Nordic IDea 2014 - 2015 by Nordic ID

NORDIC IDEA NORDIC ID CUSTOMER MAGAZINE 2014 -2015

CASE STUDIES Roberto Verino Stephan Bilo Matranga Sukkamestarit Cotonificio Carlo Bonomi Trivilita Front Systems

ARTICLES The physical web shop Perfect balance of stock RFID becomes mainstream Bombproof RFID RFID: The tipping point Revenue stream with RFID RFID in logistics

EDITORIAL Text: Kirsikka Dräger / Nordic ID Image: Hanna Östman / Nordic ID

MEET THE NEW NORDIC ID CEO

Pekka Riippi Nordic ID has recently welcomed a new staff member, the new CEO Pekka Riippi. We are pleased to have him join Nordic ID and want to take this opportunity to introduce him to all of you.

Pekka Riippi is not a totally unfamiliar face at Nordic ID and he is already accustomed with the company’s operations. This is due to the fact that Pekka has been consulting Nordic ID in international sales since 2011 as well as due to his role as the Chairman of the Board, a role that he has been holding at Nordic ID since July 2013. At Nordic ID the focus has been broader than selling hardware for some time now. Pekka sees this as very important. The focus is to keep customer needs and benefits as an essential part of the core mission. Pekka says “Nordic ID is a great company; it comprises a lot of skill, great clients, good commitment and an exciting history. I am pleased to be part of this innovative entrepreneurial company with a passion for RFID technology. He continues “What I am most looking forward to is to work together efficiently with my Nordic ID colleagues as well as our customers and ensure that we will continue to grow as a key player in the RFID industry.” 2 • Nordic IDea

With business fields changing rapidly Pekka emphasises the importance of systematic and agile planning whilst envisioning what the future will hold. He also believes strongly in motivation and empowerment as important factors. “Success is created by people and it is great that the Nordic ID staff has passion, experience and genuine interest in RFID”.

Nokia, Aldata, Teleca Oy and Cadence Design Systems, he was employed for 7 years at Finpro: the national trade, internationalization and investment development organization in Finland. Before moving to this new position as Nordic ID CEO, Pekka Riippi worked as a Lead Consultant for Finpro and concentrated on creating and implementing internationalization strategies for Finnish companies.

ABOUT OUR NEW CEO When asking Pekka Riippi about himself, the first thing he mentions is team player. He adds that nowadays it is impossible for a company or employee to function well without successful teamwork. He says “I enjoy working in a team. In a successful work environment we need to bring the knowledge, experience and opinions of different people together and this entity leads us to effective results.” Pekka Riippi’s employment background is deeply rooted in companies in the technology and international trade sector. After years of employment at

On a more personal level Pekka reveals that he is enthusiastic about sailing. He owns a sail boat and enjoys taking trips with it in the summers. As a father of two grown-up children he also enjoys reading and sports, particularly cycling and skiing. His active approach and desire to continuously learn new things will make him fit in perfectly at Nordic ID.

Welcome on board Pekka!

ROBERTO VERINO

FASHION STORE PACKED WITH RFID SMART SOLUTIONS BEYOND WHAT THE EYE CAN SEE.

NIDA PLATFORM It’s Software, baby.

“5252 of 5252 items found” “0 items missing” “Results stored”

ROI CALCULATION Is ROI achievable in less than a year? Study our fictional example and find out.

CONTENTS 2

CASE / STEPHAN BILO Tracking of Big Bags in cleaning operations

12 ARTICLE RFID: From marginal to mainstream 16

PRODUCT / NIDA APPLICATION PLATFORM RFID mobile integration just got simpler

20 ARTICLE The perfect fit: Fashion retailers and RFID 24

CASE / SUKKAMESTARIT Pairing sock production with RFID system

26 ARTICLE RFID: The revenue stream game-changer 30 ARTICLE Intelligent logistics CASE / TRIVILITA Lithuanian furniture manufacturer implements RFID

36 ARTICLE Bombproof RFID

Nordic IDea 2014- 2015

Editor-in-chief: Mirva Saarijärvi Editor: Kirsikka Dräger Layout: Hanna Östman

CASE / COTONIFICIO CARLO BONOMI High-end Milano textile pioneer embraces RFID

42 ARTICLE RFID in international supply chain management 44

Nordic ID Headquarters Myllyojankatu 2 A 24100 SALO FINLAND

PRODUCT / NORDIC ID STIX The creative process behind the scenes

46 ARTICLE 5 most common applications on the shop floor 50 NEWS N

C DIC E OLAB E OR

Printed at Finepress Oy, Finland

CASE / ROBERTO VERINO Spanish retailer tailors RFID to customer experience

8 ARTICLE Strike the perfect balance of stock at retail with RFID

tel. +358 2 727 7700 fax + 358 2 727 7720 marketing@nordicid.com

EDITORIAL

4 ARTICLE The physical web shop

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Printed Matter

The views, opinions or positions expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions or positions of Nordic ID or any employee thereof. Nordic ID does not assume any liability or warranty for the provided information being up-to-date, accurate, complete or appropriate. All offers are without engagement. Windows is a registered trademark of Microsoft Corporation in the United States and other countries. Nordic ID, Nordic ID Merlin, Nordic ID Morphic, Nordic ID Sampo and Nordic ID Stix are registered trademarks of Nordic ID Oy.

PARTNER NEWS

CASE / MATRANGA Top jewellery chain streamlines operation with RFID

56 ARTICLE The essentials of ROI calculation in retail RFID 60 ARTICLE Who carries the cost of RFID adoption in retail projects? 62 CASE / FRONT SYSTEMS Norwegian fashion stores achieve high stock accuracy 64

BLOG / Jorma Lalla RFID heading into the clouds - The stores of the future

FINNISH ID / GAME ON! The Finnish game industry is top notch

Nordic IDea • 3

RFID ARTICLE

THE PHYSICAL WEB SHOP

RFID: bridging the gap between online tools and bricks-and-mortar retailing. A FLAWED MODEL The online customer experience keeps improving, but the experience in-store remains essentially the same. The great advantage that in-store retailing has over online is that you can touch, feel, try on and otherwise experience goods, especially clothing. But for all that, we’re doing many things more poorly in the real world than in the virtual one—some are even worse now than they were a century ago. Ramir De Porrata-Doria, CEO of Keonn Technologies, a Barcelona-based manufacturer of RFID systems for retail stores, notes that each obstacle to instore shopping shaves off a percentage of sales. “Online stores care very much about minimising obstacles in the buying process. That desire is the same in physical stores, but there’s been no significant change in many, many years.” 4 • Nordic IDea

Here is a short list of in-store issues facing the consumer today: • Security systems - Security gates have been shown to create anxiety, discouraging people from crossing the threshold into a store. • Finding products - Finding what you’re looking for often means asking. If there’s no one around, you might decide to leave. Staffing at most stores is lighter than it was a century ago. • Not the right size - You find the right product but not the right size. A recent study indicates that this results in a loss in sales of between 2% and 4%. • Fitting rooms - Even when there’s no queue to use a fitting room, repeatedly getting dressed and undressed in order to find the right item or the right size can cause

people to abandon the buying process. • Payment - See a queue and you’re tempted to come back another time. A recent study shows that after a wait of 5 minutes, 30% of people leave. These are the top reasons that sales are lost, but there are more! Each shaves a few percentage points off a store’s sales potential. Wouldn’t it make sense to tackle these issues head-on instead of simply accepting them? WEB TOOLS, MEET BRICKS AND MORTAR Bringing online techniques into the real world is one solution. Take recommendations, for example. “70% of Amazon’s home page consists of recommendations,” says De Porrata-

Text: Carl Michener / ID BBN Image: Shutterstock, edited by Hanna Östman / Nordic ID

Doria. “And they are responsible for 35% of Amazon’s sales.” Even the most conservative studies show an increase in online sales of between 5% and 15% due to recommendations. “Improving the experience hinges on contextualised item recognition,” asserts Pekka Riippi, CEO of Nordic ID. “In this context, that’s what RFID delivers: the ability to recognize what a customer has in their hand, including size, colour, version and any other relevant data. The same granular information that has had such a profound effect on backroom logistics—vastly improving the tracking and moving of goods between manufacturer, DC and store—is now being used to improve and facilitate the shopping experience.” We now have the technology to transform the in-person shopping experience, and we’re just starting to fit the pieces together—by bringing online technologies into physical stores, transforming the way that physical spaces interact with consumers. FROM STORE-CENTRIC TO CONSUMER-CENTRIC Retailers that can eliminate just one of the barriers to a sale can create an incredible uptick in sales. One proven way to do this is by means of a retail platform. Whether it’s via the customer’s smart phone, kiosks, interactive fitting rooms, smart mirrors, or shop attendants’ PDAs, integrated retail platforms change the in-store consumer experience. Imagine this: …with a voice command, you tell your virtual shopping assistant what you are looking for. She directs you to a colourcoded section of the store. You pick up a pair of pants and the nearest mirror shows you virtually wearing them. Move, and the garment moves with you. The mirror shows you what sizes are currently available, and along one side are similar options in a variety of colours. Along the other, you find complementary shirt

www.rfidarena.com

suggestions. You press one option, which brings up a diagram of where the item is in the store.

It all boils down to two main ways of improving the customer experience through in-store technology:

Taking a clothing combination to a dressing room, you decide that the colour of pants you have chosen is not quite right. You engage with your virtual shopping assistant to request an alternate colour. A staff member uses his PDA to let you know that he will bring your selected colour shortly. When you try on a football team jersey, you hear the roar of the crowd and the team’s anthem starts to play. Try on a spring skirt, and you detect the delicate smell of tulips.

1. Your shopper acts on recommendations, creating a sale where there might not have been one 2. She doesn’t abandon her purchase at any point

Leaving the fitting room, you tell your virtual shopping assistant that you’re ready to pay. She directs you to a kiosk where you can pay by credit card or bank debit via your smart phone. A shop assistant wraps your purchases up for you and you’re on your way, across the pressure-sensitive carpet near the store entrance. An RFID-enabled electronic article surveillance system checks the item tags in your possession against your receipt. Ok, sounds wonderful. So how does this all work? A camera, gesture recognition software (think Nintendo Wii) and augmented reality work together to enable virtual try-ons in the mirror. SMS or a similar technology sends messages to a live assistant. Nearfield communication (NFC) enables payment via smart phone. RFID does the rest. It’s not rocket science, and according to Riippi of Nordic ID, the payback potential is big. “Every time you eliminate a barrier to shopping in-store, you realise an uptick in sales of several points,” he says. “Tear down those barriers,” continues Riippi, “and the shopper doesn’t get scared off by antitheft gates, frustrated from searching, worn out by the dressing room shuffle, or ticked off at a long queue. The whole experience is satisfying—it’s really what’s missing in bricks-and-mortar retailing today.”

It’s really that simple. RFID-enabled pilots of the kind described above have proven to increase sales. RFID systems will, of course, also facilitate a high level of inventory accuracy. With mobile RFID computers, employees can inventory the entire store in minutes, enabling cycle counts daily or even more often. Employees can also use the devices as Geiger counters to find items. Overhead antenna RFID systems can deliver real time stock data, creating the distinct possibility of never having an item out of stock or unaccounted for, ever. Scenarios like the one above leverage aspects of transforming the shopping experience: • Personalisation - The store quickly engages you as an individual • Contextualisation - The store learns what you’d like to buy and makes suggestions • Interaction - You interact with the store itself, not just with employees Central to transforming the shopping experience is RFID. “It’s the technology that acts as a bridge,” observes De Porrata-Doria. “Once an item is detected in a certain context, it crosses over into virtual space. There, you can do pretty much anything with it that you can do on a website: create recommendations, show different colours, sizes and styles… you name it.” Modern retail experiences have the potential to be even better than online ones because you can experience the excitement of shopping, of finding what you truly want, on your terms and with a minimum of hassle. It won’t be long before today’s pilots turn into a fullfledged retail platform.

Nordic IDea • 5

RFID CASE STUDY www.robertoverino.com

Spanish retailer

ROBERTO VERINO

tailors RFID to customer experience

INTELLIGENT STORE CONCEPT WITH RFID ROBERTO VERINO is a successful Spanish retailer of men’s and women’s fine fashions. The vertically integrated brand has 160 sales points distributed among dedicated ROBERTO VERINO stores, franchisers and sections in major department stores in Spain, Mexico and Portugal.

KEY BENEFITS • Time spent on inventory dropped from one week to two hours • Improved and exciting shopping experience • Optimized internal store processes • RFID reinforces the characteristic style of the brand • Faster check-out thanks to system integration with POS

TOTAL RFID IMPLEMENTATION: FITTING ROOMS, SECURITY AND MORE A few years ago, management decided that RFID was the future of fashion retail. As a result, the retailer began implementing the ROBERTO VERINO RFID project in June 2010, incorporating the technology into the company’s flagship store in Barcelona. “RFID enabled us to develop a new intelligent store concept,” notes Vicente Rodriguez, Assistant Management and Systems Manager. “We feature newly designed RFID elements throughout the store, aimed mainly at enhancing commercial functionality and reinforcing our characteristic style. These elements are also meant to make the customer’s shopping experience as pleasant and exciting as possible.” The aim of the pilot project was to test conventional and also innovative RFID systems in one retail store. It involved Iglass display counters, ultra-panoramic devices, digital signage screens, an interactive fitting room, a true Virtual Dressing Room that combines RFID with augmented reality, an invisible anti-theft system based on an RFID floor mat and a real-time overhead inventory system. POSITIVE RESULTS Nordic ID was one of several partners involved, with Nordic ID Merlin UHF

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mobile computers phased in just in time for the launch of the Spring – Summer Collection 2012. “As all the products are RFID-labelled, it was possible to optimize the store’s internal processes” says Rodriguez. “And since it is integrated within the store POS system, there’s no need for sales personnel to use the barcode reader at the checkout counter to finalize the sale. ROBERTO VERINO management expects RFID changes to boost combined sales and improve the customer experience. RFID will almost certainly form part of future growth plans in terms of identification, monitoring and traceability of products throughout the supply chain. It’s still too soon to reach any definitive conclusions, but early indicators are good. Store employees and management are happy with the improvement in their inventory process, and anecdotal evidence shows that a store inventory count, now performed with Nordic ID readers, has dropped from an entire week to about 2 hours. “We’re convinced that this is the area where we have the greatest capacity to invest and justify the costs of the implementation through rapid return on investment,” says Rodriguez. His only wish is that all retailers with whom ROBERTO VERINO works would adopt RFID in order to realize economies of scale.

Product: Nordic ID Merlin UHF RFID Cross Dipole

Text: Carl Michener / ID BBN Image: Roberto Verino

Nordic IDea â&#x20AC;˘ 7

RFID ARTICLE Text: Carl Michener / ID BBN Image: Hanna Östman / Nordic ID

STRIKE THE PERFECT BALANCE OF STOCK AT RETAIL WITH RFID Taking stock accuracy from 65% to 99% creates huge opportunities for efficiency and profit.

Professor Bill Hardgrave, Dean of Business at Auburn University and an RFID specialist, agrees. He has found that retail systems typically show out of stock levels of 1%, when in reality it is 12% to 15%. That’s just life - or at least it used to be - before RFID.

Most retailers think they have a much better handle on stock levels than they actually do. Despite a widespread belief in 90%+ store inventory accuracy, RFID Journal pegs overall accuracy at 65%. The large disparity between what’s on the screen and what’s really on shelves translates into huge losses in potential sales and forces a massive amount of discounting.

SIMPLE STUFF

The culprits? Infrequent cycle counts coupled with human error. With barcode technology it can take several people more than a day to completely inventory a large store and its storeroom. No wonder counts happen only quarterly or yearly. Jorma Lalla of Nordic ID sees RFID as the answer to increasing visibility into stock levels on the floor and in the storeroom. “With RFID you can perform a store-wide stock count in minutes, not hours,” he explains. “Since walking along a rack of clothing while scanning can give reads that are more than 99.99% accurate, it’s no wonder that retailers move from quarterly stocktaking to daily or even twice daily. RFID can help retailers literally eliminate out-of-stock situations in their stores.”

8 • Nordic IDea

The technology may be sophisticated, but the everyday realities of using RFID are really quite simple. Rubin Press, Director of Sales & Marketing for Controltek, a U.S. provider of auto ID solutions, explains. “RFID is touted as more accurate than bar coding, which it certainly is given that RFID tags offer so much more functionality for retailers to leverage. But the real secret to its success is pretty basic stuff. Scanning is easy and fast, which allows the frequency of cycle counts to skyrocket. This makes system information much more accurate.” The technology, long in use within logistical processes worldwide, is now hitting the mainstream in-store. Retailers like Wal-Mart, American Apparel and Gerry Weber put RFID to work on the sales floor and in the back office. Since RFID enables rapid tag reading from a distance of several metres through boxes and walls, a box containing hundreds of items can be scanned in seconds, producing an item list that can be automatically checked against what was ordered.

REDUCING STOCK WITH RFID When you know exactly what you have, you can kiss stuffed storerooms goodbye. Press explains how RFID affects ordering and inventory. “The increased visibility that RFID brings to what’s now on your floors -and having confidence in this information-allows you to order what you need, versus what you think you need.” Without RFID, retailers aren’t confident in what they have or don’t have and build in a large safety margin, leading to product that sits on storeroom shelves. RFID also changes the mix for retail floorspace allocation. “When you use your storeroom more for processing than storage, you need less back room space,” observes Press. He notes that store overhead costs are reduced since storage and sorting are also reduced. “RFID can reduce carrying costs as well, as less fluff stock needs to be sent to stores to cover previous inaccuracies.” Dr. Martin Gliesche, Manager at TAILORIT, a German management consultancy based in Düsseldorf, illustrates how RFID helps improve visibility upstream of retail locations. “At corporate headquarters, planners may think that there isn’t enough stock in the store, but in reality there is-it’s just not on the sales floor,” he explains. “With RFID you have accurate, reliable information both about what's

www.rfidarena.com

in front and what’s in back. This allows you to optimise your planning and merchandise allocation.”

the daily business of the merchandise planning departments of retailers like American Apparel who use RFID for more accuracy in in-season management.”

