November 18, 2013
special report | RFID Report

Pioneering RFID in the DC

Pioneering RFID in the DC

Item-level tagging has sped up inbound and outbound processing at a German 3PL's distribution center. But issues remain in using RFID for item selection.

By James A. Cooke

Although item-level tagging of goods has long been touted as the future of inventory visibility, a lot of companies are skittish about being pioneers. That's not case with two German concerns. German contract logistics service provider The Fiege Group is helping German fashion retailer Gerry Weber International AG become the industry leader in the deployment of radio-frequency identification (RFID) technology for tracking individual goods.

"Gerry Weber is the only company that has rolled out RFID tags across its stores and supply chain," says Christoph Mangelmans, the Fiege distribution center manager involved in the RFID initiative.

Gerry Weber, which claims that it is now tagging nearly 100 percent of its garments, initially adopted RFID to speed up the goods-in and goods-out processes at its stores and enable it to use electronic article surveillance (EAS) to deter theft. "RFID item-level tagging gives various advantages along the supply chain, starting with easy DC 'goods-in' operations that are 100-percent quality checked," says Gerry Weber's former chief information officer, Christian von Grone. "This has sped up our processes and saves money on EAS and error handling, and gives the chance for higher turnover on replenishable items."

Headquartered in Halle, Germany, Gerry Weber sells its clothing line through its own stores as well as through dealers. It launched its RFID tagging program in 2009. On its website, the company claims that since January 2011, it has outfitted more than 26 million of its clothing items with RFID.

Gerry Weber has partnered with Fiege since the inception of the tagging program. Based in Greven, Germany, Fiege provides contract logistics services in Europe for a number of industries, managing such activities as warehousing, transportation, e-commerce fulfillment, order management, and reverse logistics on behalf of its clients. Fiege currently handles the distribution of Gerry Weber's "Edition" and "Taifun" clothing brands. A second contract logistics firm, Meyer & Meyer, handles goods on hangers.

When it comes to affixing the tags, Gerry Weber's suppliers in Eastern Europe, Turkey, and Asia apply the passive RFID tags to garments. Because it oversees its clothing production, von Grone says, Gerry Weber was able to get the suppliers to take part in the program. He added that only licensed products, such as sunglasses, bags, and jewelry, need to be tagged upon arrival at the store.

Avery Dennison furnishes the chips, which are embedded in the clothing-care label attached to the article. Avery Dennison maintains printing centers near the suppliers' factories to produce the tags, each of which has a unique identification number.

The tagged goods arrive in trucks at the Fiege distribution center in Ibbenbüren, Germany, near the Dutch border. The site, which measures more than 1.45 million square feet, is a multitenant facility, with nearly 161,500 square feet assigned to Gerry Weber.

Once the boxes are offloaded from the truck, they're placed into one of three tunnels, which are equipped with antennas to read the tags. To make sure the correct items are in the box, the tag readings are matched against information supplied in the advance shipment notice transmitted by the supplier.

After the boxes' contents are verified as correct, they are placed into storage. Because Gerry Weber brands are coordinated collections of apparel, articles only get shipped to stores when all items in the clothing line are in stock at the warehouse. Since articles in a collection may be made by different suppliers and don't always arrive at the same time, inventory turnaround can take up to six weeks.

Once all items in the collection are available, warehouse workers will select orders for the Gerry Weber stores. Fiege, which uses parcel carriers like DHL, UPS, and DPD to handle the deliveries, makes store replenishment shipments every day except Sunday. The company has set up packaging tables with RFID interrogators to read the tags on outbound goods and confirm the accuracy of store orders before the merchandise leaves the DC.

As for the results to date, the use of RFID has revved up throughput in both inbound and outbound processing in addition to boosting order accuracy. Since the RFID initiative was launched, Mangelmans says, inbound processing of goods is 25 percent quicker than in the past and outbound processing is 15 percent quicker.

Improved visibility and throughput notwithstanding, RFID deployment has not been without issues. In particular, Mangelmans says that when order selectors go to retrieve items, there's a "media break" or disruption in the automatic transfer of information to the DC's computer system. That's because an RFID reader can't distinguish the signal for an individual clothing item from the surrounding signals. So if the worker wants to retrieve a particular size garment from a box, he or she can't use an RFID reader to determine whether the item is on the top, middle, or bottom of the carton.

At present, the worker filling an order must take an additional step to make sure the right item is picked from a mixed carton of goods. After selecting the item from the storage location identified by the warehouse management system (WMS), that worker has to scan the bar code on the hang tag, which contains information on the item's style, size, and color. The scanned information is then relayed back to the WMS for confirmation.

In Mangelmans' view, the solution to that problem would be to use a sorter to remove garments from the box during inbound processing. That way, individual items could be placed into automated storage and retrieved based on the RFID tag.

Despite the current need for manual scanning during picking, Mangelmans believes that the increased throughput afforded by item-level tagging justifies the use of RFID technology. That technology has given us "transparency on the supply chain," he says.

About the Author

James A. Cooke
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP’s Supply Chain Quarterly and a staff writer for DC Velocity.

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