DC Velocity - October 2015

RFID adoption,” Patton says. “Without RFID, you can’t
tell a customer to go drive to the store and get a specific
item, because you don’t know what items are there with
(sufficient) accuracy.”
The use of RFID in the warehouse as a way to boost prod-
uct-tracking capability is a fairly recent development. Until
now, distribution centers have typically used RFID tags for
three specific applications: inbound audits for quantity,
outbound audits for quantity, and to confirm the contents
of parcels in pick/pack operations, he says.

However, as they venture into the world of omnichannel commerce, DCs have discovered new benefits, ranging from simple out-of-stock monitoring to more complex tasks such as opening up inventory visibility to online shoppers.

The pressures of omnichannel fulfillment have given rise to a surge in RFID adoption in the last 18 to 24 months, agrees Melanie Nuce, vice president of apparel and general merchandise at GS1 US, the supply chain standards organization.

“If you talk to any retailer, they’ll tell you that RFID is
fundamental to omnichannel performance. The retailer
needs the right item in the right place at the right time,”
she says.

It’s important to note here that this kind of visibility is
predicated on what’s known as item-level tagging—that is,
affixing RFID tags to individual items, as opposed to cases
or pallets. Typically, the process begins when a manufac-
turer attaches a tag to each object as it’s assembled, Nuce
says. Assigning a unique identifier to every item is the stra-
tegic foundation that allows users to do outbound reads at
a manufacturing site in Asia, inbound reads at a U.S. DC,
then do another outbound read as each shipment heads to a
retailer. Building that complete chain of visibility lets users
perform downstream inventory reconciliation, tracking
products all the way to store shelves and stockrooms.

“Then, they can integrate that data with their existing enterprise resource planning (ERP) software and go from saying ‘This is a hammer or this is a small pink T-shirt’ to saying ‘This is hammer #1 or hammer #2, and this is small pink T-shirt #3 or small pink T-shirt #4,’” Nuce says.

That ability to reconcile inventory shipments by tracking specific items can be enormously valuable when a client complains that a shipper failed to deliver an entire order. Aided by item-level RFID tagging, the shipper can follow the trail of digital breadcrumbs throughout the supply chain, locating the allegedly missing items, whether they were forgotten on a dock, stacked with pallets, or deposited on the wrong shelf in a retailer’s backroom.

APPAREL: ON THE CUTTING EDGE

One sector where RFID has made great inroads is apparel, with an estimated two-thirds of the top 30 U.S. apparel retailers using the technology in either a proof-of-concept trial, pilot project, or full deployment, according to Bill Hardgrave, a professor at Auburn’s Harbert College of Business and co-founder of the university’s RFID Lab. But it’s not just the mega-retailers that have rallied under the RFID banner. When you look at the top 100 U.S. apparel retailers, about half are now using RFID in some form, Hardgrave says.

Retailers turn to RFID for a variety of reasons. In some cases, they’re looking to boost inventory accuracy in order to do a better job of replenishment and reduce stockouts. In others, they’re using the tags for purposes of loss prevention or shoe display compliance—i.e., making sure every footwear style stocked in the backroom is displayed on the retail floor.

As for why RFID has made such headway in the apparel industry, there are four basic reasons, says Patton. First, the sector has a large variety of stock-keeping units (SKUs), as each style of item typically comes in an array of sizes and colors. At the same time, it has low sub-stitutability, which means that customers are loyal to certain brands and sizes. Many retailers have found that RFID tags allow them to deliver these unique apparel items to customers by tracking every unit.

Third, most apparel items—from jeans to

RFID: Not just for tracking anymore

When it comes to RFID in the warehouse or DC, the technology’s role isn’t limited to tracking pallets, cases, or individual items. In some operations, RFID has another important function: guiding semi-auto-mated vehicles around the facility.

By embedding RFID transponders in warehouse floors, engineers at Mitsubishi Caterpillar Forklift America Inc. (MCFA) in Houston have created systems that guide turret trucks and order pickers to specific racks and aisles with accuracy of one centimeter, says Perry Ardito, general manager of the Jungheinrich warehouse products group at MCFA. The transponders, which are placed in the warehouse floor at specific distances, communicate with an RFID reader/writer in the lift truck to identify warehouse aisle locations and distances.

When linked to a warehouse management system (WMS), the system can automatically pick up or put away products while following the most efficient path of travel. Further, these networks can boost warehouse safety by automatically slowing lift trucks down before they leave an aisle or by making the vehicle stop, flash its lights, or honk its horn at dangerous intersections in a racking system like cross-aisles and pedestrian aisles, Ardito says.

The system is currently installed at several customer sites in North America and is helping to guide more than a thousand lift trucks at DCs around the world, according to MCFA.