Retailers face more challenges than ever before in operating their businesses successfully. Economic, competitive and consumer-driven factors demand that retailers continue to innovate to deliver the products and services that consumers want, and they must do so profitably. As supply chains grow ever more complex, and consumers demand better merchandise availability and improved speed-to-shelf, retailers are increasingly relying on technology-based solutions to help address their business needs, and RFID is increasingly proving to be the ideal solution to keep up in the complex retail environment.
Although used extensively at the pallet and case level by several major retailers over the past few years, it was only recently that RFID became a consumer facing, item-level reality. Last year, Charles Vogele Group successfully implemented a source-to-store item-level standards-based RFID solution across its entire supply chain.
A leading European retailer's innovative approach
Charles Vogele is a leading independent European clothing retailer with more than 850 stores in Switzerland, Germany, Austria, Belgium, the Netherlands, Slovenia, Hungary, Poland and the Czech Republic. Today, with the help of its technology partners, Charles Vogele is benefiting from full item-level merchandise visibility from point of manufacture to point of sale, and the benefits are being felt at all levels of its business.
For Charles Vogele, this means the right merchandise will reach the right store shelves at the right time, across its stores. With more than 60 million garments sourced annually from more than 400 suppliers moving through 34 consolidation hubs in Asia and Europe, its supply chain operations present a logistical challenge.
Working with its partners, Charles Vogele has begun addressing these challenges, having implemented what is perhaps the most comprehensive end-to-end RFID-enabled supply chain based on industry standard Electronic Product Code (EPC) Gen 2 labels. The retailer piloted the solution in eight outsourced manufacturing facilities, three consolidation and distribution facilities and four Slovenian stores. The retailer is already planning to expand this implementation to more stores and supply chain facilities.
Charles Vogele worked with several leading solution partners in this implementation:
* Checkpoint Systems served as a general design and business partner on the project and also furnished the retailer with passive EPC Gen 2 RFID tags and interrogator antennas.
* KooBra Software provided software enabling Charles Vogele to collect and interpret data provided by the interrogators.
* Meyer & Meyer, Kuehne & Nagel, and Jobstl served as the primary logistics service providers.
* ie, associated with the University of Madrid, performed customer surveys to collect data on Charles Vogele's shopping experience.
Benefits of the solution
RFID technology enables Charles Vogele to streamline its supply chain through smart tags, which are applied to apparel merchandise at the point of manufacture. The tags are then read throughout the logistics operations and into stores. Once at a store, RFID technology improves operations and increases shelf availability by tracking item-level merchandise throughout the facility, including in the back room, on the selling floor, in the fitting rooms and at the point of sale. This visibility enables Charles Vogele to optimize its inventory replenishment, reduce out-of-stocks and on-hand inventory and, ultimately, improve sales.
Specifically, Charles Vogele implemented RFID tags for ticketing, picking and packing processes at its suppliers; tracking and tracing of shipping units at its Chinese dock operations and its European hubs; receiving goods and generating shop delivery units at its distribution centers; and, finally, shelf management, fitting-room sales analysis and shopper traffic analysis via "heat maps," which show where customers travel within the retail store, in order to optimize merchandising and store layout.
The retailer can now track and trace individual garments along its entire supply chain, gaining unprecedented real-time visibility. This capability enables Charles Vogele to reduce logistical errors automatically, eliminating exceptions such as packing errors and inaccurate shipments.
For example, a store expecting a certain number of popular shirts of a specific size and color might find that the box it received contained the wrong garments due to a shipping information error. As a consequence, the store would not be able to provide its customers with the shirts they want. Now, with RFID readers giving accurate information along the supply chain, mistakes such as these can be virtually eliminated and stores can provide the garments that their customers ask for.
The benefits of merchandise visibility extend throughout its stores as well, enabling store associates to gain an accurate view of merchandise on the sales floor and in the back room, and re-stock faster and more efficiently than they could using the previous manual process. Now, Charles Vogele can ensure that its most popular lines are always in stock and on display, available for customers to view, try on and purchase. Improving in-store operations also enhances the consumer shopping experience, leading to increased revenue and margin performance.
With RFID-enabled fitting rooms, the retailer can determine which products are being tried on and which are eventually purchased. Fitting-room data on those products that are often tried on, but not always bought, can be used to gain customer feedback that will help Charles Vogele improve its merchandising. Why is it that some garments are often taken from the shelves, but not eventually bought? Thanks to RFID, the company can gather the data of individual items and then conduct an investigation to determine if the problem is related to the design, shape, color or quality of the garment.
In another store application, Charles Vogele created a heat map, which enables the store to investigate the differences in shopping behavior between males and females, for example. Consumers voluntarily carry an active RFID tag with them that provides details of their movements throughout the store. In this way the retailer determines the part of the store that is "hotter" and now knows where people buy products and where they don't.
For Charles Vogele, RFID benefits stretch across the supply chain, beginning with improved packing accuracy at its suppliers. The company has also realized a 50 percent reduction in stock-counting processes at its European hubs, distribution centers and stores, and experienced significant reduction in stock outs at its retail stores.
The RFID project was not without its challenges. To implement it, Charles Vogele needed to conduct considerable training, simply to increase the RFID-related comfort level of its manufacturing workers in China, as well as its store employees in Slovenia. It found that workers at the Shanghai manufacturing site were leery of scanning RFID tags. In some cases, these workers did not speak English, and the company turned to interpreters at the University of Shanghai to train them. It also translated its software into Chinese.
But for the most part, the rollout of RFID technology has gone smoothly. Charles Vogele's adoption of RFID is transforming its business and ensuring that its customers find what they are looking for. And in the fashion industry, responding to the expectations of customers is often the difference between success and failure.
Dr. Bill C. Hardgrave is director, RFID Research Center, University of Arkansas.
systems at a glance
* General Business Partner: Checkpoint Systems
* Interrogators: Checkpoint Systems
* EPC Gen 2 RFID tags: Checkpoint Systems
* Data Collection Software: Koobra Software
* Logistics: Meyer & Meyer, Kuehne & Nagel, Jobstl
* Customer Survey Information: ie (University of Madrid)