A BALANCING ACT SOURCE, DC OR STORE? Indeed, for many retailers, improved inventory accuracy - and not out-ofstocks on the sales floor- proves to be the unexpected lead benefit after RFID implementation. With unfettered visibility into stock levels, then, where lies the perfect balance between stock on hand and deliveries from the DC? “On one hand you’re able to minimise space, but on the other you don’t want to run out of fast-selling items,” says Lalla of Nordic ID. “You’ve also got to weigh the costs of picking, packing, shipping, receiving and stocking against the cost of store room space. “If just-in-time (JIT) provisioning is what you want, RFID is what you need to enable it,” says Gliesche. “But you need to gauge where maximum efficiency lies. It’s a question of capital costs versus reduced handling -in other words, process efficiency.” Gliesche notes that JIT really comes into play from storeroom to sales floor. “Keeping in mind that replenishment from the DC may take two days, RFID helps avoid OOS situations through frequent cycle counts and in-store stock replenishment. Ensuring that this happens smoothly is

Not surprisingly, accuracy goes up the further up the supply RFID enters. Small chains and single retailers often create and affix RFID tags in the storeroom as soon as goods come in. It’s a simple process involving a mobile RFID computer and a boxful of tags. Other retailers, like Germany-based Gerry Weber, have integrated RFID vertically to the source, sending registered RFID tags to over a dozen countries where hundreds of manufacturers sew them into garment labels prior to shipping. That way they can track garments in transit, reducing shrinkage and enabling them to check for counterfeits at resellers’ locations. Offloading RFID tag integration to manufacturers also saves cost and improves logistics at DCs, since everything that arrives is automatically scanned into the system. Press notes that efficiencies are typically higher at the DC. “Overall costs per item are lower than in-store, so if at-source tagging is not an option for retailers trialing the solution, the DC is the RFID entry point of choice for most pilots/pre-rollouts.”

One thing that all experts agree on is that RFID provides a definite advantage to those who embrace it. It’s time that retailers start implementing the technology to protect their position in the market. Investing in gamechanging technologies now, rather than reinvesting in older technologies, confers undeniable benefits.

INTERVIEWED FOR THIS ARTICLE Jorma Lalla is the Founder and Owner of Nordic ID. Dr. Martin Gliesche is Manager at TAILORIT, a German management consultancy based in Düsseldorf. TAILORIT serves the fashion and clothing industry exclusively. Rubin Press is Director of Sales & Marketing for ControlTek, a U.S. provider of security products and auto ID solutions based in Cranford, New Jersey.

Nordic IDea • 9

CASE STUDIES Text: Kirsikka Dräger / Nordic ID Images: Hanna Östman / Nordic ID & Shutterstock

STEPHAN BILO GMBH IMPLEMENTS RFID TO ENABLE TRACKING OF BIG BAGS IN HANDLING, WASHING AND STORAGE OPERATIONS RFID technology enables easy tracking of items and STEPHAN BILO Reinigungsund Hygiene GmbH experienced exactly that in their cleaning operations. STEPHAN BILO Reinigungs- und Hygiene GmbH has been operating as a service provider in the cleaning industry since 1994 but it was in October 2012 that the company implemented RFID into their operations. Since the beginning of 2013 STEPHAN BILO GmbH has been involved in washing Big Bags. When STEPHAN BILO started their involvement in Big Bag washing, they complied with critical hygiene and safety requirements by using RFID technology. Nowadays the company has visibility into all steps of the process. It can track all handled Big Bags and ensure that high quality standards are complied with in the processes of handling, cleaning and storage of the Big Bags.

products, hygiene and cleanliness are top priority in handling Big Bags for safety reasons. Requirements and regulations in the grocery sector make transparency into the lifecycle and handling processes of Big Bags a key factor of success. Providing such insight with a pen and paper approach would be almost impossible. Thus STEPHAN BILO chose RFID technology for tracking their Big Bag processes. Big Bags are specialty products and thus ordering and purchasing new Big Bags needs to be done well in advance to ensure the product is delivered when needed. Working with a pen and paper approach proved to be time consuming and did not allow customers to predict future demand as early as necessary.

MANUAL APPROACH NOT SUITABLE IN BIG BAG WASHING PROCESS

TRANSPARENCY INTO EACH STEP OF THE HANDLING PROCESS

Big Bags are fabric containers that are utilized for grocery transportation and storage. Due to their contact with grocery

RFID was implemented into the Big Bag washing operations, which made tracking and tracing of the fabric

10 • Nordic IDea

containers possible in each step of the process. The RFID solution was implemented in close cooperation with integrator AISCI Ident GmbH. Two Nordic ID Sampo S1 mountable UHF RFID readers were installed at STEPHAN BILO’s facilities. One Nordic ID Sampo S1 connected to a touch pad was positioned in the washing facilities and the other one was set up on office level to ensure tracking and tracing of the Big Bags throughout the washing process. The Big Bags are equipped with RFID tags before the first washing cycle. From that moment until disposal, the Big Bags are uniquely identifiable and traceable. In the Big Bag handling processes predefined guidelines exist, which require disposal of the fabric containers after a specified number of washing cycles. The data obtained with the help of the RFID system provides precise information on when disposal of the Big Bags will take place.

www.bilo-fachreinigungen.de

STEPHAN BILO provides customer companies with daily reports that include key data of their product's process execution. In practice this means that the customers are always up to date with the process of their product batches. The reports also provide valuable insight into the lifecycle of the Big Bags. With that information the customers are able to plan ahead and RFID technology helps them predict when new Big Bags are needed and order new Big Bags already 6 months in advance. Big Bag processes need to be extremely precisely monitored. If the need would occur to identify a specific batch or pinpoint at what time an issue could have occurred, RFID would allow STEPHAN BILO to carry out needed analysis with the help of the obtained data and take action to correct any issues in the processes.

Product: Nordic ID Sampo S1

For STEPHAN BILO the RFID implementation has resulted in the ability to track and trace the Big Bags through each step of the process. At the same time precise, real time data has been made available, which allows complying with given requirements and giving the company and its customers valuable insights.

CHALLENGES •

ABOUT STEPHAN BILO REINIGUNGSUND HYGIENE GMBH STEPHAN BILO Reinigungs- und Hygiene GmbH has been providing cleanliness and hygiene related services in Germany since 1994. The goal of the company is to provide professional, environmental and gentle cleaning of all premises and places where people work. STEPHAN BILO GmbH employed more than 820 people in the year 2013.

•

Lack of transparency due to pen and paper approach Manual approach leaves room for human errors

BENEFITS • • • •

Track and trace through each step of the processes Precise, real time data available Compliance with strict regulatory requirements Provides crucial visibility for the customer into the Big Bag lifecycle

Nordic IDea • 11

RFID ARTICLE

RFID: FROM MARGINAL TO MAINSTREAM - THE TIPPING POINT FOR RFID ADOPTION

With dropping costs and entire product lines “ready-tagged”, RFID is rapidly finding it’s way into the inner core of the fashion retail sector.

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www.rfidarena.com

www.nordicid.com

TIPPING POINT

1960s sociologist Morton Grodzins coined the phrase the tipping point as a way of explaining how uncommon sociological phenomena rapidly became generalized. It’s a phrase that regained popularity when journalist and author Malcolm Gladwell published his book, The Tipping Point: How Little Things Make a Big Difference, in 2000.

RFID is becoming more and more pervasive, especially in fashion, but not all major retailers have adopted the technology, let alone the smaller chains in Europe, the U.S. and elsewhere. The benefits of the technology are indisputable, but the question is: have we reached a tipping point in retail? INVENTORY EDGES OUT ASSET TRACKING

When it comes to RFID use, a little bit of technology certainly does make a big difference, namely increased sales and other efficiencies.

Integrating RFID with inventory management and point of sale systems (POS) increases accuracy in reordering, reduces out-of-stocks and makes inventory counts a breeze.

In a 2005 report, Aberdeen Group found that “…asset management was, by far, the leading application of the technology [....] followed by production, transportation and security.” How RFID use has changed in the ensuing seven years says something about its evolution. JP Kamel, a Principal at RFID Sherpas LLC, explains that asset tracking, though still important, has been superseded by inventory tracking, in pure numbers if not in dollar value. “Asset tracking has always made sense. Because you control an asset from the beginning to the end of its lifecycle,

affixing an expensive, ruggedized RFID tag to an important asset was a good move economically. In 2005, attaching an RFID tag to a garment was costprohibitive. That has changed, with a far higher number of inventory tags and implementations.”

Now that the incremental cost of adding a passive RFID tag to a garment label at source hovers around the ten-cent mark, tag price is no longer a big obstacle. The first change involved supply chain logistics, where RFID labels were affixed to items or, more often, boxes or pallets at a distribution centre, adding visibility for better economy of movement. Once a shipment reached the store, the venerable barcode would take over.

Nordic IDea • 13

RFID ARTICLE www.nordicid.com

Since the early days of RFID-enabled inventory management, however, the technology’s role has changed again. Now that the incremental cost of adding a passive RFID tag to a garment label at source hovers around the ten-cent mark, tag price is no longer a big obstacle. A HIGH POINT: FASHION RETAIL No one can sing the praises of RFID in fashion retail better than Jorma Lalla at Nordic ID. “In Europe, Nordic ID has been involved in 80% of all RFID pilots and rollouts in apparel, and based on our experience the benefits of shop floor RFID are incontrovertible,” he says. “We see retailers move from 70% or 80% inventory accuracy to 99%; a twentyfold or better reduction in stock-taking man hours; vastly improved confidence in inventory numbers; and a reduction in out-of-stocks that lifts sales on the order of 10%.”

RFID can show precisely when a specific item was put on a truck, when it arrived at the distribution centre, and at the retail stockroom.

Most RFID implementations in fashion retail are retailer-driven, with RFID tags affixed at point of manufacture or soon thereafter. Tagging items earlier in their journey also gives retailers full itemlevel visibility into a product’s journey from manufacture to sale. RFID can show precisely when a specific item was put on a truck, when it arrived at the distribution centre, and at the retail stockroom. RFID is now being used to complete the journey to point of sale, increasing visibility in-store, including when the item was moved from the back of the store to the front and when it was sold. Metrics like these can help achieve far greater efficiencies.

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THE TIPPING POINT

“Where there are hundreds of SKUs for similar items, like clothing or tires, RFID helps tremendously in preventing stock-outs.”

Despite increased visibility and happy results, however, retailers that pioneered the use of RFID to increase supply chain efficiencies only use the technology selectively beyond the stockroom. According to Patrick Javick, Vice President, Retail and General Merchandise for GS1 U.S., the worldwide supply chain standards organization, these retailers are using RFID to track apparel and general merchandise where conditions for use are optimal. “Switchability is the key to making RFID work in retail right now,” he explains. “Where there are hundreds of SKUs for similar items, like clothing or tires, RFID helps tremendously in preventing stock-outs. Retailers like Walmart base decisions on select product matrices.” Theo Lutz, Team Leader in the department of Information Technology Management, Institute for Industrial Management at Germany’s RWTH Aachen University, adds another perspective: read ranges and materials also make apparel and the like ideal for RFID. “In today’s existing retail applications, there are hardly any metals or liquids involved to complicate reading,” says Lutz. “If there were, you would need to go to quite a bit of trouble to select the optimal tag for each product, to find out where to put a transponder for best results, how to orient the product to increase readability and so on.”

So RFID works very well in fashion retail where there are thousands of SKUs, a short shelf life and season-specific inventory challenges that makes justin-time replenishment an attractive option. There are other industries where it doesn’t work as well. So where does that leave us in terms of adoption? Are we almost at a tipping point, or is that something we can even detect?

One sign of the tipping point’s arrival is that certain suppliers have started putting tags on entire product lines because it’s cheaper to do so than to tag selectively.

According to Kamel from RFID Sherpas, one sign of the tipping point’s arrival is that certain suppliers have started putting tags on entire product lines because it’s cheaper to do so than to tag selectively. “At that point, a retailer is paying for the tag in the cost of goods whether they use it or not,” he observes. “And it is starting to happen-the tipping point is upon us. On the supply side, one well-known maker of undergarments made this decision within the past 18 months. With such a large proportion of products being shipped to retailers like Walmart, JCPenney and Macy’s, it made sense to tag those product lines in their entirety.” INVENTORY CONFIDENCE KEY TO NEW MODELS IN RETAIL The benefit of RFID to fashion retail and similar business models is evident, but not everyone has jumped on the bandwagon. What’s holding them back? Lutz of Aachen University offers an academic perspective. His findings show

Text: Carl Michener / ID BBN Images: Hanna Östman / Nordic ID, GS1US, RWTH Aachen University & RFID Sherpas LLC

that store managers often look at RFID implementations for the wrong reasons. “A motivation for many use cases seen is ‘trying RFID out’. That was reasonable at the very start of the RFID era, but to be successful nowadays you need to address specific business problems,” he finds. “Sometimes it is better to solve problems with organizational changes and use RFID to gain insight into processes. Being solution-driven, not only benefit-driven, is the key to success.”

“People have to stop focusing on the technology, and instead focus on the business problem that we’re trying to solve: improving confidence in inventory accuracy.”

Kamel thinks along the same lines. “People have to stop focusing on the technology, and instead focus on the business problem that we’re trying to solve: improving confidence in inventory accuracy.” He sees business cases built around RFID every day, and most of them have to do with inventory accuracy and visibility. “If you are offering ‘buy online, pick up in store’, you need to have very reliable inventory data. If the customer comes in to pick up an item and it’s not available, there is a 50% chance they will never shop there again. That’s a scary statistic if you have 70% inventory accuracy, like most retailers do. To keep that from happening, most retailers set a safety threshold, but then you’re five-deep in every SKU just to be sure.”

that makes the initial investment. This disconnect between departments has some companies struggling to see the big picture. But since results are proven, the number of labels moving to RFID is experiencing exponential growth in the U.S,” he says. Javick finds that smaller players are getting into the game now, too; one-off stores have implemented RFID, as have big chains with thousands of stores. He acknowledges that there are still some big companies holding out. “Some of those holdouts have piloted RFID, some have not,” he says.

JP Kamel is a Principal at RFID Sherpas

LLC, a North American consulting practice focused exclusively on the retail sector.

COST AND COMPLICATION OF IMPLEMENTATION DECREASING It’s certain that the cost of RFID tags is no longer holding anyone back, but the cost and complication of implementation sometimes is. Until recently, an implementation consisted of tags, readers and software to get tags to talk to readers. A large-scale, chain-wide implementation would often take about a year. More recently, however, deployments have become less expensive and more agile thanks to increased co-operation between software, hardware and tag providers. By optimizing their products to suit each other and offering the whole packing under the same joint roof, the solution becomes easy to implement and costefficient. INTERVIEWED FOR THIS ARTICLE:

Jorma Lalla is the Founder and Owner

of Nordic ID. Jorma Lalla works in Business Development and acts as the Chairman of the Board.

Patrick Javick is Vice President, Retail and General Merchandise, for GS1 U.S., a global supply chain standards organization.

Theo Lutz is Team Leader in the

department of Information Technology Management, Institute for Industrial Management, at Germany’s RWTH Aachen University.

GS1’s Javick notes that a move to RFID is also sometimes delayed because of departmental alignment. “RFID benefits are rarely manifested in the IT profit and loss bucket, even if that’s the department

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NORDIC ID SW

RFID MOBILE INTEGRATION JUST GOT SIMPLER NORDIC ID RFID MOBILE COMPUTERS COME LOADED WITH HIGHLY USABLE APPS Nordic ID has just made life much easier for retailers and systems integrators alike. It has come out with a new software offering, the NIDA Application Platform.

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Text: Carl Michener / ID BBN Images: Hanna Östman / Nordic ID

Nordic ID has just made life much easier for retailers and systems integrators alike. It has come out with a new software offering, the NIDA Application Platform. NIDA is a suite of retail-specific apps that can come pre-installed on Nordic ID mobile computers. Jessica Säilä, Business Development Director at Nordic ID, sees it as a way to shorten installations for partners and earn more income for Nordic ID. “And the user interface is brilliant,” adds Säilä, “so it’s a win-win-win for us, for partners and for end users.”

www.nordicid.com

already installed. We can customise these for smaller companies, while larger retailers can customise their own. This makes RFID that much easier to use and more affordable for companies just running a couple of kiosks.” Before NIDA, systems integrators had used generic software or built their own for Nordic ID mobile computers, then customised it for each application. Cost and time constraints have always limited software usability and device optimisation, leading to a less-thanperfect end user experience. BETTER INTEGRATION

LOWERING THE BARRIER TO ENTRY Säilä believes that NIDA software lowers the barrier to entry for retailers that are just coming online with RFID. “The programs that retailers need come

But software is critical to RFID, as it’s what makes data flow from tag to ERP. The three components of most RFID systems comprise readers, high frequency (HF) or more commonly ultra-

high frequency (UHF) tags, and point of sale (POS) and sometimes ERP systems to keep track of inventory either at the store or the head office level. Between these points—from tag to reader and again from reader to POS and ERP—is software that enables the accurate flow of data. Great integration results in mobile computers and fixed readers that can capture information from hundreds of tags per second with almost complete accuracy. Quickly scanning a box can tell you the SKU, size, colour, material, price and many other details of every item inside. RFID is a game-changing technology that enables storewide inventory counts in minutes, prevents out-of-stock situations, and raises inventory accuracy from an industry average of 65 percent to the high 90s.

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NORDIC ID SW

INTERVIEWED FOR THIS ARTICLE: Viktor Candolin, System Architect Jessica Säilä, Business Development Director Janne Mäkeläinen, Product Manager

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Text: Carl Michener / ID BBN Images: Hanna Östman / Nordic ID

www.nordicid.com

The first wave of five NIDA software applications fulfil the main functions that retailers require of RFID:

• NIDA Inventory Perform storewide inventory counts

• NIDA Cycle Count Perform partial inventory counts for on-the-go replenishment • NIDA Locate Locate a single item • NIDA Associate Quickly create new RFID tags • NIDA Goods In Add inventory to the store system AN OPTIMISED SOLUTION The applications are seamless and simple on the outside, the result of extensive research, development and testing. Viktor Candolin, System Architect at Nordic ID, took charge of building the applications from the ground up. He has his own reasons for creating a suite of software inhouse: “Back when we were selling the successful Nordic ID RF600 mobile computer, the solution was always programmed on a PC and did not run on the handheld itself. So our customers could program on PCs — which was well within their comfort zones — keeping the time period from pilot to implementation under six months,” he explains. “Building a mobile software client for Windows CE is trickier. Our customers are whizzes at programming on the computer database side, but mobile device programming is not usually a core competence. We spent the time to make mobile software that is very, very good.” Candolin notes that when a systems integrator is involved they generally use a software client of their own. But even that has to be tailored to Nordic ID screen sizes and hardware functions like turning on the backlit keyboard or the barcode scanner. With NIDA software these things just work, right out of the box.

