Monday, October 08, 2012

American apparels RFID experience ..

RFID youtube..

In the process of taking Inventory control classes for the MBA sem 1 students, this semester I have started the practise of giving case studies to students for reading and research offline and discussion in the class. So far I have finished Hard Rock cafe (op strategy), Apple (product design), Narayana Hrudayalaya (service design and strategy) and today I discussed American Apparels and their use of RFID (Radio Frequency Identification Devices) technology (Inventory management). Discussion of these cases is sure to improve the understanding of the industry operations management practices for the students, leading to a better appreciation of the concepts.

Here is a short youtube video on RFID benefits at American Apparels. At AA, the items of cloth taken out by the customers on the retail floor are immediately informed by RFID readings and associated software to the employees on the warehouse floor, who after validation replenish the items immediately on the shelves. Thus only one item of each size and colour (stock keeping units is displayed) at any time on the display floor, increasing the variety of inventory visibility to the customer who can then make a wiser and effective choice.

The benefits of RFID implementation is numerous for American apparels, the largest in-house clothing manufacturer in US, apart from a 62 % rise in sales from 2007 to touch $ 341 million in 2012 and a  growth of upto 360 shops. They are

1. since only one item of each SKU is displayed on the shelf/rack at any time, the replenishment and the speed at which this happens is critical to the success of the shop. Using RFID AA has been able to replenish cloth SKUs on the rack in between 30s to 1 minute.

2. Since only need items are taken out of the warehouse and displayed on the rack, there is more accountability of stock, better keep of inventory count. less internal loss due to theft, pilferage etc.

3. In the conventional bar code system counting of all the dress items on the display floor takes  5-6 employees, 5 - 6 hours . With RFID it takes an employee only 2 hours to take stock of inventory across the whole display floor, accurately. 

4. Since the reader is capturing signals transmitted by the tag (transmitter) on the cloth piece, it is easy to find lost items and misplaced items on the wrong shelf.

5. With less of time spent in taking count, the employees have more time with the customers, giving them a very pleasurable experience, getting to know the merchandise well, good stocking and display styles etc..

6. More tiems are on display on the racks / shelves for sale to customers

7. better customer service possible

8. Due to the above positive factors, about 40% increase in sales in RFID stores have been realised over non-RFID stores

9. RFID can be used not only in cloth items, but across a large variety of items from books, medicine, files, hardware, vehicle parts, electronic components etc.

In Bangalore, Pantaloons used RFID tags and readers supported by Wipro, A demo stall of RFID hardware and software is on display at the Wipro corporate HQ in Bangalore. The Elevated Highway in Bangalore near Electronic city uses RFID on vehicles who have been given tags to enable faster processing of vehicles, avoiding waiting at queues. Wonderla in Bangalore uses RFID wrist band on their visitors to keep track of their rides, expenses and personal details.

In short, this is a very promising technology which has terrific applications across sections of the economy. In Govt offices files could be tagged with RFID making it easy to keep track of their progress and to trace lost / hidden files for faster decision making by the officers.

The capture of data regarding items and visitors can be misused leading to legal issues and claims. The electromagnetic radiations can damage tender human cells and damages the environment in the long run, example the case of vanishing sparrows from Bangalore city.


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