– Esther Sancho, Alicia Chiang, Sílvia Plans, Xenia Berrio and Paola Sancho-
Aecoc is an association in which more than 24,000 companies dedicated to manufacturing and distribution in various professional sectors work hand in hand for the benefit of the consumer. For more than thirty years since its creation, it has been committed to collaboration, innovation, technological development, efficiency and in general, to all practices which, from joint effort, contribute to making Spanish companies more sustainable, modern and competitive at all levels.
Throughout these 30 years, AECOC has not only witnessed but also instigated some of the major changes which your company has experienced, such as shifts in the purchase-sale process, company management models and above all, the consumer.
Ferran Domenech is responsible for implementing the RFID standard in the fashion industry, footwear and accessories.
The aim of our analysis focuses on assessing the impact of RFID in the fashion industry. Some key issues for the development of our study are:
- ¿Which are the main application of RFID in the fashion industry?
The main important application is the control of the inventory. It helps to have an accurate inventory, more updated.
The accuracy of the inventory can reach levels of 90%. Taking into account that most of the companies have around 70% of inventory accuracy, RFID provides a significant improvement.
- Could you explain us, in general terms, how does RFID work?
Each item of clothing has a tag or chip. This chip has a code, which is different from the code of the other products, even for the same product.
Then we have the reader. It is a portable reader or even a smartphone.
There are two types of chip: the blank chips and the hard ones.
The blank chips are those used in stores as Decathlon. Some of them are sewn into the garment. These ones are not reused because they remain in the clothes.
As you have seen in some stores like Zara, they have the alarms. This alarm is an example of a hard chip. These chip can be reused. Moreover, this anti theft devices have a dual technology: they have the chip and they are also an alarm.
- Which are the main benefits of the RFID?
The most important benefit of the RFID is the accuracy of the inventory that it offers. Once a company have an accurate inventory, it is able to offer a better customer service because the store know exactly which products it has, also it will improve the way the orders to the suppliers are done…
Nowadays, as the e-commerce is increasing, it is crucial for companies to know how many products they have in their warehouses.
- What are the potential drawbacks of this system?
I would highlight two drawbacks:
The first one is the cost that it can suppose for firms.
The second one can arise if the products contain some metals or water.
This is the reason why some clothes shops are reluctant to implement this technology to accessories such as pendants, rings, bracelets…
Those retailers that sell accessories like these are also reluctant to use RFID because the label (chip) is too big in comparison of the product and it makes it unattractive for consumers.
- ¿What would be the cost of implementing RFID in a company?
It is very difficult to say a precise amount of money because there are a lot of variables that affect on the complexity of the system that should be implemented.
It depends on the information systems that the company has, it depends on the quantity of products, on the dimension of the company…
The cost of the tag is around 50 cts, but some big companies as Decathlon are now buying it for almost 12 cts.
Then there is the cost of buying the hardware (which is the reader), but the most important cost of the implementation of RFID is the integration of the information systems.
The real important cost relies on how the information will be managed. It’s important to notice that so far, we had codes that were different between products, but now, what RFID offers is to distinguish between units. This means that the units of the same red t-shirt model, size M will have a different code.
Since the cost of implementing RFID can vary a lot depending on the situation, it is recommended to do a previous analysis about which is our current situation, what we want, why we want to implement RFID and how it can help to improve our business.
- How are RFID and Barcode systems related?
The thing is that it is very useful and also interesting to have both systems. We don’t have to think them as two type of independent systems since they are totally related.
First of all, because in case some of them doesn’t work, companies wouldn’t be affected since they can use the other one.
Secondly, because having two collecting data systems as RFID and Bar Code, would improve the companies’ efficiency. In fact, most of the companies which are implementing RFID have still use Bar Code.
- What are the main industry sectors that use RFID?
The sector that is leading the implementation of RFID is the retail sector, especially the retailers of the fashion industry.
This technology is worth for those industries that need a comprehensive control of their inventory.
The implementation of RFID also depend on the value of the products the company is selling, if they value is so low, then, investing on RFID has no sense since the cost of each chip will be a high percentage of the total cost of the product. But, if the price of the product is significant, like a trousers, then, adding 50cts (price of the chip) to the price of the trousers does not really matter a lot, and the benefits in terms of efficiency that it suppose are huge.
One industry that is less likely to use RFID so far is food industry. For supermarkets, it would be so expensive to have precise information of each single product they are selling. Also, the cost of the chip would suppose an important part of the total cost of the product.
What they are increasingly doing is to have a chip in each pallet, so they do not track each single product but each pallet of products.
- Do you think that Barcode will be replaced in the future by the RFID system?
It is not the first time that one system is replaced by a new one, so I guess that it can be the case. Maybe some years ago no one imagined that all the companies would be using the Barcode system and finally they did.
It will depend on how the RFID system is adapted to each industry and the investment that companies will have to do to implement that system.
We have to think that companies that are using RFID still use Barc Code as as backup resource. RFID and Bar Code are not two different and independent systems. The company has a software where there is all the information and both the Bar Code and RFID work as a tool to gather information. The main difference between both tools is that RFID is more efficient than Bar Code, since there is no need to manually type each single product. It only needs a hardware to read the chip of each product and the information is gathered immediately.
- Are huge companies more interested in RFID than small businesses? What are the main causes?
Big companies are the ones that have started using this system mainly because of the cost.
The inversion pays off in the case of big companies because they will get a higher return but maybe new businesses prefer to keep using old mechanisms since RFID is much more costly and they don’t really need it.
Besides the cost, the fact that businesses are interested or not in RFID depends on what do they need. So, I mean, those longlife stores that have a lot of products don’t care about if they have 5 rather than 4 units of sponges, for example. But, on the other hand, companies as Inditex, Mango or Decathlon do need to have an accurate control of its inventory because they can not take the risk of being out of stock because then they will lose sales.