“Our integrator partners don’t have to reinvent the wheel every time,” says Janne Mäkeläinen, Product Manager at Nordic ID. “It’s a chance for our partners to sell more and work faster since it allows them to focus on middleware integration, which is what they are really good at.” Mäkeläinen believes that the time between pilot and implementation, now as long as 18 months, will revert to the same time period as in the RF-600 days of the early 2000s. Reinventing the wheel doesn’t just apply to software applications. With barcode you simply select the type of reader and length of read and it works. But RFID involves radio signals so the environment, reader engines from different manufacturers, and the choice of tags all affect read results. All of a sudden there is a lot to optimise to achieve great performance. The NIDA platform can come preoptimised to fit customer processes and needs exactly, with minimal ERP changes. The solution can also be whitelabelled for Nordic ID partners. “One thing that our partners appreciate,” observes Mäkeläinen, “is the ability to customise fields. Most other solutions don’t allow this. Selling fashion apparel is different from selling tires, so we built NIDA without making assumptions about product data.” Mäkeläinen notes that Nordic ID integrator partners are currently demoing NIDA, and feedback has been very good. “They are enthusiastic,” he says. “We will start with these five apps, then add more as needed.” TAKING USABILITY TO ANOTHER LEVEL With months spend on research, development and testing, Nordic ID was able to bring NIDA software to a whole new level of usability. With most software, not much effort is expended on user interface. From a programmer’s point of view, for example, it’s less work to add more to each display than to

build multiple screens. “So you tend to find displays crammed with data,” explains Candolin. “With NIDA, only the information you need for the function you are performing is displayed.” The attention to detail involved in planning NIDA is immediately evident to users. For example, users can forego the touch screen entirely in favour of the keyboard. “Using the keyboard is much quicker,” observes Candolin. “The software is configured to function without the touch screen. With big green and red buttons for cancellation and approval and a giant scan button in the middle, you can work by touch and keep your eyes on what you’re scanning.” Response time is another common glitch that has been sorted. When a lot of data is involved, many software solutions appear to freeze up for five or ten seconds. With NIDA, even when a process takes a bit of time, such as uploading data for 100,000 items, the device is always giving feedback. SURPRISING COSTS The most surprising thing about the NIDA platform is how much money it saves. A one-function implementation comes with a one-time cost of €110; the second application increases the price by €60 per unit, and so on, up to a total cost of €290 per device for the full five applications. “Until now, customers typically have just one or two functions running on their mobile computers,” observes Säilä, “because each was custom made and therefore costly. Now that we have a suite of customisable programs, the client gets better functionality at a better price.” The level of pricing offered by Nordic ID is recouped many times over during system implementation thanks to cost savings resulting from the flexibility and simplicity of configuring the NIDA solution. Not to mention the added end-user productivity that comes with a truly usable mobile computer.

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RFID ARTICLE Text: Carl Michener / ID BBN Images: Hanna Östman / Nordic ID & Shutterstock

The perfect fit FASHION RETAILERS AND RFID: HOW TO MAKE THE MOVE Adoption of RFID is spreading widely in the retail sector. As many more retailers are now contemplating where to start, how to proceed and what to expect, we gathered a few tips by experts and early adopters on how to run a successful RFID project.

Many major fashion retail chains have moved to in-store RFID with excellent results, unequivocally establishing RFID as a ‘must’ technology for high volume fashion retail. It’s a technology that is quickly moving beyond the early adopter phase, with retailers large and small jumping on board throughout Europe and North America. As the technology matures, RFID is experiencing growing pains including patent challenges. Once we get through those, it will be full speed ahead. The question that most retailers will have to 4 • Nordic IDea 20 • Nordic IDea

answer is: what’s involved in getting into RFID? Is there massive changes require, what are the costs and how quickly can an organization go from zero to fully functional? This article illustrates some of the requirements, challenges and benefits that you can expect in making the move. FASHION AND RFID: THE PERFECT FIT RFID is such a good fit for apparel and specialty retail because it shines most brightly where there are thousands

of SKUs and high volume sales. At present it’s also a key differentiator in an extremely competitive segment of retail. What makes RFID ideal for fashion retail is that unlike barcodes, RFID tags can store item-specific information. Tag information can be very detailed, including size, colour, price, model number, batch and other data pertaining to the individual item. In addition, information can be added along the product’s journey; time in, time out, inspection, modification etc, from point of attachment to destination. All of

www.nordicid.com

this information, on hundreds of tags, can be read through cartons and from distances of several metres in a second or two. “Not needing to rely on line of sight is the key to fast access to goods in a warehouse, stockroom and on the shop floor,” says Jorma Lalla, who works in Business Development at Nordic ID. He notes that RFID readers can be mounted in ceilings or walls, and a 3,000 square foot store can be completely inventoried by a team of two with handheld computers in less than half an

hour. But the big news isn’t timesavings: it’s increased accuracy. “You can walk along quite quickly with a handset and read every tag that you pass with 100% accuracy,” says Lalla. “That makes it easy to know what you have and that it’s properly shelved.” PRIMARY DRIVERS OF RFID ADOPTION The consensus among fashion retailers that have implemented RFID is that a 5% lift in sales is a conservative forecast. Other benefits include better inventory

management on many levels, a drastic reduction in stock-keeping man-hours and 98% inventory confidence-a threshold high enough to make multichannel fulfilment and similar options a distinct possibility. These benefits formed part of the impetus for recent pilots executed by C&A, one of Europe’s leading retailers of affordable fashion apparel. In both the 2012 and 2013 pilots, however, the primary driver was something else: guaranteeing that items in highest demand were always on shelves. “Our Nordic IDea • 21

RFID ARTICLE

brand promise is to make wonderful fashion available to you at a reasonable price,” says Joachim Wilkens, Head of Supply Chain Development with C&A Europe. “Sometimes the available part was missing.” THE REAL COSTS OF CHANGE The benefits of RFID are important, but adopting a new technology is still a big step to take for any retailer, large or small. According to a 2009 RFID Journal report, retailers were spending $30,000 on average on a single store pilot, and that figure didn’t account for employee time directed at a non-core project. That cost has come down in the four years since the study, and of course cost per store takes a steep nosedive as you add more locations to the pilot. But dollar cost is not the big hurdle for many retailers; they know the ROI is

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there. What C&A was more concerned with – a common fear – was the potential disruption that introducing RFID might cause. “With the first pilot it was a big commitment in time especially at the store level,” admits Wilkens, “but parts of the daily routine also became much more efficient. So it was a kind of tradeoff.” He adds that the initial five-store pilot required a lot of in-store support, whereas the current 20-store pilot does not. This is typical of what other retailers like Gerry Weber have experienced with rollouts.

with the prospect of RFID: a small group of employees called into question the legitimacy of the numbers that RFID was producing, while the majority quickly embraced an intuitive technology that they believed would help them in their daily work. In both cases, the eventual result was improved job satisfaction. This was due in equal parts to increased inventory confidence, reduced out-ofstock-induced frustration-especially at busy times-and far less time spent performing rote tasks. FINDING ROI

When asked whether significant change was required at C&A, Wilkens acknowledged that it was, at a sales floor level. “But staff were very interested in the new processes to see if there was a benefit for themselves as well as for the company,” he adds. He also noted that there were two distinct attitudes that employees adopted when faced

The numbers and the ramifications of change worked for C&A, but before jumping into any kind of RFID implementation most retailers need some assurance that the technology will work for them specifically. To help with this, there are several RFID ROI calculators that demonstrate

www.rfidarena.com

projected returns on a deployment. They are based on data collected from actual deployments, such as those of American Apparel, Marks & Spencer, and many other retailers. RFID Journal’s Fashion Retail ROI Calculator, for example, was developed in consultation with independent academic and implementation experts. It shows an ROI of over $33,000 for each store in a 400-store chain during the first year of deployment. The ROI increases each year after that, for a total advantage of more than $25 million after three years. ROI Calculator focus on in-store RFID deployments because research and early pilots indicate that’s where the greatest benefits can be achieved. But as two German retailers have proven, ROI advantages accrue everywhere. Gerry Weber has deployed RFID end-toend throughout the entire supply chain, from point of manufacture to point of sale. They report statistics like 70% timesavings on warehouse inventories, and up to 10% greater accuracy of factory picked orders. For many retailers, improved inventory accuracy-and not outof-stocks on the sales floor-proves to be the unexpected lead benefit after implementation. Professor Bill Hardgrave, Dean of Business at Auburn University, has found time and again that without RFID retailers don’t have a true handle on their numbers. “In working with major U.S. retailers, we found that systems invariably say 1% or so of items are out of stock, when in reality it is 12% to 15%.” Hardgrave ticks off all kinds of benefits that high inventory accuracy delivers. “Faster optimal reorder cycles, reduced cycle stock, reduced out-ofstocks, multi-channel capability and the list goes on,” he says. TECHNICAL REQUIREMENTS For a simple RFID implementation, the shopping list is not long. You will need UHF RFID tags – either reusable or single use – and at least one mobile handheld RFID computer for receiving goods and stocktaking. Fixed RFID readers mounted under tables or counters are handy for receiving and

www.nordicid.com

for checkout, but can be substituted with handheld computers. A portal or fixed reader is also really good to have between the storeroom and the sales floor to validate that the proper items have been brought to the sales floor. Unless you integrate with POS-to date, C&A has not-there’s not a whole lot more that’s required. Wilkens says that the hardest part is learning to switch to updating inventory systems with RFID data and not with POS-calculated data, as in the past. The vertically integrated private label company approached RFID as major players do: with a fivestore pilot, followed less than 12 months later with a second pilot that added on Germany’s twenty principal stores. With more than 1,600 stores in 20 countries, one challenge C&A experienced was how to make RFID work in a very limited number of retail locations. They decided to handle tagging by printing and encoding the RFID hang- and adhesive tags at point of manufacture, and to apply them to certain batches of never-out-of-stock (NOS) items destined for pilot stores. “Obviously we will eventually send tags direct to all manufacturers to realize greater supply chain efficiencies,” explains Wilkens, “but with only 25 stores right now that doesn’t make sense.” You will, of course, need some integration work to make tags talk to readers and readers to transmit data to your computers. But implementations are getting simpler and less expensive as the industry moves closer to plugand-play solutions. One example of this is an economical RFID solution for retailers created jointly by Nordic ID and SML Group Ltd, a global brand identification solutions provider. The out-of-the-box solution pairs optimized handheld computers from Nordic ID together with SML’s RFID-enabled apparel labels and the company’s Vizit cloud computing solution. It enables storewide inventory counts and product tracking from manufacturer to point of purchase. “The tags and readers talk to each other from

the get-go,” says Jorma Lalla of Nordic ID. “That’s one less integration step required.” IT’S NOT ABOUT RFID In considering the significant benefits that RFID is bringing to C&A, Wilkens is quick to point out that although RFID is a great technology, at the end of the day it’s just a tool. He believes that what organizations need is a vision, an end-goal and a plan to get there. “It’s not RFID that brings competitive advantage,” he says. “It’s our unique selling proposition. If RFID can help support that, we’ll use it.” Given the success of C&A’s pilots, Wilkens is confident that further investment in RFID is on the horizon. No matter what happens in the short term, Wilkens has some advice for retailers about the inevitable adoption of RFID. “Make sure that your choices are business-driven and not IT-driven,” he suggests. “And when you’re ready to plan an RFID implementation, engage a consultancy rather than a solution provider. First they need to understand your business. Then they can decide how to apply the technology to support it.” Wilkens also advises prioritizing privacy protection. “Whatever you implement has to be 100% acceptable to the public. Retailers live on public opinion.”

INTERVIEWED FOR THE ARTICLE: Joachim Wilkens is the head of Supply Chain Development with C&A Europe. Jorma Lalla is the Founder and Owner of Nordic ID. Jorma Lalla works in Business Development and acts as the Chairman of the Board. Professor Bill Hardgrave is the Dean of Business at Auburn University in Alabama.

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RFID CASE STUDY Text: Kirsikka Dräger / Nordic ID Images: Mikko Jokela / ToP Tunniste

SUKKAMESTARIT PAIRING SOCK PRODUCTION WITH RFID SYSTEM RESULTS IN A SUCCESS STORY

Sukkamestarit is Finland’s largest sock manufacturer. Their production is located in Tampere, Finland, where they manufacture high-quality socks for their own sock brand as well as for other sock brands in Finland. The company is known for its agility and speed, ensuring that incoming orders will be shipped the same day. Such agility and speed require visibility into all processes at the various manufacturing stages and the ability to produce and deliver goods with high accuracy. With a capacity of around 4 300 000 pairs of socks per year, there is a fair bit to manage and plan. In cases where process management is carried out manually some processes can be very time consuming and labour intensive.

FACING CHALLENGES Production planning and warehouse management with a pen and paper approach is labour intensive, time consuming and prone to human error. Sukkamestarit wanted to increase transparency into the various stages of production and ease handling of warehouse inventory. Sock production is a seasonal business, which poses challenges due to the seasonal changes in demand. For example for Christmas large quantities are already produced in advance. In the production warehouse processes and management have proved to be extremely time consuming and labour intensive if carried out manually. Another important part that used to be challenging before RFID implementation was managing a bonus system for the employees.

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Sukkamestarit wanted to ensure that they had a fair bonus system in place, to grant employees performance-based bonuses for their work effort and ability to meet set targets. TAKING THE STEP TO IMPLEMENT RFID In 2010 Sukkamestarit implemented RFID technology into their operations. Nordic ID partner ToP Tunniste delivered the solution to Sukkamestarit. The solution included Nordic ID Morphic readers for identifying work order sacks, RFID gates for registering material flow from warehouse to manufacturing as well as table readers that enable tracking of work orders at the sewing stations. RFID BRINGS MULTIPLE BENEFITS The RFID system was taken into use at the sock producer’s facilities to solve

key challenges. Sukkamestarit gained valuable transparency in the production processes by implementing RFID. RFID helped to cut down on time consuming and labour intensive tasks whilst obtaining real-time visibility on production steps and progress of orders. Managing production and material movements with RFID, helped to accomplish an astonishing 100% order accuracy. TRANSPARENCY INTO PRODUCTION PROCESSES All production orders are packed in RFID tagged sacks and can be tracked and traced through the entire production process. The sacks are identified and allows the user interface to show real time orders, related processes and the stages of production. The end user interface can show what orders are currently being produced, what stage they are in and the progress of the order. Before implementing RFID, line managers did not have the ad hoc visibility they have today. They used to have to check with the production lines to receive information on what orders are being processed and how far each has progressed. RFID was found to have an enormous impact on the end to end process. Nowadays all order related information is easily checked from the computer.

www.sukkamestarit.fi www.toptunniste.fi

Product: Nordic ID Morphic

WAREHOUSE STORAGE AT OPTIMAL LEVEL The increased visibility allows just-intime management of production, which ensures that real-time replenishment orders can be met with 100% accuracy. The RFID data allows Sukkamestarit to forecast replenishment orders, seasonal orders as well as basic orders a couple of weeks in advance. With the optimization of production processes the material warehouse and interim storage buffers can be kept at an optimal level. PRODUCTION PLANNING AND TIMING The increase in data, that is now available through RFID, directly results in a more accurate analysis and more efficient planning. Having information on upcoming orders allows efficient management of work orders. For example, changes from one color or setting to another can now be scheduled so that time consuming machine setting changes can be kept to a minimum. Also, the time needed for different stages of production can be predicted and used to manage production planning and timing more accurately. MAINTENANCE PLANNING By monitoring the machines used in production, maintenance schedules can be planned and adjusted accordingly. Sukkamestarit can easily evaluate which machine produces what amount of

products. If a machine has issues, for example with an engine, the recognized problem can be fixed in maintenance. This also enables predicting when a machine is due to undergo maintenance and plan schedules correspondingly. ISSUES IDENTIFIED AND CORRECTED RFID provides Sukkamestarit with data that can be utilized to solve production issues. With insight into the production steps, issues are easily identified and traced back to the underlying problem. If, for example, there is a rise of defect products in production, the underlying issues and whether they are caused by human or mechanical errors can be identified. If there is a sewing machine that starts to produce a higher level of defect items it can be determined whether maintenance of the machine is needed and whether the issues can be addressed and corrected.

control. The visibility into each step of the production process was improved and accurate data can now be obtained and utilized to ease the challenges of the business and save costs. Production planning and control alone allowed for time savings of one man-year. The new RFID-based planning system has resulted in high inventory accuracy and production efficiency has risen significantly. The size of warehouse buffers has decreased due to planning and optimal usage of production resources. Unnecessary costly changes of machine settings are kept to a minimum and maintenance of machinery is taken into account in planning. The 100% accuracy proves that Sukkamestarit is at the top of their game. This means that whilst gaining visibility into real-time data through RFID, the end-customer will be served faster and with zero errors.

BONUS SYSTEM

WHATâ&#x20AC;&#x2122;S NEXT?

Now that work orders are tracked and traced through the entire production process, the gathered data can be utilized as a basis for the bonus system. Accurate real time data is used for granting employees performancebased bonuses for their work effort.

The usage possibilities for the data captured through RFID seem to be endless. Sukkamestarit Factory director Jani Tarkki envisions that the next evolutionary step could be to implement item-level RFID. Nevertheless, with such a success story under their belt, this is not on the table quite yet.

GREAT RESULTS Implementing RFID significantly improved and simplified production

Nordic ID partner ToP Tunniste delivered the solution to Sukkamestarit as an integrator.

