2

StockRoom #4

Garment Tagging

StockRoom #3

•100k garment inventory•5,000 skus•2k new daily

•80k garment inventory•5,000 skus• 5k new daily

•60k garment inventory•5,000 skus• 5k new daily

•60k garments inventory•5,000 skus• 5k new daily


•2k new daily•500 orders/day•4 read points (2 tunnels, 1 HH and 1 cart)

•.5k new daily•100 orders/day•4 read points (2 tunnels, 1 HH and 1 cart)



Actual and Projected Benefits

• Increase order fill rates up to 50%• Increase order fill rates up to 50%• Increase customer satisfaction 5% to 10%• Increased warehouse efficiency by 25% • Reduce inventory levels up to 30%Reduce inventory levels up to 30%• Reduce labor costs 15% to 20%• Created savings of $2500 per location per day


Microsoft Retail Experience Center


Tips for Success – Keep it Simple

Study your business and find the simplest, high-value project to d ldeployInvolve the day-to-day business users from the startEnsure all projects have a defined beginning and endp j g gMake sure success has clear and measurable metricsMinimize reliance on suppliers at the beginning

Scot StelterAli T h l

Chad WardXt iAlien Technology

[email protected] 782 3900

Xterprise

[email protected]


rfid in apparel retailrfid in apparel...

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