Today's small suppliers and retail stores have scores if not hundreds of Stock Keeping Units (SKU). Because of this large number, an automated approach to inventory tracking and reordering at the individual SKU level is particularly important to apparel distribution centers and retailers. Item level tagging using Radio Frequency ID (RFID) is an excellent way to achieve an automated inventory control system that is affordable and accurate.
A Brief Explanation of RFID in Supply Chain Management
RFID is an older technology first introduced in supply chain management decades ago when pallets and containers were tagged with RFID. This allowed for shipment tracking of entire shipments, but not at the solo item level that RFID is now capable of. Today an RFID system at the SKU level works as follows:
1. Apparel is tagged at the SKU level before leaving the manufacturer’s site.
2. When a shipment arrives at an apparel distribution center, it passes by RFID readers that can ‘see’ the tag even if the item is in a container or carton and not in the line of sight of the reader.
3. Each SKU is read and a record created using the RFID information.
4. When orders come to the distribution center (DC) the items are removed from DC inventory and the delivery location is noted on the SKU file.
5. In the best RFID systems, as retailers sell a particular SKU it records the sale on the retailer’s inventory system and the SKU for that size/color/ is reduced each time that the size and color are sold.
6. When inventory reaches a certain, pre-determined level, a reorder is either issued from the store or automatically occurs.
Two Types of Apparel Supply Chains
Supply chains come in one of two structures in the apparel industry. The first is the Replenishable Apparel Supply Chain (RASC). The other is known as the Fashion Apparel Supply Chain (FASC). There are significant differences in the types of RASC items, and they consist of things worn year-round such as:
Orders for these kinds of SKU items are produced throughout the year and do not change much. So, RASC items are refilled automatically from the retailer’s own DC.
When looking at SKUs in FASC we find things such as
* Shirts and Blouses
* Winter coats
However, items like these have styles that change along with colors from season to season or year to year. Apparel retailers do have challenges from FASC inventory control that RFID helps alleviate. The challenge is with predicting size/color/style almost one year in advance of the sales season from manufacturers often found overseas. Dealing with RASC and FASC manufacturers are a bit more complex than with manufacturers in most other consumer goods areas.
When it comes to RASC products, clothing contractors can provide RFID on the item at the factory. Smart contractors may offer RFID at low or no cost as a tactic to differentiate themselves from the rest of the marketplace. Also, contractors who use RFID technology to benefit their own operations find great value from better inventory control.
Areas that can benefit from RFID technology include:
* Inventory management and tracking
* Quality assurance
* Recalls and returns tracking
* Shrink management and security
* Supply chain data
Also, retailers that have implemented RFID and create visibility for inventory on shelves and align backroom-to-shelf replenishment processes causes shelf product availability to improve and that helps drive sales. Not only is this good for retailers, this is especially of benefit to manufacturers and is another reason for them to provide RFID at little or no charge. Companies find that RFID-enabled processes exert downward pressure on order costs at the DC level by cutting errors and therefore the expense of shipping an order or receiving an order.
Scanning shipments as they pass through loading dock doors is easy, even at the single unit level. Unlike barcode scanning which must be line of sight, RFID just needs proximity and reduces handling time when both receiving and shipping items at the distribution center.