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RFID ARTICLE Text: Carl Michener / ID BBN Image: Hanna Östman / Nordic ID, Shutterstock, Auburn University & International with Futura

RFID:

THE REVENUE STREAM GAME-CHANGER RFID is changing the make, store and ship revenue model for good. The technology can enable 99% inventory accuracy, which can impact the bottom line by reducing out-of-stock (OOS) situations, drastically reducing inventory-related sales losses. According to some studies, 47% of fashion apparel in Europe is sold at discount - and OOS shares a big part in the blame. If products aren’t on the shelves, they won’t sell right away. And unlike wine, fashion items don’t get better with age: they require discounting. OOS TO BLAME FOR DISCOUNTED ITEMS According to Patrick Javick, VP Strategic Accounts Management at GS1 US, fixing inventory accuracy is the number one element that justifies RFID investment in retail. Studies in Europe and the USA demonstrate that, despite what non-RFID retail systems actually show, inventory accuracy in retail averages 63% in the U.S. and 75% in Europe. Causes include inaccurate registration of goods, not enough EDI information, human error in counts and replenishment, incorrectly marked products, and shrinkage. It’s understandable that inventory accuracy and cycle counts continue to be the biggest factors driving 26 • Nordic IDea

adoption, and the ROI is most certainly there. The technology has proven so effective, in fact, that American Apparel has equipped all of their stores in the United States, Canada, Mexico, Europe, Asia, South America and Australia with RFID tags on every item. Their inventory

accuracy is high, but they realise that RFID has many more benefits to retail than simply keeping products on the shelves and bringing efficiency to inventory counts. It’s what high accuracy enables that’s the real game-changer.

www.nordicid.com

47% OF FASHION APPAREL IN EUROPE IS SOLD AT DISCOUNT OOS SHARES A BIG PART IN THE BLAME THE RISE OF OMNI-CHANNEL A jump in accuracy into the high nineties - 99% at Germany-based Gerry Weber and 95% in Wal-Mart’s RFID categories, for example- changes the picture from a revenue and customer satisfaction point of view and also gives retailers the confidence in inventory numbers to do things they have never done before. “When you use RFID to bring inventory awareness to such a high level, it gives retailers vastly increased visibility into their entire network of suppliers and distribution centres,” says Jorma Lalla. “You can make a lot of improvements with that kind of data. Outside of OOS prevention, omni-channel is the first thing that comes to mind.” Omni-channel is the ability to leverage all channels to fulfil sales. On the front end it’s a seamless, consistent customer experience regardless of how customers shop- in the store, from a computer, on a mobile device, or through a catalogue. On the back end, retailers with a fine handle on the existence and

whereabouts of every item they sell can leverage that knowledge to reduce storage, shorten cycle and delivery times, offer customers new options like local store pick-up, and ultimately make more money. It’s the granular information that RFID delivers which has helped retailers like American Apparel to make the move to omni-channel selling. They have reduced warehousing needs by supplementing distribution centre inventory with that of RFID-enabled stores. When the distribution centre is out of stock, online orders are fulfilled directly from stores. Gerry Weber goes a step further, allowing customers the choice of direct shipment or pick-up at their closest store. In-store pickup comes with the added benefit of potential incremental in-store sales. CONFIDENCE IS KEY Companies that offer Internet-based purchases and local store pick-up traditionally build in a healthy error tolerance. A store may show that they

have five DVD players in stock, but they are so unsure of actual inventory levels that unless they show 10 or more, they tell online shoppers that they are out of stock. The worst-case scenario is sending a shopper to a store to pick up an item that isn’t there. So retailers have always erred on side of caution and missed out on sales. With RFID, the inventory confidence required for omni-channel is there. One industry expert believes that omnichannel retailing will come into its prime when Distributed Order Management (DOM) matures. The technology leverages detailed logistics data to calculate the optimal way to source a product as soon as an order is made. “Right now we’re using heuristics and best guesses,” says Dr. Bill Hardgrave, Dean of Auburn University’s College of Business in Auburn, Alabama. “DOM is not mature partly because today’s systems are not operating in real timethere is always a lag of several hours. You can’t recommend the best way to source a product if that information is out of date,” he observes.

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RFID ARTICLE

Stores like Macy’s and Gerry Weber are starting to use RFID to optimise in real time, something that Hardgrave has seen happening very quietly, and for good reason. “Implementing RFID is something that retailers have no qualms over crowing about,” says Hardgrave. “Just having RFID is not a sustainable competitive advantage. What you do with it is.” Hardgrave believes that when DOM matures and bricks & mortar retailers truly figure out omni-channel retail, pure online players like Amazon are going to get hurt. “They don’t have the physical presence,” he says. “When Best Buy and other retailers really figure out omni-channel and make efficient use of their stores as part of the distribution network, I don’t see how Amazon can compete with that.”

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DROP THE DISCOUNT Rüdiger Hulla, the man in charge of international project management for global technology solutions specialist Futura, believes that reducing the need to discount can vastly improve revenue from existing streams-and that’s got a whole lot to do with RFID. Hulla has seen his fair share of implementations, and has noted a trend among major European retailers of making storespecific recommendations on what to order, and orchestrating inter-store transfers. According to Hulla, the next big impact on revenue in retail will centre on detailed information regarding the real age of products. “You can only truly optimise the movement of goods if you

have visibility into the real age of the item,” he says. “It ties in with DOM, but it’s an entirely separate concept. The potential for increased revenue is far higher.” The idea is a simple one: if you know how long each item has existed within the inventory system, you can plan better and discount less. Given that 47% of fashion apparel is sold at discount, it’s also a big idea. “You can use that information strategically to move products to where they are going to sell better, or to discount by 20% early on rather than having to discount by 50% later,” says Hulla. “That’s 30 points, plus the space you’re able to allocate to new, full-priced items. It’s got a huge impact on profitability.” Information is power, and the granular data needed comes from RFID. One Gerry Weber

www.rfidarena.com

Rüdiger Hulla is Head of Project Management, International with Futura, a global technology solutions implementation company headquartered in England.

Professor Bill Hardgrave is Dean of Business at Auburn University in Alabama. He is a prominent, published expert on RFID who often speaks on the subject.

Jorma Lalla is the Founder and Owner of Nordic ID. Jorma Lalla works in Business Development and acts as the Chairman of the Board.

shop has antennas strategically placed on the ceiling to keep track of the exact age and placement of every item, and place the newest items at the front of the shop, using them as a magnet to attract shoppers.

However, RFID-enabled EAS is rare. “Today we’re at loss detection, not loss prevention,” says Hardgrave. With conventional electronic article surveillance (EAS) systems, it’s difficult to detect what was stolen. “With RFID we can see that it’s 5 pairs of shoes out front door and 10 pairs of jeans out the back door,” observes Hardgrave. “With enough RFID gateways throughout the store, you can track product movement, identify patterns and ultimately take steps to stop theft before it occurs.”

RFID: THE FASHION DESIGNER’S NEW BEST FRIEND

BETTER VISIBILITY, BETTER NEWS The improved visibility that enables higher profitability through less discounting also helps reduce shrinkage. Complete supply chain visibility provides concrete proof of where goods are, or were, at any given time. Enlisting manufacturer and logistics partners to scan and upload tag information as part of doing business will show you where an item went missing en route. The same goes with in-store, where RFIDenabled electronic article surveillance (EAS) helped American Apparel to reduce internal shrinkage by up to 75% at some locations and 55% overall. “Employee theft is the biggest cause of shrinkage among most retailers,” says Lalla of Nordic ID. RFID EAS has been terrifically successful in minimizing that.” Bolt-on solutions like ZeroShrink add another level of security, especially useful in the case of high value items such as jewellery and watches.

Just as it helps reduce shrinkage, RFID can bolster revenue and safeguard the brand through reduced piracy. Wonder why some retailers aren’t ordering as much of your product as they used to? It could be that they are getting a pirated version for far cheaper. Other times, retailers are duped. Either way, the consumer and brand owner are cheated. With RFID tags sewn in at point of manufacture, retailers can readily identify counterfeits. Brand owners can also visit retailers, perform audits at retail and say for certain if retailers are selling fakes.

It’s not a new revenue stream, but it is a new way to drive sales. When you know exactly what size and colour of what item was sold at what time and date at each and every store, that’s power. American Apparel uses such data for trend recognition-to gain a more precise understanding of what sells where best. This facilitates replenishment, shapes future design that’s going to sell, and helps indicate where to allocate how much of each product. Retailers are appealing to shoppers’ sense of fashion in other ways as well. Roberto Verino, a Spanish fine fashion retailer, runs Smart Fitting rooms in their flagship store to create an experience while Burberry’s flagship store in London’s Regent Street has smart mirrors that will turn into screens and show a short film detailing the creation of each piece. Not every RFID experiment will bear fruit, of course, but it’s certain that this game-changing technology is delivering ever-increasing value.

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RFID ARTICLE

Intelligent logistics - CLOSING THE LOOP ON TRANSFERABLE ASSETS IN LOGISTICS WITH RFID

In the beginning there were only giant, unwieldy tags and readers that cost as much as the assets they tracked. In its infancy, RFID was an expensive solution for tracking expensive assets.

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www.nordicid.com

Text: Carl Michener / ID BBN Images: Hanna Östman / Nordic ID

As is the way with all technology, RFID has become more nimble and affordable. Now that tags can cost less than 10 cents apiece, use of RFID has spread around the world. From fish to fruit, military assets to cardboard boxes, RFID is smoothing out logistics processes, ensuring freshness and reducing waste across industries. You’ll find it in retail and fashion, supply chain, manufacturing and, more recently, perishables. RFID is a superb tool for high volume logistics. Unlike barcodes, RFID tags can store detailed, item-specific information including size, colour, model number, price and other data. Information can also be added as the product travels. It can record time in, time out, date of inspection, information about modifications made, ambient temperature and more-from point of attachment to ultimate destination. All of this information can be read through cartons with a single pass of a handheld RFID computer. Industry experts are quick to point out that although RFID is more hi tech than barcode technology, it simplifies processes to a greater extent. “Since barcode reading involves line of sight, the ability to read automatically requires a sophisticated conveyor and reader set-up. RFID is simpler,” says Jorma Lalla, Founder of Nordic ID. “The line of sight distinction is crucial. Think of delivery operations. If you were to install a fixed RFID system in your delivery vehicles, manual scanning would no longer be needed. Tracking becomes faster, automatic, and less susceptible to human error.” RFID has become so affordable that it’s beginning to be used with oneway cartons and cardboard packaging material (slap & ship). One major European airline is now starting to ship their mission critical spare and replacement parts (also tagged) in tagged containers for easier batch retrieval.

Finding items in a shop and processing shipments in a warehouse are run-ofthe-mill logistical challenges that RFID has been tackling for more than a decade. It’s no secret that the apparel industry has been making very good use of RFID to keep items on shelves and streamline storeroom and distribution centre operations. The next evolution in retail logistics processes is Distributed Order Management. The technology leverages detailed logistics data to calculate the optimal way to source a product as soon as an order is placed. It aggregates and prioritises orders from all sales channels, optimising orders from multiple locations and supplier sites. “It’s a rulesbased system that relies heavily on RFID to know where everything is,” says Lalla. “When it’s perfected it will bring us to a level of efficiency that we’ve been after, well, forever. But perfection is dependent on all systems operating in real time, and we’re not quite there yet.” EFFICIENCY UP, SPOILAGE DOWN Some of the newer challenges that RFID is tackling involve freshness, weight, and

returnable transport item (RTI) control. From Taiwanese fruit to Brazilian fish, RFID is increasing profitability while reducing waste and ensuring freshness and availability. Brazilian supermarket Grupo Pão-deAçúcar (GPA) recently implemented RFID to solve some fishy business. Until recently, the boxes of seafood they deliver to individual stores made use of average weights. Fish don’t come in a standard weight, and it was never practical to keep track of the weights of individual boxes. As a result, the actual weight of a box could be one or two kilos more or less than the average weight. A discrepancy of a kilo or two might not seem like much-and should even out over the course of many shipments-but with hundreds of stores, the numbers add up. Add the fact that it could cause managers to run out of fish prematurely, and you can see how this can be a problem. The retailer has implemented RFID to replace the average weight with the actual weight, improving accounting and reducing out-of-stock situations. A

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RFID ARTICLE

side benefit is less container attritionsince GPA knows where and when the boxes come and go, they are less likely to be expropriated or put to unintended use. “Reducing attrition is one of the principal benefits of returnable transport items,” says Sander Merkx, Partner at Dutch Systems Integrator Mieloo & Alexander. “Our clients timetrack their containers to tell if there’s something wrong.” When tagged skids or boxes come back later than expected-or not at all-it becomes obvious that they are being put to unintended use. “The information that RFID supplies is extremely granular, the data indisputable. That tends to keep everyone doing things as they should,” summarises Merkx. A Taiwanese fruit producer, Je-Nong Cooperative Farm, has moved from cardboard to RTI boxes for fruit, but for different reasons. Produce is now delivered from farms right to its final destination in RFID-tagged boxes, reducing handling and eliminating the need for disposable cardboard. RFID tagging also helps with customs processes, thanks to temperature monitoring functionality. Tags monitor and record temperature and humidity

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within storage coolers. When conditions fluctuate too much, an alert draws the attention of personnel. Tags record atmospheric data, providing information that enables customs officers-especially in Japan-to quickly clear fruit shipments from quarantine. In the past, those sensors were manually monitored 24 hours per day, seven days a week, in order to maintain a record of conditions. FROM MILITARY TO RUN-OF-THEMILL RFID technology is changing fast. As it gets more sophisticated, it gets simpler and less expensive. In 2005 the U.S. Army began testing RFID mesh networking, an asset location technology consisting of wireless mesh nodes using active UHF tags with powerful transmitters. It was an expensive, hi tech solution with bugs that needed working out. As of 2012, most of the bugs were gone. High-throughput, low-jitter, low-delay mesh networking just works, even as some elements of the network move out of range. They automatically form into independent networks, seamlessly merging when brought back within range.

Mesh has its advantages, but it’s still an expensive solution. At its plant in Saltillo, Mexico, Daimler Trucks North America has found a far cheaper way to do essentially the same thing, albeit with assets that don’t move much. Daimler equipped its yard trucks with RFID scanners that constantly create and update trailer inventory from passive trailer tags using 4G networking as they drive around the yard. 4G, combined with passive RFID and a yard truck going about its business shuttling trailers to and fro, has achieved much the same result as mesh technology-at a tiny fraction of the price. PRIVACY, PEOPLE AND PIGS All of this is progress as you would expect: the world is waking up to the incredible efficiencies that come with RFID. But that’s just the start. Emerging uses for logistics push the boundaries of technology and, where people tracking is concerned, privacy. PlayPass, an event organization and marketing firm, has developed BandID-a distinctive, woven smart bracelet that carries an RFID tag. Bracelets are mailed to concertgoers

www.rfidarena.com

ahead of time, allowing crowds to flow through checkpoints and eliminating choke points. Different bracelets can allow for different clearances as wellcertain tags can grant VIP access. BandID also acts as an internal control. It restricts the movements of employees at massive events such as Belgium’s Rock Werchter, where some tend to the needs of rock stars, while others are allowed only in food service areas.

www.nordicid.com

food traceability are of course growing at regulatory and consumer levels. “We’re seeing the use of low frequency tags for animals for vaccination purposes,” continues van Oostrum. ‘I don’t think it will be long before the food sector moves to ultra high frequency for mass reading.” He acknowledges that farm trials have been taking place since 2010, with good results. INTO THE FUTURE

BandID also enables aggregate reading, to monitor the number of people in any given area for crowd control in these massive 300,000 visitor events. A new trend in such events is to combine RFID reading with social network fun-by scanning your wristband at a kiosk, you can let friends all over the world know that you are at a certain stage, tent or podium. While novel and cool, such uses of RFID can also be contentious: anyone with a reader can monitor the movement of concertgoers or, for that matter, any one wearing a wristband. Privacy is not an issue for pigs, however. “There are more pigs in Holland and Denmark than there are people. Cattle too,” says Hielke van Oostrum, Sales Director at at Nordic ID for the BeNeLux countries and Denmark. Demands for

RFID has come a long way since simple asset tracking, and it’s got much further to go. Our experts agree that the future consists of RFID-tagged RTIs. “It might take as long as ten years,” says Merkx. “Tagging is always the bottleneck. But it’s either pay for disposable containers for years and years, or invest in tagged RTIs. Do the math and the answer becomes obvious.” van Oostrum notes that logistics processes are facilitated with, and often driven by, RTIs. “Just one grower of Hortensia flowers might use 250,000 tags,” he observes. “The growth in RTIs is driving wholesale RFID adoption. It won’t be long now before most logistics processes are RFIDenabled.”

INTERVIEWED FOR THIS ARTICLE: Jorma Lalla, Founder and Owner of Nordic ID. Jorma Lalla works in Business Development and acts as the Chairman of the Board. Sander Merkx is a Partner at Mieloo & Alexander Business Integrators, a systems integrator based in Hoofddorp, Netherlands specialising in technologyenabled supply chain improvement. Hielke van Oostrum, Sales Director at Nordic ID for the BeNeLux countries and Denmark.

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RFID CASE STUDY

www.trivilita.lt

TRIVILITA EMBRACES RFID Lithuanian bed, pillow, mattress and quilt manufacturer reaching 100% order accuracy with RFID

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Product: Nordic ID Merlin UHF RFID

Trivilita, a high-volume furniture manufacturer based in Šiauliai, Lithuania, already had an order accuracy rate of 98 percent. That’s a good record for a company that ships 5,000 to 6,000 pallets per month. But management knew that they could improve that figure while adding efficiency with RFID “to increase accuracy and reduce time,” as Trivilita’s Deputy Director Andrius Vilciauskas puts it. Starting in September 2012, they have moved accuracy results from the high ninetieth into the thousandth percentile. WITH HIGH VOLUME, A SMALL CHANGE MEANS BIG SAVINGS Trivilita is a major manufacturer of beds, mattresses, pillows and quilts for customers worldwide, including IKEA. With so many orders going out every day, company management knew that even a small reduction in the time that employees spend scanning pallets at loading docks, and a slight uptick in order accuracy would make a big difference to the bottom line. Barcodes were already in use to keep track of pallets—a customer requirement—but

Text: Carl Michener / ID BBN Images: Shutterstock

they needed to be scanned from inches away. Forklift drivers had to get down off their machines to scan each pallet before bringing it to the loading dock. THE WAREHOUSE RFID SOLUTION To implement an RFID solution, Trivilita chose Vilnius-based UAB Autepra for consulting services, SMARTRAC Short Dipole tags, some hardware, and deployment. The furniture fabricator made the innovative and ultimately successful decision to create the software required to connect RFID with its existing ERP systems internally, with some support from Autepra. The complete system for which Autepra supplied RFID reader portals, tags and Nordic ID Merlin mobile computers consists of RFID pallet tags, reader portals at dock doors, mobile computers on forklifts with real-time driver displays, software and middleware to receive, store and manage RFID data, and Nordic ID Merlin mobile computers. These last are used to scan barcoded pallet labels and code the information on SMARTRAC EPC Gen2

passive UHF RFID tags, which are also applied to the pallets. When products reach the storage area, an employee uses the Nordic ID Merlin mobile computer to associate the RFID tag with the shelf bar code, inputting its precise location into the ERP system. SOLID RESULTS Results have been great, thanks to new warehouse protocols involving RFID. Orders are sent via WiFi to forklift operators’ computers, displaying the item required, location and dock door destination. Once the pallet passes the dock door RFID reader, tag data is matched with order information. If it’s the wrong pallet, the forklift driver will see an alert on his display—a message that can also be sent to administrators. Trivilita is quite pleased with overall system results. Scanning time is reduced, there is less time spent searching for goods, actual goods retrieval is quicker and order accuracy climbed to 99.94 percent in the first three months of RFID system deployment.

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TECH ARTICLE Text: Carl Michener / ID BBN Images: Hanna Östman / Nordic ID

BOMBPROOF RFID - Smart RFID tag manufacturing makes reading next to metals and liquids a reality

With the help of a mobile RFID computer, you can read all the clothing tags inside a cardboard box from across the room. But fill that box with cans of Coca-Cola, and you might not be able to read tags until you are just inches away. How to solve these issues?

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Radio frequency identification is quickly gaining prevalence in the fashion apparel industry, as it is in major retailer supply chain logistics. It’s a technology that’s superbly suited for high product volumes and a high number of stock keeping units (SKUs), but problematic when reading next to metals and liquids.

The big barrier to adopting the technology used to be cost. Less than twenty years ago, tags cost tens and even hundreds of Euros, limiting their use to tracking expensive assets like truck chassis, tools and other equipment. Now some tags cost as little as a few cents, making widespread use highly affordable. The biggest barrier today is making low-cost tags that read properly next to metals and liquids.

www.rfidarena.com

METALS

www.nordicid.com

LIQUIDS

EFFICIENCY = SUPERIOR DATA

A TAG IS NOT A TAG IS NOT A TAG

“Just like with logistics, profitability in retail is closely linked with efficiency,” says Jorma Lalla, Business Development Director of Nordic ID. “And efficiency in retail demands in depth data and transparency,” he continues. Tags can store great quantities of information specific to each individual item, and build a history as they travel from manufacture to point of purchase or use. “RFID in retail has produced tremendous results so far, and there are hundreds more use cases waiting to happen.”

Metals detune and reflect RFID signals, while liquids absorb them. This has historically caused poor tag read range, unreliable reads, or no read whatsoever especially with Ultra High Frequency (UHF) tags. UHF tags that read well next to metal now exist, but they are not inexpensive.

In addition to serial number, colour, size, brand and other product details, tags can be used to accumulate information like ambient temperature, time in, time out, and other data via an RFID reader. Since RFID doesn’t require line of sight to function, readers installed in ceilings and floors can read passive tags at high speed from distances of up to 8 metres. Every item on a pallet can be automatically scanned and entered into an inventory system as it is wheeled from trailer to warehouse, unless those items are metal or contain liquid.

UHF tags are not the only ones in use, but their advantages have made them the gold standard. Here are some of the differences between types of RFID reading: • UHF Ultra high frequency reading takes place in the 860 to 950 megahertz range. Reading is quick and covers distances of eight to ten metres in the case of passive (non batterypowered) tags. UHF has historically performed poorly in reading metals and liquids. • HF High frequency reading works much better than UHF with metal objects and goods containing liquids, but is limited to a distance of up to one metre. • LF Low frequency reading is appropriate with read distances of less than 30

WOOD, FABRIC, PLASTIC, CARDBOARD, PAPER ETC.

centimetres. LF doesn’t work well with metal, but does work with beverage containers, produce and other similar items. Active (battery-powered) UHF RFID tags send out a signal when they detect a properly configured RFID reader. They are used to track items up to 30 metres away and more, depending on the strength of the tag signal. Active tags are often used for high value inventory such as military hardware and vehicles, aviation equipment and some logistics processes. ACCURATE READING NEAR METALS AND LIQUIDS Clearly, inexpensive tags that can be read quickly and accurately at a distance are the winners in most scenarios. The ultimate tag is small, thin, inexpensive, tolerates chemicals, water, reasonably high temperatures and rough handling-and its readability is not affected by the presence of metal or water. Figure out the metal and water part, and the rest is simple. Julian Krenge, a researcher at the Institute for Industrial Management, Aachen University in Germany, illustrates several options.

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TECH ARTICLE www.nordicid.com

“One way to increase readability is to create a space of one centimetre or more between the tag and the object it is affixed to,” says Krenge. He notes that such tags are bulky and relatively expensive. Another experiment he conducted with some success was to use regular 2D tags on a six-pack of plastic bottles of water. “If you calculate the optimal position, choose the right type of tag and pre-determine how the product is transported, readability can be decent,” he says, though he acknowledges that such a scenario is not always practical. A third option is to have the antenna rise vertically off the tag. This works well, Krenge believes, “but it’s not very practical in most environments where goods are stacked beside and on top of each other.” The key: integrating antenna design with chip manufacture. Professor Heikki Seppä- a senior research professor with VTT and known in European scientific circles as Mr. RFID - is a pioneer in the area and still pushing the boundaries of the possible. He believes that the tag manufacturing process, not the tag itself, is at issue. “In close proximity to ferrous and most nonferrous metals, you have to use a 3D antenna in order to get a clear reading,” says Seppä. “That’s being done now- it’s quite simple - and the price of materials to build the antenna is not much higher than for a 2D metal tag. But the manufacturing process has yet to be properly automated.” Seppä points to Traditional PIFA antennas (Planar Inverted FAntenna) as the obvious technical solution to the problem. However, the vias needed between the two conducting layers of the antenna make the structure complex and expensive to manufacture. It’s not quite there yet, and as a result the cost per tag is still high.”

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Antenna manufacture and chip manufacture are separate industries. For cost-efficiency to become a reality, the chip must be embedded into the antenna layer in one simple, costeffective process.

personalization. Seppä acknowledges that while volume is crucial to drive tag prices down, it’s also true that different products and applications will require a specific configuration of tag.

LIKE DESIGN, VOLUME IS CRUCIAL

This is the other impediment to high volume production of 3D tags: the current heterogeneity of the RFID tag manufacturing industry. Moving to 3D tags will mean more tag tailoring for each customer. With PAFFA tags, customization is theoretically possible even in the same production run. Bottles of juice will require more inexpensive tags than those manufactured to track airplane wear components. Tags will also require different configurations because of the nature of the materials they are affixed to and the way that those materials are transported and stored.

Researchers like Seppä’s team at VTT Technical Research Centre of Finland are upping the ante in the RFID game by perfecting the process of manufacturing tags-including thin, flexible tags-that work with metal. These platform insensitive/ platform tolerant and platform-adaptive RFID tags are not innovative in the sense that they make use of new technology, but rather in the way that they are put together. The team at VTT is set to enter the pilot phase of automating manufacture. “We have settled on a fail proof method of automate the manufacturing of 3D tags,” says Seppä. “Now we need to invest in tooling.” The VTT version of the simple 3D tags, which VTT is beginning to market, is called ‘PAFFA’ for Planar Asymmetrically Fed Folded Antenna. Traditional Planar Inverted FAntennas (PIFA) are a technical solution for the problem, but as already mentioned the vias needed between the two conducting layers of the antenna make the structure complex and expensive to manufacture. The PAFFA solution replaces all of the vias needed with a special antenna substrate folding technique. The one critical via typically required at point of attachment to the tag is replaced by a substitute circuit element. PAFFA type antennas result in small tags that efficiently read over long distances. Economical 3D tags will be important to the advancement of many industries. In automobile manufacturing, for instance, inserting RFID into the value chain is the only way that companies can keep up with the increasing demand for consumer

“My guess is we are three to five years away from more widespread use of 3D tags,” hazards Lalla of Nordic ID. “Demand is growing, and it won’t be long before it’s satisfied. But it could be a good while longer before we are tracking bottled water with 3D tags.” INTERVIEWED FOR THIS ARTICLE Jorma Lalla, Founder and Owner of Nordic ID. Lalla works in Business Development and acts as the Chairman of the Board. www.nordicid.com Julian Krenge, Researcher at the Institute for Industrial Management, Department of Information Management, RWTH Aachen University in Aachen. www.rwth-aachen.de Heikki Seppä, Senior research professor with VTT Technical Research Centre of Finland located in Espoo. VTT is a non-profit organization and the largest multi-technological applied research organization in Northern Europe. www.vtt.fi

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Text: Carl Michener / ID BBN Photos: Cotonificio Carlo Bonomi

COTONIFICIO

CARLO BONOMI HIGH-END MILANO TEXTILE PIONEER EMBRACES RFID Premium Italian textiles manufacturer reinforces their innovation and quality edge with RFID. Cotonificio Carlo Bonomi is a pillar of the Italian textile establishment in Lombardy, near Milan. With a history dating back to 1860, the company embraces technological innovation, using it to increase efficiency and safeguard quality. Cotonificio Bonomi now employs over 150 people and produces more than 5 million yards of high-end fabric per year.

In 2012, Cotonificio Bonomi was looking to simplify and accelerate the reading and handling of rolls of material, and to eliminate possible human error. The existing barcode system was plagued with problems such as dust and packaging interfering with reading. A PHASED APPROACH TO RFID Cotonificio Bonomi settled on a phased approach for RFID implementation, spreading the cost over a longer time period and introducing changes to quality control

and inventory management procedures slowly.

operating

After testing in November 2012, the first phase of RFID implementation was brought online. Each newly produced roll of fabric is tagged with an RFID smart label and added to the inventory database immediately after the quality control phase. When rolls are transported from the production facility to the company headquarters and warehouse a short distance away in Gallarate, warehouse personnel use Nordic ID Morphic UHF mobile computers to identify and register each roll. Because the mobile computers are equipped to read both barcode and RFID, employees are able to trace newer RFID tagged stock as well as barcoded rolls, bridging the gap between new and old technology. RFID REINFORCES QUALITY CONTROL For Cotonificio Bonomi, textile quality is paramount. It’s one of the company’s strategic advantages vis-à-vis overseas manufacturers. Consequently, eliminating defects in the finished product, as well as in production processes, is essential. Italian software integrator Testa Systems devised a new quality control process that can be carried out in two ways: in the first, workers visually inspect material, then defective parts are automatically cut out. An RFID smart label is then printed and applied by hand.

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www.cotonificiobonomi.com

Product: Nordic ID Morphic UHF RFID

The second quality control process is more automated. Two machines control fabric quality, while software maps defects and proposes cutting solutions depending on customer-specific parameters. An operator authorizes the cutting solution and an RFID smart label is automatically printed and applied to the roll. In either case, when the roll of fabric arrives at the central warehouse in Gallarate it’s tagged, in the system, and contains information about its ultimate destination. STELLAR RESULTS: EFFICIENCY AND ACCURACY Cotonificio Bonomi is on track to amortize the cost of their RFID system quite quickly. Before, reading barcode tags on the 30 rolls that made up each pallet took four minutes, with frequent misreads due to dust or plastic packaging. RFID now enables identification within a few seconds, and item traceability is 60 times faster than before.

Identification has also risen to 100%, meaning that no roll is lost. What’s in the system and in the warehouse are quickly becoming one and the same. This, combined with reading and tracing timesavings, is bringing serious efficiency to Cotonificio Bonomi. “This new technology allows us to streamline asset management and optimize internal resources,” says Francesco Donaggio, IT Manager at Cotonificio Bonomi. “We understand the great potential of RFID. In fact, we are planning a new architecture that will store more information in RFID tags, enabling a new set of inventory management processes.” Cotonificio Bonomi’s RFID implementation is a success that embodies the two strongest values of the company: innovation and quality. Benefits involving immediacy and accessibility of fresh data complement the quality control safeguards enabled with the help of RFID.

NORDIC ID: BEST OF BREED To architect and implement their RFID solution, including quality control, cutting optimization and automatic cutting software, Cotonificio Bonomi brought in Testa Systems, based in Zanica near Milan, as the software integrator specializing in systems automation. Testa in turn had Softwork, a Value Added Distributor (VAD) of RFID architectures, supply the technology package. Softwork also supported Testa during system validation in order to find the best configuration and meet Cotonificio Bonomi’s exacting needs. Softwork takes a best-of-breed approach, which for them includes Nordic ID handheld RFID computers. In this implementation, Softwork chose the mobile telephone-styled Nordic ID Morphic.

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RFID ARTICLE Author: Roksana Parvin Image: Hanna Östman / Nordic ID

RFID IN INTERNATIONAL SUPPLY CHAIN MANAGEMENT International import of apparel and textile products can be a logistic nightmare. However, the use of RFID can reduce the problems to a great extent. International production of apparels and home textiles involves complex and multi-faceted supply chain challenges. Most probably, the t-shirt you buy at Wal-Mart is made in Cambodia, the jeans available at Kappahl are made in China, the jackets at Tesco are from Vietnam, the formal shirts at Metro are from Bangladesh, the sportswear at Nike are from Thailand and the bed covers available at Hemtex are produced in Indonesia. In other words, the majority of the clothes sold in the Western countries are made somewhere else, usually in Asia. And it’s a huge and complex logistical challenge to track and control the international shipments and inland transportations of the products. Let’s imagine the international production and supply chain scenario between a European retailer (here referred to as ‘buyer’) and their production partner (here referred to as ‘producer’) in Bangladesh. The buyer places an order for one million t-shirts to the producer. The producer makes the t-shirts on time, and then washes, irons, and packs them into individual packages. And then the logistical nightmare begins. IT’S A CHAOS IN THE COUNTRY OF ORIGIN As soon as production is complete, the individually packed t-shirts need to be packed into cartons. One carton can contain 20 t-shirts, so for 1 million t-shirts (which is considered a standard purchase), we are talking about 50,000 cartons. Now, all these 50,000 cartons need to be sent to the warehouse of the freight forwarder 300 kilometers away. But hey, wait! Before dispatching them from the factory, there are a few more things to do. T-shirts of the same size are put in the same carton and there are 14 • Nordic 42 Nordic IDea IDea

seven different sizes. On top of that, the t-shirts come in six different colors, and the colors should not get mixed up. So, the 50,000 cartons need to be accurately sorted into 42 different groups, before they are loaded into trucks and leave the factory gate. Next, the cartons arrive to the warehouse of the freight forwarder. Bangladesh is one of the top three exporters of garment products in the world, so a standard warehouse may already contain 5 million other similar cartons for different buyers. And the cartons should not get mixed up. Again, a complex logistical procedure starts. Sort the cartons, load them into the containers in a special sequence, and place the containers on the ship. And after a voyage of 17 long days, the containers finally arrive in Europe. THE SITUATION IN THE DESTINATION COUNTRY IS NO BETTER Problems solved? Not quite yet. The buyer takes the containers to their own warehouse/distribution center. They open the containers and find 50,000 cartons with 1 million t-shirts in them. The next task is to distribute the cartons to the 300 shops that the buyer owns around the country. But simply dividing 50,000 cartons into 300 lots and sending one lot to each shop, is not the solution. It’s much more complex than that. The buyer needs to check that each lot contains the right amount of t-shirts of each size and color. That means solving a puzzle of 50,000 cartons, which contain t-shirts of six different colors and seven different sizes and need to be divided into 300 correct lots. The size of the lots is not equal and is determined according to the demand of each individual store. And, in most cases, all these logistical procedures are done manually, by reading the individual barcode labels printed on each carton. A real nightmare, huh?

THAT WONDERFUL LITTLE THING CALLED RFID Basically all these problems can be solved to a great extent by using RFID (radio frequency identification) tags. RFID tags are small electronic devices that use electromagnetic fields to transfer data to RFID readers. RFID can make a significant contribution to ease production and supply chain problems in the apparel and textile industry. The RFID tags are attached to the garments during production; they are then traced throughout the whole supply chain. There is no need to remove the tags from the product afterwards, but if the customer wishes, they can be deactivated/killed at checkout. Let’s consider the situation we were talking about earlier. If the producer had attached RFID tags on all 1 million t-shirts during production, it would have been much easier to trace and count the products, sort them appropriately and dispatch them from the factory in an efficient and time-saving manner. When the cartons are delivered to the warehouse of the freight forwarder, the risk of mixing them up with products of other buyers would have become close to zero, and no cartons would have been missing during the loading of cartons into the container, or in the loading of containers on to the ship. Each RFID tag has its own identity, which means it helps to monitor all items on an individual level. In the future, it's probable that the buyer will use only RFID tags on their products replacing barcodes completely. With an RFID system more data can be stored and analyzed, which helps other interest groups within the company in the decision making. Not only that, with RFID the buyer does not need to sort the products at the distribution center, as the RFID tag will tell them which product goes to which shop.

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Therefore, if RFID tags are attached, all that the distribution center needs to do is to send the ready-packed products to the designated shops. No need to repack them at the distribution centers.

DISTRIBUTION CENTER

When the buyer chooses to tag the products at production, the tags can be utilized throughout the whole supply chain. But there are other alternatives as well. In the picture you can see at what points of the supply chain RFID tags can be attached; at 1) production, 2) distribution, or in the 3) shop backroom. Sometimes buyers are very particular about their products, especially if it is a brand like Nike, Puma or Adidas. The products need to be scanned at each and every point along the journey. This is a challenge without RFID: After filling all the cartons with garments, the cartons’ and/or garments’ barcodes need to be scanned during loading to the truck, after reaching to the logistics/ shipping company and then again during stuffing. And, if one carton is accidentally scanned twice, it is a real mess when the logistics company personnel tries to send the scanned notification to the buyers end. And don’t even ask about the time it takes. Scanning the barcodes one by one at every point and takes a lot of time and that is not the end of the scanning. The barcodes are also scanned during unloading from the container and after reaching the distribution center. With RFID it will take only 3 to 4 minutes to scan at each point during the journey and it will not make any difference if one carton gets scanned twice by mistake. The system will know, since all tags are unique. SUMMARY OF THE BENEFITS OF IMPLEMENTING RFID IN INTERNATIONAL SUPPLY CHAIN LOGISTICS An RFID tag can be read from a distance of several meters without a line of sight. This helps to improve time management in the country of origin, at the logistics/ shipping company, at distribution and finally at the store.

100 % ASSET CONTROL

3 STORE

MANUFACTURING

Alternative tagging locations. The supply chain of items becomes more visible, which enables more efficient tracing of internal shrinkage. American Apparel, a US vertical retailer, has reported a 55% drop in internal shrinkage since they implemented RFID. With RFID a logistics company/shipping company can track the container and inform the buyer where the products are and how long it will take to reach the destination. With RFID tags, it is easier to detect counterfeit products. By giving all authentic products an individual ID, fake products can easily be spotted. Thanks to the information gathered with RFID, the buyer can make their selling strategy more accurate. When the products reach the destination, the buyer just needs to pick them up. As the RFID tags are attached to the products and ready for scanning,

there is no need to recount the cartons or products again manually. The staff can find cartons/items easily if they are misplaced and put them in their right place. CONCLUSION Although new technologies might be scary, RFID is one of those technologies that need not be. On the contrary; implementing RFID will make the working day of the the supply chain staff easier to manage. RFID tags can be attached on individual products, but that is not all. Tags can also be attached on cartons to get higher level information, or they can even be placed inside containers to track them individually. Each situation is unique, and so are their solutions! However, the common denominator for all cases is always there: RFID reduces production and supply chain management challenges to a great extent. Nordic IDea • 43

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The creative process behind the scenes In a world where tablets, smartphones and laptops are readily available, an easy-to-use plug&play USB UHF RFID reader is a great option for professional use. The sleek Nordic ID Stix contains the world’s smallest RFID module which makes it a powerful UHF RFID reader though small in size.

NORDIC ID STIX - THE NEW STANDARD OF VALUE AND PERFORMANCE

other implementations for example access control purposes.

With the Nordic ID Stix, we have a new member in the Nordic ID hardware product range that is compact in size but at the same time a truly powerful UHF RFID reader. Never judge a book by its covers, sleek in design can indeed equal high performance. The Nordic ID Stix came to life as a result of research and development efforts to provide a powerful but price-effective option in the Nordic ID product range.

USB PLUG & PLAY READER WITH STRONG PERFORMANCE

The Nordic ID Stix is ideal for application areas such as point-of-sales, information kiosks, smart displays, document tracking, smart shopping and EAS at POS. The reader is lightweight and compact in size, making it ideal for usage in situations where limited space poses restrictions. Due to the small size and versatile integration options, Nordic ID Stix is also in use in a wide range of

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Nowadays tablets, smartphones and laptops are within easy reach of everyone and a plug&play USB product certainly is a great option. This explains the customer demand for a device that optimizes ease-of-use with a small footprint. The Nordic ID Stix allows easy connectivity to tablets, laptops and smartphones and thereby offers a costeffective UHF RFID reader for interactive read/write applications. “The Nordic ID Stix is a star performer and contains a combination of our cross dipole antenna and the world’s smallest RFID module,” says Toni Heijari HW / RF Design Engineer at Nordic ID. “This explains a lot in regards to the performance of the Nordic ID Stix.”

Nordic ID Stix features USB plug&play and contains a powerful 500 mW module. This makes the device operate with great performance and enables a reading distance of up to 1 meter. Jari Järvi, Product Manager at Nordic ID says; “The Nordic ID Stix offers superior performance due to the Nordic ID NUR-05WL2 500mW UHF RFID reader module. Together with USB plug & play, which enables easy installation, it is a great cost-effective UHF RFID reader.” Järvi continues “A lot of planning and development has gone into the creation of the Nordic ID Stix.” The reader features functions such as tag killing and deactivation, which are convenient in point-of-sale applications. Additionally the reader is equipped with LED indicators. When RFID reading is on, this is indicated by the green LED light. The green light changes to a blinking green indicator once a tag is found within the reading range.

Author: Kirsikka Dräger / Nordic ID Image: Hanna Östman / Nordic ID

MAXIMIZE OPERATING TIME

TECHNICAL INFORMATION

“Power consumption and operating time are important factors in battery powered RFID readers”, says Heijari. “Thus we wanted to take power saving straight into the planning of the UHF RFID reader. With the Nordic ID Stix different power saving options are available and depending on how the Nordic ID Stix is used, power saving can be adjusted and optimized. This allows maximizing operating time for each use case”. Jari Järvi adds to this: “Operating time is a key issue with battery operated readers. With the Nordic ID Stix up to 80 % power can be saved and that makes a significant difference.”

NORDIC ID STIX

USER FRIENDLY SOFTWARE INTERFACE “The user friendly API allows operating the Nordic ID Stix on Windows (XP, Vista, 7 and 8), Linux and Android devices”, says Hannu Heino, Technical Director at Nordic ID. “As the reader is intended to be used with different types of devices such as laptops, tablets and mobile phones, it was very important to us to offer as many options as possible. We are pleased that with the Nordic ID Stix we have created a cost-effective reader for the mobile phone and table market.” But of course, the proof is in the pudding. Hielke van Oostrum, Area Sales Manager at Nordic ID has seen client reactions to the Nordic ID Stix; “The beauty and the grounds for the success of the Nordic ID Stix and our OEM products are, that it combines really good performance with moderate, entry-level pricing. Plus a full working suite of demo software and the renowned, ready software development kit makes it a big hit. This combination of factors opens the doors and lowers the threshold for many UHF RFID applications, such as access control and “work-in-progress” management that previously weren’t economically feasible.” He points out that ”now both tag and hardware pricing have found their "sweet spot". The only limitation in creating solutions is lack of vision and imagination.”

• • • • •

Multi-read UHF RFID Adjustable reading range Fast and easy software integration Compact size with elegant design Cost-effective

• Suitable for smartphones and tablets • USB plug&play • Deactivate / kill tag function • 2 years warranty

UHF RFID Supported standard

ISO 18000-6C (EPC Class 1 Gen 2)

Frequency band

ETSI 865.6 - 867.6 MHz FCC/IC 902 - 928 MHz

RF Power

+27dBm. Output power adjustable in 1 dB steps.

Typical reading distance

Typical reading speed

200 tags / sec

Integrated antenna

Circular cross dipole antenna

Regulatory

CE ETSI EN 302 208 CE ETSI EN 301 489 FCC part 15.247 IC RSS-210 Safety IEC 60950-1

USER INTERFACE Indicators

2 LED indicators

COMMUNICATION PAN

USB 2.0 device (Micro USB via optional adapter)

DRIVERS USB Drivers

Windows: XP, Vista, 7 and 8, Linux and Android

POWER External Power Supply

USB

Operating Power

2.5 W

SIZE AND WEIGHT Dimensions

(W) 53 x (L) 79 x (H) 7 mm

Weight

22 g

ENVIRONMENT Operating Temperature

-20 °C to 55 °C (-4 to 130 °F)

Storage Temperature

-40 °C to 85 °C (-40 to 185 °F)

Environmental sealing

For indoor use only

Nordic IDea • 45

RFID ARTICLE

MOST COMMON APPLICATIONS

on the shop floor

In this article we will introduce the most common RFID applications used on the shop floor. Tune in on how the typical processes and the working day of your staff will change after adopting RFID. Contrary to what many people think, RFID technology is actually very straightforward and often easier to use than traditional barcode systems, not to mention pen and paper systems. People find this hard to believe and see it as some kind of strange “voodoo”, at least until they get an insight into how the RFID applications actually work in the field. This article is good reading for companies that are adopting or considering adopting RFID and can be used to explain the new work processes to the shop floor staff and other interest groups.

1. STOCK TAKE/ INVENTORY/ CYCLE COUNT Stock take, inventory, cycle count etc... They say a dear child has many names, but the task of taking inventory is “dear” to very few. It’s in fact one of the most hated tasks on the shop floor. And no wonder, it’s dull, monotone and it takes forever. AND the staff still has to find time to complete their other tasks as well. Just to make things clear, the words stock take and inventory usually refer to a yearly counting of all items as a basis

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Text: Hanna Östman / Nordic ID Images: Hanna Östman / Nordic ID

for accounting and taxation at the end of a fiscal period. A more frequent form of stock taking is called cycle counting or cycle count, which can be completed as often as every day. Cycle counts are usually performed in small portions of the shop at a time and the purpose of them is to keep the backend system upto-date and the items in the right place.

Cycle counts, on the other hand, are often performed while the shop is open. The staff is expected to keep numbers in their heads while customers are tapping them on the shoulder or walking away with an item the staff member just counted. Only portions of the items can be counted per day since the process is so time-consuming.

Without RFID, the stock take process demands that the shop is closed for a day or two. The counting process often causes overtime, especially if the number of counted items doesn’t match the information in the inventory list in the backend system.

RFID counting for you:

The inventory process without RFID, (using pen & paper or barcode systems) usually looks something like this: 1. Close the shop. 2. Divide your staff into groups with designated counting areas. 3. Give each group lists of what needs to be counted. 4. The staff counts all the items manually and places stickers with numbers all over the shop. They also keep their own record of counted items as a backup. If the store has a barcode system and the staff members have mobile devices with them on the quest, one barcode gets scanned at a time followed by the manually counted number of that particular barcode. 5. Misplaced items found along the way are moved and added to the numbers causing confusion and unclear results. 6. The results are handed to the inventory supervisor or, in case mobile devices are in use, sent to the backend system wirelessly or via batch (transferred at the docking station). Then the results are compared to the numbers in the inventory list in the backend system to see if they match. 7. The first round of results is often wrong and demand a recount. 8. Perhaps even a third recount for some items groups. 9. Clean-up and arrangement of items. 10. Open the store for business.

With RFID every item has an individual ID stored in the RFID tag. RFID tags can be scanned quickly without line of sight and you only need to designate a portion of your staff to scanning. With the use of RFID, the process looks more like this: 1. Designate (only) a few staff members to taking inventory/ performing cycle count. 2. Define what needs counting and set the mobile devices accordingly. 3. The inventory takers walk around the shop with mobile devices and scan all items in seconds or minutes (depending on the shop size and number of items). 4. The results are sent to the backend system wirelessly or via batch. The results are automatically compared to the numbers in the inventory list in the backend system and the information is updated. The results are usually correct right away (99.9% reading accuracy has been reported with RFID), so there is no need to recount anything. And, even if the staff would decide to do that, it only takes minutes. Most items have not been physically moved, so everything is in order and there is no need for cleaning up afterwards. The inventory/ cycle count was done while the shop was open, so business has been rolling as usual meanwhile. Since counting with RFID is so fast and accurate, there is no need to do cycle counts only in small portions of the shop at a time, go ahead and let the stock takers scan everything while they’re at it.

2. ITEM SEARCH Item search without RFID: All shop floor staff members have been there; A customer needs help finding a specific item or size and it just isn’t where it’s supposed to be. It’s important to find the item quickly or else there is a risk of losing the customer (or other customers waiting in queue) while searching. After checking with the backend system how many items are supposed to be on the shop floor and noticing that at least one should be around here somewhere, the ordeal begins: 1. Start searching manually. 2. If the item can’t be found easily, call the backroom and ask for more items. It is usually faster to order a new one than to look for a missing item that is hiding well. 3. If there are no more items in the backroom, the “grand search” begins. The staff member might have to go through all cloth racks, fitting rooms, shelves, piles of reserved clothes, display windows etc. and it’s still likely that the item has gone permanently missing. Since inventory with pen & paper or barcode is so prone to mistakes, the searching staff member is painfully aware of the possibility that the item might not even be in the shop. If the item isn’t located in a certain amount of time, the staff member will simply give up. The sale is lost. The actual search process without RFID is also unreliable, since the staff member is searching for the item with his or her eyes as the only aid. Many items may be similar to others and are easily missed or mixed up. Item search with the help of RFID: 1. Check the reader for information about availability and/or location information. The device informs about findings of its last scans (in for example fitting rooms, shop sections or the back room) to make locating the item easier. Nordic IDea • 47

RFID ARTICLE

2. If the item is supposed to be on the shop floor and has not been detected by gate readers or fitting room readers, the item has most likely been misplaced. 3. Start item search with the RFID reader. It works like a metal detector that beeps and shows a digital graph of how close you are to the item. By following the device you minimize the searching area from the entire shop to just one square meter. Consider your missing item found!

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1. A box of items arrive at the shop. 2. When the staff has time or while the shop is closed, the box is opened and each item is checked and counted manually to make sure the right items have arrived. 3. The product data is fed into the backend system (all items separately) either by scanning the barcode or by feeding the product information manually. 4. The items are moved to the shop floor. The goods-in process with RFID:

Since the stock takes and cycle counts are performed with RFID in this shop, the database information is more trustworthy and you can be almost certain that you are not searching for the missing item in vain. If the shop is equipped with RFID gates at the entrance, the database has also reduced the stolen items from the stock automatically, i.e. the stock is accurate. Since RFID shops have close to daily cycle counts of all items, the RFID device could be set to alert whenever it finds an item that has been misplaced. The misplaced item is moved to its right location straight away and the need for customers to even ask for item search assistance in the first place is minimized dramatically.

3. GOODS-IN The goods-in process with pen & paper or barcode system: Checking, counting and transferring incoming items manually to the backend system takes a lot of time and mistakes are bound to happen. If the staff is busy serving customers, unopened and unchecked boxes of items that haven’t been registered as received may lie in the backroom for ages and, as a result, they don’t get sold. The goods-in process with pen & paper or barcode systems usually looks like this:

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1. A box of items arrive at the shop. 2. The box is scanned in a few seconds with a mobile or fixed reader and a list of items appears on the screen. If the list matches the list of incoming items, all the staff member has to do is to “accept it”, and the backend system is automatically updated. 3. The items are moved to the shop floor. With RFID the goods-in process is easy and stress-free. The items are almost immediately in the backend system and can be moved directly to the shop floor without even opening a single box first. ASSOCIATING BARCODES TO RFID TAGS Depending on what kind of shop and delivery chain you have, when implementing RFID you will either have the products tagged during manufacturing, DC or in the shop backroom. If you are tagging products in the backroom, you will need to associate the barcode information to the RFID tags of each product. But no need to worry, it’s extremely easy: 1. Attach an RFID tag to an item (usually a sticker tag or a hard pin). 2. Read the barcode with an RFID and barcode reader. 3. Choose “associate”, or a similar command that your device offers, and read the RFID tag. DONE!

Now the barcode EAN product code and all the information related to it is associated to the tag, and additionally the item has received an individual ID. If needed, you can add more product information to the tag and/or database in your backend system. If prices need to be marked down, this change too can be made directly to the tag by: 1. Reading the tag. 2. Choosing “change price” or a similar command. 3. Feeding the new price. 4. Accepting the change. Now the backend system knows about the price markdown without the staff even having to touch a computer. This works although your system isn’t wireless, since the tag will inform the backend system about the new price as it is scanned by the RFID reader at the POS counter. Many shops have problems with customers moving markdown price stickers from one product to another. With RFID, this will not go by unnoticed.

4. POS -POINT OF SALE

The classic way of performing checkout is to: 1. Scan all barcodes separately or feed a product code or name and possibly a price to the POS system. 2. Check that all items got scanned/ fed and that the price is right (no price markdown stickers have gone unnoticed). 3. Fold and package the items. 4. Cash in. Mistakes happen easily as staff members are stressing over long queues. It’s easy to miss or forget to scan an item - especially if the customer is buying a lot of them. The process takes a lot of time and double-checking is often needed. If the queues get too long,

www.rfidarena.com

many customers will simply give up and leave the shop without buying anything. RFID makes the POS process faster: 1. Place all items on the counter and, voila, they are all automatically read 2. (Disable the tags if that is the shop policy) 3. Fold and bag the items 4. Cash in There is no need to waste time on double- or triple-checking. All items have been scanned and they all have the right price. And the best of all, the check-out process is fast and the other customers don’t have to wait in long queues.

CALL FOR ASSISTANCE

ITEM INFORMATION

MATCHING ITEM INFORMATION

ITEM AVAILABILITY INFO

SOCIAL SHARING

VIP ADVANTAGES

FEEDBACK POSSIBILITIES

WATCH VIDEOS

FITTED vs. SOLD RATE

SHRINKAGE INFO

CUSTOMER BENEFITS

5. RFID IN FITTING ROOMS Adopting RFID in fitting rooms is a hot topic now, and the RFID enabled fitting rooms go under the name of “smart fitting rooms”. A quick explanation of the concept would be: a fitting room equipped with a fixed RFID reader and a tablet. The RFID reader automatically scans the items that are taken into the fitting room and with the help of the tablet customers can get more information, give feedback, order another size etc. So, the biggest benefit of smart fitting rooms is better customer service. But even if the customer doesn’t use the tablet, there is very valuable information to be collected from observing what items customers tend to bring to the fitting rooms and what happens to them afterwards. See the picture to the right. Last but not least, you’ll know where your items are at all times.

RETAILER BENEFITS

HANDLING TECHNOLOGY CHANGES Although new technology might be scary, RFID is one of those technologies that need not be. Implementing RFID will on the contrary make the working day of the staff easier to manage.

ITEM LOCATION INFO

ITEM POPULARITY

Nordic IDea • 49

NEWS www.roundrockresearch.com

NORDIC ID & ROUND ROCK RESEARCH LLC SIGN A LICENSING AGREEMENT We are pleased to announce that Nordic ID and Round Rock Research LLC have signed a licensing agreement, which covers Nordic ID RFID readers used with licensed RFID tags in the United States of America. Jorma Lalla, the owner and founder of Nordic ID, states: “I am very excited about this. The power of RFID is proven especially in apparel retail. The RFID market in the US is growing fast. Nordic ID has top performance RFID readers

STRONGEST IN FINLAND The Strongest in Finland solid proof of a company’s creditworthiness Nordic ID has received the Strongest in Finland certificate with Rating Alfa classification. The certificate is awarded to companies that meet requirements in regards of excellent financial key ratios, positive background data and payment. The Strongest in Finland certificate with Rating Alfa classification, is proof of a company's creditworthiness, reliability and excellent solvency.

and software. The license agreement with Round Rock Research LLC allows the retailers to make the best choice of RFID solution vendors”. The RFID market is flourishing in the US and all around the world, especially in implementations in the apparel and retail industry. Adopting radio frequency identification (RFID) solutions enables retailers to benefit from high inventory accuracy and provide better customer service.

Round Rock Research LLC is a technology research and patent licensing company. The Round Rock Research patent portfolio consists of several thousand issued patents and pending applications throughout the United States, Europe and Asia.

RFID-EMBEDDED PEARL IDENTIFICATION AND CERTIFICATION SYSTEM RECEIVES HONG KONG AWARDS 2013 The winners of the Hong Kong RFID Awards 2013 have been published. The Gold award for “Most Innovative Use of EPC / RFID” and the Silver Award for “Best EPC / RFID Implementation” went to Fukui Shell Nucleus Factory for RFIDembedded Pearl Identification and Certification System. The project was also awarded the “最佳創意奬 (Most Innovative Award)” in the Guangdong-Hong Kong RFID Awards 2013 organized by GS1 Hong Kong and Guangdong RFID Public Service Centre. The RFID-embedded Pearl Identification and Certification System is a new technology that assigns a unique identification number to a pearl. "Businesses are affected by the lack of traceability in pearls", says David Wong. “The inability to

50 • Nordic IDea

About Round Rock Research LLC:

www.fukuishell.com

distinguish between variations of similar looking pearls creates a huge disadvantage to those who wish to brand their own pearls.” The benefits of the RFID-embedded Pearl Identification and Certification system include improved inventory management, ability to trace the origin and cultivation of each pearl. For suitable RFID readers Fukui collaborated with Perfect China supplies Ltd for this project, which took totally several years from concept to completion. Nordic ID Morphic UHF RFID Cross Dipole readers were used in the project. “Now pearl cultivators, wholesalers and pearl jewelry retailers can benefit from this new technology that combines traditional pearl nucleus manufacturing methods with modern identification systems", says David Wong, project director of Fukui Shell Nucleus Factory. www.perfectchina.com

www.rfidarena.com

NORDIC ID TECH GEEK RFID ARENA w w w . r f i d a r e n a . c o m

Everyone with a passion for fashion needs a nerdy friend, let the Tech Geek be yours.

and makes sure that his knowledge gets shared. He writes great articles on technical topics and is always glad to help on technical issues.

At Nordic ID we are creative and innovative; that would not be possible to the same extent if we did not have a dedicated R&D (Research & Development) team making sure that product development is top of the line. One person from R&D has been especially prominent this year and that is: the Nordic ID Tech Geek. You might ask yourself: “who is that guy?” We figured that most of our readers would like to learn more about him and set out to introduce him to all of you.

Nordic ID Tech Geek, what do you typically do during your day?

The Tech Geek has been working for Nordic ID since early 2013 and is already an experienced RFID professional. From battery saving options to RFID reading patterns, he knows it all! What is best is that the Tech Geek is not only technically skilled, but also enjoys sharing his knowledge with all of us. Our Nordic ID Tech Geek is extremely busy, but from time to time he sits down

“As my name already reveals, I am a tech geek and I spend most my time in product development. During my work day, I can be found involved in project work and developing RFID fixed and mobile readers. Nevertheless if you are lucky you can see me hang out in Google+ or writing technical articles for the RFID Arena.”

RFID in fashion retail is a subject that we are passionate about and we strongly believe that sharing and exchanging knowledge is the way to go. This is why Nordic ID and the School of RFID set out this year to bring knowledge closer to retailers by organizing RFID in fashion retail seminars in Sweden, Spain, Russia and Germany. www.nordicid.com

Well, there you have it! We all need a nerdy friend. Let the Tech Geek be yours!

Tech Geek, at Nordic ID there seems to be a lot of talk about RFID in fashion retail, how do you feel about that subject? “Well, what’s there not to like about the fashion sector? As you might see from my profile pictures, I am very well dressed. I must admit that I am not a trendsetter, but what I have found out is, that in life, everything is about the right perspective.

NORDIC ID FASHION EVENTS SPREADING THE WORD OF RFID IN FASHION RETAIL: SCHOOL OF RFID TOURING DIFFERENT COUNTRIES

Top designers might not be impressed by my impeccable sense of style; nevertheless my technical skills are the ones to impress the fashion sector. Ask the big players, if I wasn’t here to help implement great ideas and make improvements possible, I am sure I would be dearly missed. You see, everyone with a passion for fashion needs a nerdy friend, so I have made it my mission to be yours.”

The seminars include a full day of learning about RFID in fashion retail. Nordic ID and top industry experts share their knowledge and shed light on different angles of RFID technology usage in fashion retail. From standardization to tagging and from compliance to implementation cases; the School of RFID covers a wide range of topics.

WHERE ITEMS

ARE

YOUR

AS WE SPEAK?

We are already looking forward to bringing experts together in other cities as well and continue to share our knowledge with you. Nordic IDea • 51

PARTNER NEWS

www.eti-textil.com

RFID SHOWROOM IN SPAIN JOINT EFFORT BY ETITEXTIL AND NORDIC ID What would be a better way to demonstrate how RFID works than testing it live? Nordic ID and Eti-Textil have joined forces and established an RFID showroom at the Eti-Textil premises in Elche, Spain. The RFID showroom is open to visitors interested in using and testing RFID in practice. Nordic ID and Eti-Textil are building up an extensive collaboration model and partnership, of which the quick set up of the RFID showroom is only one demonstration. The RFID showroom is an excellent opportunity for end users and partners to test for themselves how RFID hardware with integrated NIDA software operates in functional demonstrations. The RFID showroom has been designed to be similar to a small scale retail store, containing shelves, racks and basic RFID equipment and tags. All garments in the showroom are equipped with Eti-Textil’s RFID tags and visitors are free to use

Miguel Ángel Guilló of Eti-Textil together with Maria Ala-Sulkava of Nordic ID. Nordic ID RFID mobile computers and fixed readers in RFID tests. Want to see how fast you can scan fashion items? Or how quickly you can locate an item in a shop floor or back store environment? In the showroom visitors can test all this and much more, including cycle counts and other inventory processes executed with RFID technology.

The demonstration options of the RFID showroom will increase as new devices and software will be integrated into the portfolio. Showing the ease of RFID in retail processes has always been important to us. Eti-Textil and Nordic ID are pleased to welcome visitors to test the showroom, learn more about RFID in retail and enjoy a truly hands-on RFID experience.

Confidex and Nordic ID collaborate in RFID RTI logistics The RFID market is steadily growing and this growth is reflected also in the rise of RFID RTI (Returnable Transport item) logistics implementations. Nordic ID and Confidex are leading RFID RTI logistics players with vast experience. The previous collaborations prove that teaming up with Nordic ID and Confidex ensures great results and successful RFID implementations for the reselling partners and their customers. www.confidex.com 52 • Nordic IDea

www.controltek.com

NORDIC ID AND CONTROLTEK JOIN FORCES IN NORTH AMERICA ControlTek will start distributing Nordic ID products in the US and Canadian market and collaborate with Nordic ID Inc. and the Nordic ID Headquarters, located in Finland. VP and Sales Director of Nordic ID, Atte Kaskihalme states “We are very delighted to have ControlTek as a distributing partner in the US market as we are increasing our RFID visibility

and product offering continuously also in the USA. Together we can better serve our joint resellers and customers. Furthermore, Nordic ID can be sure that with the help of ControlTek’s experience in the retail market, Nordic ID will strengthen its position as a provider of most innovative RFID products and solutions in retail and logistics RFID business also in North America”.

ABOUT CONTROLTEK ControlTek is a solution provider with 37 years of experience. ControlTek is committed to providing companies with products and services that offer high quality and high value at a reasonable cost. Director of Sales of ControlTek, Rubin Press states “We are focused on enabling commerce through Innovation and always looking to leverage technologies to support our Client’s initiatives. Our goal is to increase efficiencies within our Client’s operations to help drive higher profitability through greater visibility. Nordic ID gives us the technology tools needed to achieve these goals”.

NORDIC ID AND NORDIC PLUS JOIN FORCES www.nordicplus.co.uk Nordic ID is pleased to announce that Nordic Plus will exclusively resell Nordic ID products in the United Kingdom. Nordic Plus will be offering the familiar Nordic ID product offerings under their brand Nordic Plus. The new concept will enable Nordic ID and Nordic Plus to cooperate closely and strive towards market leadership. Mark Tailford, CEO of Nordic Plus, says “Nordic Plus is the new brand to take the lead in RFID solutions to existing and new customers. This will still mean providing support for our customers in the auto ID space but also transitioning them into RFID technology.” “Retail RFID is growing fast in UK. We have worked for a long time with the people behind Nordic Plus – they are true Retail RFID experts!” says Jorma Lalla of Nordic ID.

Paul Tyrer and Mark Tailford of Nordic Plus.

Nordic IDea • 53

RFID CASE STUDY

Product: Nordic ID Merlin UHF RFID Cross Dipole

A match made in heaven Top Italian jewellery chain streamlines operation with RFID

Since 1896 Matranga has been the symbol of fine jewellery in Sicily, with shops in Palermo and Trapani. The company is famous for its designs and beautiful custom pieces, making it a favourite among the royal families of Europe. Matranga also carries a wide range of prestigious brands including Rolex, of which they are the most important dealer in southern Italy. A BALANCING ACT With total retail space of over 400 square metres and a turnover of 5 million Euros per year, Matranga is an impeccably managed operation. Like any large jeweller, they stock a good number of high value items, making inventory balance one of the key factors in profitability: having enough selection

54 â&#x20AC;˘ Nordic IDea

on one hand, and on the other not carrying dead stock in the warehouse (in Matrangaâ&#x20AC;&#x2122;s case, a safe).

warehouse was onerous, demanding an entire day of three people, and was performed every three months.

Further refining this balance was the impetus behind Jewel-ID, a custom RFID solution implemented in July 2011. The system was designed by RFID consultancy Dynamic ID based in Saviano, Italy. Softwork, a Value Added Distributor (VAD) of RFID architectures, supplied the technology package, of which Nordic ID Merlin mobile computers formed a part.

RFID TO THE RESCUE

The thrust of Jewel ID was to come to better grips with an average inventory of 5,000 Rolex watches and 3,000 rings, necklaces, bracelets and other individual pieces of jewellery. Before Jewel-ID, a general inventory of the 2 stores and

To keep better track of the 8,000 items, white RFID tags designed and produced especially for the jewellery sector were attached to each piece, making it uniquely identifiable at a distance. All information relating to each product was recorded on tags and in the database: its provenance, its exact location in the store, when it entered the store system, and other details. Reports after each inventory count can now show whether pieces have been lost or stolen, or if they have been sitting for too long and perhaps need promoting or discounting.

www.ematranga.com

Text: Carl Michener / ID BBN Pictures: Matranga Gioiellieri

Inventory can be counted in two ways: by placing a tray of jewellery on top of a fixed reader, or with a Nordic ID Merlin mobile RFID computer. With the tray method, 30 tagged pieces are placed on a counter, which reads all products within three to four seconds and displays the last date and location that each tag was read.

relatives buy these items at Matranga, ordered items arrive at the warehouse and are equipped with RFID tags, showing as ‘bought, in stock’ on the registry list.

Another valuable Jewel-ID plus is analytics: each piece’s history is stored in the database-things like sale date, price and provenance. Naturally, this information can help optimize replenishment.

The system works very well, with one exception. Metallic objects, especially ferrous cutlery and silverware, affect reading performance. The problem was solved by attaching tags to items with a decorative string, establishing some distance between the tag and the metal, and by placing the RFID tag inside the box in the case of cutlery and similar items.

A TECHNICAL HURDLE

EXCELLENT RESULTS

Once the implementation was running smoothly, Matranga added wedding gifts to Jewel-ID- an additional 4,000 items on average, for a grand total of 12,000 items in stock.

Creating and filling a wedding list is now a more accurate, less laborious process. So are inventory counts, which used to take 24 man-hours and now require just one hour - a 96% timesavings. Less time spent in the vault also has positive security implications. Most important of all, moving from quarterly to weekly counts gives a more accurate reading on inventory and enables much better inventory planning and timely ordering.

Whenever a couple comes in to choose the gifts they wished to receive for their wedding, Matranga staff place the items on a counter equipped with a static RFID reader, automatically creating a digital version of the entire wish list. As

Searching for items on store shelves is now much simpler and faster as well. With the help of Matranga’s Nordic ID Merlin mobile computers, staff can select parameters such as price range, type of item and brand. When the item is scanned, the mobile computer emits a sound. Matranga’s CEO Giuseppe Serafini calculates the return on his investment at less than one year: “The increase in efficiency is so extreme that it can be compared to the evolutionary transition from the musket to the machine gun!” MATRANGA’S RFID SYSTEM: THE COMPONENTS The RFID ecosystem in Matranga stores works on UHF passive frequency and is composed by: • • • •

Customized passive UHF tags with MONZA3 chips Readers and antennas embedded in counters RFID printer Nordic ID Merlin mobile computers

Nordic IDea • 55

RFID ARTICLE Text: Jessica Säilä / Nordic ID Image: Hanna Östman / Nordic ID

THE ESSENTIALS OF ROI CALCULATION IN RETAIL RFID - A PRACTICAL EXAMPLE The challenge in the spread of RFID derives from the difficulty to predict the cost. This article offers a view on what the different elements of RFID investment are and suggests an idea on how to evaluate cost using a fictional case.

- COSTS + SAVINGS + ADDED SALES =

56 • Nordic IDea

ROI

www.rfidarena.com

The more we speak to retailers interested in RFID, the more we believe in one thing; the investment is not transparent enough for the retailers. No matter if the RFID tags were introduced to products with an average retail price of €20 or high-end luxury products. The purpose of this article is to shed some light on ROI calculation and explain why many retailers have stated that the benefits of their RFID deployment have exceeded their expectations.

www.nordicid.com

We learned from Uwe Quiede, a wellknown and experienced RFID consultant, that most retailers he gives consultation to can justify the investment in RFID already at a 1% increase in sales. Everything else is additional benefits. Our discussions with some mid-sized North European retailers suggest that the time saved in inventory alone would be enough to finance the investment for them. In our upcoming example, even a mid-segment retailer will find ROI for RFID investment within a year.

WHAT ARE THE ELEMENTS OF ROI CALCULATION? The positive impact of RFID on businesses is typically based on the four themes introduced in Table 1. When turned into Euros, the four below will create the “plus” side of the calculation. As each retailer has different processes, all ROI calculators are just suggestive, but should at least help to list the elements that can be used as a basis for the ROI.

THEME

NO RFID

WITH RFID

IMPACT

Inventory Accuracy*

Average level: 75% (EU) / 63% (US)

Average level: 95-99%

Inventory inaccuracy causes: O-O-S, which in roughly 40% of cases means loss of sale Wrong fill of store, which leads to discounting

Time

Counting speed: 250 items / h Several stages of manual registrations Manual locating & picking items

Counting speed: 25 000 items / h Registration of goods no longer requires unpacking them

RFID based inventory count is 100 times faster than non-RFID and goods registration no longer requires unpacking -> both mean significantly less labor hours Locating items with RFID is much faster and makes the picking process more exact and efficient

Selling more

Items missing from stock Internal shrinkage is difficult to battle

RFID helps reduce internal shrinkage RFID increases inventory accuracy AND transparency

Internal shrinkage can be measured and addressed with correct inventrory counts also in areas not previously recorded Transparency of stock in transit and in stores increases especially online availability No longer need to close stores for inventory cycles -> less lost sales

Cost factors

Cost of incorrect deliveries Extra labor for inventory

Increase of delivery accuracy Transparency in logistics On-demand replenishment

Less reclamation costs for brand owners as transportation transparency is now 100% No need for extra labor for inventory cycles Better allocation of sales staff

Table 1.

Nordic IDea • 57

RFID ARTICLE

THEME

NO RFID / RFID IMPACT

CALCULATION

Inventory Accuracy

80% / 97%

Loss of sales: € 39,4 million

Not buying customers (due to non-availability) X inaccurate stock @ store X turnover

Loss of sale during inventory cycle

Stores closed for inventory / stores open

€ 3,9 million

Average daily sales X days that the stores are closed

Cost factors

Cost of labor for inventory cycle: € 720 000 / € 8181

Cost saving of € 711 818

Cost of labor without RFID – Cost of labor with RFID

Table 2. Usually it is relatively easy to determine the impact of increased transparency of stock. A well run focused pilot project will give an understanding on how RFID can help to count stock more frequently. Typically the RFID ROI calculators are based on inventory accuracy as the other factors require more internal analysis by the retailer and vary more from one company to another. However, there is no reason why one couldn’t add these factors to a ready calculator that mainly focuses on inventory accuracy and cost savings. As Kris Doane, the former “Mr RFID” at American Apparel points out in our interview with him, one of the main success factors of RFID projects is to include all departments in planning the RFID project and not to consider RFID from a mere logistics or IT point of view. The RFID Arena ROI calculator includes all these factors and leaves some of them open for the retailer to fill in on demand. TOTAL COSTS INVESTMENT:

2. Applications to support the chosen hardware

Applications for fixed readers tend to be a bit more complex and are hence typically more expensive than those for mobile devices. This is why many try to use mobile devices for as many purposes as possible. Applications for mobile devices can for instance be priced according to the amount of users or the amount of devices / licenses.

3. RFID database or extension to existing

ERP (or equivalent) to support the use of RFID next to barcodes

At its simplest this can mean a separate database, which just combines existing information with RFID information. In most cases a combination of an existing database and an RFID database or a completely new RFID-run database will be used.

4. Integration to business systems 5. Installations ONGOING COSTS:

1. Hardware (mobile & fixed readers, and potentially RFID printers and RFID based EAS)

Some retailers choose to use mainly mobile readers; others need fixed readers due to a different model of operation.

58 • Nordic IDea

On top of the investment itself come the running costs. The largest part of the running costs is formed by the RFID tags. The good news is that the tag cost is still dropping. According

to Apparel Magazine, the cost of tags has dropped significantly during the past 24 months in the US and is close to 0.10 Euros at the moment. Furthermore the support for the system will form a cost. A CONCRETE EXAMPLE Let’s imagine a retailer with 200 stores of their own. They currently sell roughly 12.5 million items per year at an average of €25.00, making the yearly turnover €312.5 million. Online trade currently represents 5 % of the turnover and it is growing. The retailer in our example knows that customers are lost online due to unavailability, but online sales will not be taken into account in the ROI calculation at this point. Only physical stores will be considered as they are all filled from one DC which is operated by a business partner. The ROI benefits for this retailer are described above in Table 2. The figures in Table 2 represent the benefits the retailer may gain and make up over € 24 million. Of course the assumption here is that all consumers would buy with the increased accuracy of stock, which would mean a 7.8 % increase in sales.

www.rfidarena.com

But let’s assume that sales increases with only 2 %. It would mean a €6.25 million growth and a cost saving of €711 818, meaning that the bottom line after implementing

INVESTMENT

www.nordicid.com

RFID would be roughly €7 million more than prior to RFID. And this calculation is conservative.

AMOUNT / LOCATION

And what lies on the cost side? The costs are calculated in Table 3. So to sum up this fictionary example, we can conclude that the benefits exceed the costs in the first year.

UNIT PRICE

TOTAL

HARDWARE Mobile devices (incl. Cables etc.) Fixed readers for PoS Fixed readers for front-backstore RFID based EAS readers RFID hardtags (Y=1 / N=0)

2 1 0 0 0

1 200 € 450 €

Total Hardware

480 000 € 90 000 € 0€ 0€ 0€

570 000 €

APPLICATIONS & INTEGRATION RFID mobile applications (selected 5 features) RFID application to support PoS reader RFID based EAS Database Access Customized Data Exchange Module Workshops related to ERP system (pricing in days) Integration to ERP system (pricing in days) Remote Management for mobile devices Remote Management server

SELECTED Y Y N Y Y 10 50 Y Y

UNIT PRICE 350 € 250 € 0€ 8 000 € 14 000 € 1 000 € 1 000 € 5€ 500 €

Total Applications & Integration

TOTAL 140 000 € 50 000 € 0€ 8 000 € 14 000 € 10 000 € 50 000 € 2 000 € 500 €

274 500 €

INSTALLATION COST Installation at store

200

7 000 €

INVESTMENT ONGOING COST Support cost / year HW maintenance cost / year

1 400 000 €

2 244 500 € AMOUNT / LOCATION

UNIT PRICE

12 % 15 %

TOTAL 32 940 € 72 000 €

TAG COST (ONGOING) Soft tag ready converted

13 000 000

0,10 €

1 300 000 €

ONGOING COST

1 404 940 €

TOTAL COST YEAR 1

3 649 440 €

Table 3.

Nordic IDea • 59

RFID ARTICLE Text: Jessica Säilä / Nordic ID Image: Hanna Östman / Nordic ID

cost

WHO CARRIES THE

OF RFID ADOPTION IN RETAIL ITEM-LEVEL RFID PROJECTS?

When starting to calculate ROI for an RFID investment, companies start by looking at when different costs will occur and how to pay them back. But also, who pays. If a company wants to follow its items from manufacturing (or at least manufacturing country) all the way to the point of sale, it may well mean RFID investments in 6-10 different operations. However, this is usually not the case. To simplify things, let us take a look at the route of an item to a consumer.

STEP 1: MANUFACTURING

The picture on the right shows the main steps of a garment on its way to a consumer. To understand who pays for RFID, it is important to understand:

WHAT IS THE INVESTMENT?

1. Who takes care of the operations? 2. Who benefits the most from RFID?

60 • Nordic IDea

If garments are to be followed from manufacturing onwards, such as with American Apparel, the key is to attach the RFID tag to each item at manufacturing. Many large garment distributors also mandate their manufacturers to do this.

When this is done in the simplest way possible – the Gerry Weber style – there will be no fixed installations at manufacturing. The brand owner or retailer who orders the manufacturing of the garments, will supply the manufacturer with RFID enabled labels

i.e. care labels or price tags. Typically a local tag converter supplies the tags, which means the manufacturing doesn't need to make changes. The brand owner covers the cost. Takeing it a bit further, the manufacturer OR the retailer/brand owner may invest in RFID printing facilities. This means that the manufacturer can create ready labels for the items they manufacture as they go. The cost is covered by the brand owner/retailer, depending on what is agreed between the players. At this point one should ask oneself: who benefits the most from the hardware at the manufacturing estate? And, the benefitor should pay.

www.rfidarena.com

www.nordicid.com

STEP 2 / 4: TRANSPORT

STEP 3: DC OPERATIONS

STEP 5: STORE

Typically transport vendors, especially shipping companies, invest in RFID as an answer to a request from their clients. At the simplest, all that is needed is to read an RFID tag from each box that is carried by the company and report this back to the customer. The easiest way to do this is with a mobile RFID reader, which has access to mobile phone network for data upload.

Distribution center (DC) operations vary from company to company. Some use DCs primarily for cross docking, others have several different functions for them. The more the DC does, the more benefits there may be to the DC operator from RFID. RFID can be used for goods receiving and delivery processes, picking, different registrations as well as stock control. Additionally DCâ&#x20AC;&#x2122;s may offer their clients RFID tagging and association services and other RFID related services as well.

The investment in hardware equipment is heaviest at this end. The store also needs different applications and integration to an ERP or a PoS system. However, the store typically witnesses the most benefits as well. But of course, none of the benefits are sensible unless the garments are tagged before they enter the store. So either tagging at the manufacturing stage or tagging at DC would be necessary. The cost of RFID in the store is carried by the store operator.

The equipment investment is not heavy, but the challenge lies in different customersâ&#x20AC;&#x2122; need to receive data differently. No transport company wants to install tens of different application clients to their mobile device in order to serve different clients. Hence the sharing of this data should be somehow standardized as well. This cost is typically carried out by the transport company. However, in most cases retailers do not necessarily need this step to include RFID reads.

MANUFACTURING

TRANSPORT

Depending on what the RFID system will be used for and how, the party investing in RFID technology is either the Retailer / Brand owner or the DC operator. The more the DC operator will benefit, the more likely it is for them to pitch in and help with the cost. Especially in cases when the same DC serves several end clients.

TRANSPORT

To finalize, the easiest way for a retailer/ garment distributor to benefit from RFID is to get the items tagged and invest in RFID equipment in the store (and potentially in own DC). For other vendors in the garment value chain, RFID is more of a must. However, many DC vendors may find ROI in DC automation and of that RFID can be a great part.

STORE

EXIT

ACTION

BENEFIT

MANUFACTURING

Tagging

Retailer / Brand owner

TRANSPORT

Track & trace

Retailer / Brand owner

Tagging Picking Replenishment

DC Operator / Brand owner / Retailer

STORE

Goods-in/out Inventory control Floor fill Replenishment PoS Shrinkage control

Distributor / Retailer

RFID CASE STUDY Text: Kirsikka Dräger / Nordic ID Images: Front Systems

NORWEGIAN FASHION STORES BENEFIT FROM HIGH STOCK ACCURACY AFTER RFID IMPLEMENTATION Many large fashion retail chains have implemented RFID technology into their operations, but what about smaller businesses and fashion boutiques? Yes, they can also benefit from the adoption of an RFID system. In Norway, Front Systems, an integration partner of Nordic ID, has worked together with smaller retail store chains Tara - Espen Dronsett, Follestad AS and Høyer AS and enabled them to implement an intuitive RFID system that has helped the retailers reduce manual work whilst benefitting from high stock accuracy. Tara - Espen Dronsett is an exclusive women’s clothing store, located at one of the best shopping streets in Oslo. Follestad AS is an exclusive retail chain with 8 stores selling mens- and womenswear with retail stores located in and around Oslo. Follestad Valkyrien is a store owned by Follestad AS. Høyer AS is a retail chain with about 25 stores located in and around Oslo, Arendal, Larvik, Stavanger and Trondheim. BIG EFFORT - LOW ACCURACY Many smaller retail store chains or standalone boutiques face the challenge of time-consuming and labour intensive manual tasks. This is certainly not an issue for large chains alone. Instead of having their staff busy counting items, retail businesses want to improve operations so 62 • Nordic IDea

that store personnel can spend more time serving customers. For Tara - Espen Dronsett, Follestad AS and Høyer AS the situation was similar. A lot of time was spent in timeconsuming inventory tasks at the stores of the three retailers. Oftentimes taking inventory could take one or even several days and even though a lot of effort was made, the accuracy was not very high. A medium-sized shop may spend 40-60 working hours counting with EAN codes and despite the effort stock accuracy is as low as 60-80 %. Low stock accuracy makes it difficult for the retailers to plan ahead and purchase and order the correct items to avoid out-of stock situations. Some retailers implemented weekly counts of specific product

groups or brands instead of counting all items at once, but this generated the same amount of work hours and the stock accuracy remained fairly low. The major challenge was to find a costeffective and timesaving system to aid in stock count processes. The system needed to be affordable and easy to integrate into the existing POS (Point of Sale) and backend system. The retailers wanted to gain better control of their stock whilst ensuring that sales personnel had more time to spend with the customers. HIGH STOCK ACCURACY - LESS MANUAL WORK Tara - Espen Dronsett, Follestad and Høyer stores are now equipped with a fully integrated RFID solution. Included elements were chosen carefully making sure they were reliable, high quality and in the right price segment. After choosing the RFID tags, RFID printers and RFID readers, the retailers carried out internal testing. The RFID solution was first implemented in two stores: a small and a large store with respectively 1,200 and 8,000 items.

Products: Nordic ID Morphic UHF RFID Cross Dipole & Nordic ID Sampo S1

By now 37 stores in Norway have taken the RFID solution of integrator Front Systems into use, this number includes the Tara - Espen Dronsett, Follestad AS and Høyer AS stores. Implementing RFID technology served two concrete purposes: less manual work and higher stock accuracy. The retail stores use RFID technology to keep track of their stock. Items are tagged at arrival at the store. This is done with the help of Zebra RFID printers. Nordic ID Morphic UHF RFID Cross Dipole mobile computers are utilized for stock counts. Høyer AS is the only exception as their items are already tagged in a central warehouse. Nevertheless also Høyer’s retail stores have printers located so they can re-tag items in the event of missing tags. In the beginning, the staff had to get used to the new technology. Some

www.frontsystems.no

working methods needed to be carried out with a different precision. As an example, it happened that duplicates of the same label were printed. It also happened that duplicated labels were left in the trash even though they were already counted in the stock counts. After these initial mix-ups the store personnel has become more precise in the labelling process. It did not take long to get used to the technology, and this directly reflected in the amazing results. The stock accuracy level is up to 99% after the RFID solution implementation. GREAT RESULTS OBTAINED THROUGH RFID The retail companies have been very pleased with the results they have achieved by implementing RFID. Ken-Ole Olsen, Manager of Follestad

Valkyrien (part of retail chain Follestad AS) wraps it up: “Implementing the RFID solution from Nordic ID and Front Systems has given us an exceptional control over our stock. We are doing a monthly stock count of the store and obtain a 99.9% stock accuracy in just 60-80 minutes each time. Before RFID we used 2 days on a stock count and the accuracy was poor. The RFID system helps us do more precise buying from our vendors and we are always updated when it comes to what is in stock in the different stores.” As of today, the retail stores of Tara Espen Dronsett, Follestad AS and Høyer AS use RFID technology for stock count purposes in all their stores. Additionally, their aim is to use RFID technology in the future also for anti-theft purposes, locating of items and RFID tracking of items in transport.

Nordic IDea • 59 63

FINNISH BLOG POST ID Editing: Kirsikka Dräger / Nordic ID Image: Hanna Östman / Nordic ID

RFID HEADING INTO THE CLOUDS

The stores of the future Blog post by Jorma Lalla What could the stores of the future look like? In this blog post I want to share a vision with you about where RFID development is heading and how this will transform the stores of the future. RFID WILL BECOME THE HIDDEN HERO IN RETAIL ENVIRONMENTS

Everyone enjoys imagining what the future will hold. As a pioneer in the field of RFID this is especially important to me. The excitement about RFID technology is formed by its endless possibilities and with a little imagination there is a clear vision on how it will be transforming stores of the future. This article will outline the vision of where RFID development is heading and how this will transform the stores of the future. 64 • Nordic IDea

The importance of leading with knowledge will be huge in the future. RFID technology can provide outstandingly accurate and precise data that retailers can use for many purposes. The technology can for example help to identify conversion rates, provide insights into what clothes are often tried on in the fitting room, but not purchased. Also, the data can be used to plan product display locations, campaigns and much more. The more information retailers have available, the more they can use it to their advantage. RFID will become an essential part in store operations and this will lead to RFID enabled stores where the technology is integrated in all places. Strategically placed overhead RFID readers and RFID mats in addition to smart shelves, smart fitting rooms, smart mirrors and RFID enabled point-of-sale capabilities will allow retailers to integrate RFID at

full-scale throughout the entire retail space. RFID will become the hidden hero that is integrated into the display rooms. At the point-of-sale RFID will ensure easier and faster registration of products. Customers will value the perks of minimising the time spent at cashier lines. RFID enabled stores will transform more into display rooms and thus, retail will be able to shift their focus from counting and searching items to their core task: creating a pleasant and convenient shopping experience for the customer. These new trends will have a big impact on how RFID equipment and solutions will evolve and develop. DISPLAY ROOMS The stores of the future will be more and more like display rooms, where the shop floor is a representation of the retailer’s product offering. Customers can choose items, receive information on matching items and make the purchase decision

www.rfidarena.com

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in the store. Nevertheless, this does not mean that the customers have to leave the store with plastic bags packed with purchased products. The display stores will provide all customer support and service - after that the purchased goods will be delivered directly to the customer’s doorstep.

entire store will cater to the customer’s needs and wants. Augmented reality implemented with the help of smart technologies will ensure convenience at the highest level whilst making sure that the retailer can concentrate on their core task: selling. EQUIPMENT FOR THE FUTURE

This transforms retail stores into true multichannel businesses and makes the role of keeping stock at the store unnecessary. Sales personnel will concentrate on customer service and selling. Goods will be stored and delivered from a warehouse that serves both online as well as in-store orders. The display rooms will offer the customers a wholesome shopping experience with focus on details, such as smell and music. RFID enables retailers to identify customers with customer loyalty cards and therefore makes it possible to tailor a shopping experience to the likes of shoppers. Registered VIP status customers could be greeted with preferred music and scents. Also customers can engage in social media sharing and can have the option to compile wish lists and share those with their friends and family. Creating a pleasant experience will not end with the ambience of the store. The

The future trend towards RFID enabled stores will, needless to say, lead to technical improvements in the equipment. Equipment, such as furniture/fixture and modules with integrated RFID technology will evolve and be installed so they can be used and moved on the shop floor easier and with more flexibility. Fixed RFID readers will need to be mounted so that they provide information accurately without disrupting the aesthetic look of a retail space. They will be placed discretely by the ceiling, under stacked garments or they could be integrated in the rack or garment hangers allowing maximum flexibility of the store layout without sacrificing reading performance. The different types of RFID readers will constantly communicate with the backend system to ensure that precise real-time information of the content of the store is available at all times.

INFORMATION WILL MOVE INTO THE CLOUDS More and more information is already stored in cloud servers, from private persons’ pictures to email. This is a development that will likely also happen with store related information retrieved with RFID technology. This would mean that inventory lists and replenishment lists could be available conveniently from cloud servers. What would be more convenient than having a whole display room solution fitted and implemented into your company’s operations without having to worry about IT integration and such? As a retailer you would have inventory and replenishment lists available for your use, real-time and without hassle. And what is best, in the future retail stores might obtain RFID as a whole data management package, instead of as an RFID solution. RFID will shift from a technology investment to a full solutions service as well as RFID readers. Much as in the case of mobile phones: nowadays the device itself is not necessarily purchased separately but as part of a service contract with the network operator. All this would be possible when RFID transforms from a mere technology investment into an agile service. Nordic IDea • 65

FINNISH ID www.nordicid.com

THE FINNISH GAME INDUSTRY IS TOP NOTCH

As a Finnish company we have been pleased to see how the Finnish game industry raised its head and has made a statement in the last years. The game industry is an internationally growing industry and this trend shows no indication of a change in direction. Finland proved to be one of the hotspots for start-up game businesses, with 13 Finnish companies making it to the Develop 100 list which features the top 100 game start-ups.

gained global attraction and interest in their games.

For a small country such a phenomenon is refreshing and Finns are proud to see their games becoming popular all around the world. People play on laptops, their mobile devices and tablets and the choice of games is enormous. The Finnish games have proven to be top notch with users showing a big interest in games created by the Finnish game industry and making them reach great popularity.

You might still remember the groundbreaking game Max Payne, which was a huge success, upon its release in the year 2001. Created by the Finnish game company Remedy Entertainment, the game it made its way to Hollywood in 2008. 20th Century Fox used the game as a base for the Max Payne movie. It is quite rare that a game makes it to the big screens as it did in the case of Max Payne.

Finnish app developers tend to leave a substantial footprint in the mobile game industry. It seems that the Finnish game industry has not only managed to create their apps for the global rather than local market, they have also successfully

After Max Payne there have been multiple other Finnish games that have become internationally recognized and favored. Angry Birds, which was published by Rovio Mobile in 2009, accomplished a massive success. It

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Finnish startups have been popping out of the ground and into the game industry, hitting the top of the game charts. Consisting of more than 180 companies, the Finnish game industry employs roughly 2200 people. FROM THE DARK SIDE TO THE ANNOYED BIRDS

turned out to be the best-selling mobile game in the world and made it the number one iPhone application in 67 countries. Kudos! And then there was Supercell, who rose to success with its strategy games Hay Day and Clash of Clans. Recently the Japanese telecom company Softbank and game-company GungHo bought a 51% stake of Supercell for 1.5 billion Dollars. This deal made Supercell an absolute success story. It has been estimated that the Finnish game industry totals to around 600â&#x20AC;&#x201C; 800 million Euro with a turnover of 250 million Euro. Not bad for a tiny Nordic country. The phenomenon has been surprising to some, but on the other hand, the success did not turn up out of nowhere. So, where did it come from? WHY FINLAND? Maybe the foundation has already been laid in the education system. The Finnish educational system has been achieving great results in the PISA (Programme for International Student Assessment) studies. Or is this more a matter of

Text: Kirsikka Dräger / Nordic ID Images: Hanna Östman / Nordic ID, Remedy Entertainment, Rovio Entertainment & Supercell

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higher education? For example Turku, one of the fastest growing game industry regions in Finland, has three higher education institutions that offer a game degree. Turku Polytechnic and the University of Turku offer a Game Developer Trainee Programme. Some say that the key to success lies in the combination of these three factors: the Finns are frequent players of games, the level of education is high and computer technology is at a world class level. Other sources claim that the way the Finnish games are distinctive in graphics and sound design, the intentional focus on Apple, meticulous testing regimes, unique pricing strategies as well as upgrade and expansion planning are the reasons behind the success of Finnish games. Finland is a country where excellent technology know-how and innovation are very prominent. Surprisingly enough, Finns play the most games per capita compared to other countries. Or is it really surprising, maybe we can blame the long, cold and dark winters for the game enthusiasm? The fact is: Finland has the highest mobile penetration rate

SCORE: 17200

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in the world and the highest proportion of people working in information technology and communications. If you pair this with good funding and support by the Finnish Funding Agency for Technology and Innovation as well as game education and game research at world class level; the picture is getting clearer. Having a strong gaming and game development culture combined with the character traits reliability and flexibility that Finns take pride in, could be the factors that give Finland a competitive edge. As a small country Finland might also be exceptional in regards of being skilled at gathering all key interest groups on the same table. What exactly causes the Finnish game industry to flourish might be influenced by all above factors; it is hard to pinpoint one responsible factor. Nevertheless it is undisputable that Finland can be delighted for having world class game education and game research skills and the international success stories show that the game industry achievements are being enjoyed by people around the world.

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GAME ON FINLAND! Ready, Steady, Go! Or should we say: RFID, Steady, Scan! Finland is a leading country in game research and development and the great successes inspired us to participate. We decided to join in and find a fun and different way to demonstrate our RFID products. With the help of game developer Markus Silvennoinen, the Nordic ID game “RFID Agent game” was created. Markus, who studies at the Novia University of Applied Sciences, helped us take the game from an idea to reality and make sure that we are able to show you the fun side of RFID. We hope you enjoy our game and a big thank you to Markus for his help and expertise! Speaking of which: we hereby kick off our game competition. Visit our website to try your luck. Sign up and start scanning bubbles! Every month the player with the best score will be crowned the winner and receive a special price. So aim your RFID device and get going!

Nordic IDea • 67

COMING SOON. A NEW ERA OF

IDENTIFICATION

IS ABOUT TO BEGIN. www.nordicid.com