In the fashion retail business, speed is what separates the chumps from the Valentinos. How fast an organization can respond to new customer demand is key. And when creatives and seamstresses are all driven to turn around ideas quickly, frittering the time gained makes a mockery of the system.
But like a fast moving stream entering a broad plateau, garments destined for Wills Lifestyle Retail slowed down when they got to warehouses. It was like the warehouses were thumbing their noses at the system. And it wasn’t funny. Everyday that a box of clothing stayed shelved in the warehouse, was a day less on display and 12 hours worth less of opportunities to make a sale.
That, however, was a fact at the Rs 300-crore (US$3 billion) fashion house that belongs to the ITC Group. As truckloads of boxes waited outside warehouses, workmen couldn’t inventory them fast enough. “The challenge was to deal with large volumes because people have been doing it manually,” says O.P. Bansal, CIO, ITC Lifestyle Retailing.
A lean supply-chain could help. But with traditional and manual practices, there was only so much that the company could crunch its time-to-market cycles.
Looking to streamline their operations, ITC Lifestyle Retailing, conducted a detailed study to assess their overall supply chain process. After their huddle, they returned a solution they had probably guessed before the study: RFID was the solution that could best increase the company’s responsiveness. “A business case was put forth to implement RFID at an item level. The aim was to speed up existing processes, reduce time-to-market, handle material efficiently, and bring more accuracy of books versus physical stock,” says Bansal.
But the company knew they were shopping in the unknown. Few companies have invested in RFID, shying away from the technology because of its price and inaccuracy. Fewer still have attempted in India’s retail scene. So, the core team decided to start with a pilot, and follow it up with phased implementations. The first phase would last a year starting from September 2006.
Making It Stick
ITC Lifestyle Retailing has two gigantic warehouses, which swallow up everything their factories produce and carefully distribute clothing based on location, season and host of other parameters. The warehouses run on a warehouse management system that are tied into MOVEX, a fashion ERP. They have separate bays that receive, scan, store (in metallic bins), segregate and dispatch products.
The IT team looked at this workflow picture and decided two things: any garment carrying the Wills Lifestyle brand needed to be RFID tagged at a ITC Lifestyle Retailing factory (before they got to the warehouse) or at an outsourced manufacturer. Second, they needed to create two RFID tunnels at each warehouse: one for incoming goods and another for those leaving the warehouse.
Like other RFID implementations, the IT team at ITC Lifestyle Retailing bumped into challenges of read accuracy, read speed and tag orientation. That’s when they turned to solutions such as PLC-based RFID tunnels for the warehouse and smart, customized point-of-sale software (POS) for the stores.
“During the pilot, we tested a variety of RFID tags and RFID readers and antennas. Various systems — the RFID tunnel was one of them — were conceptualized and fabricated to achieve our goals,” recalls Bansal.
Meanwhile, at the stores, the RFID program was meeting its own challenges. Since each store has two counters for customer billing, store managers decided to use a similar approach to that at the factory: they placed RFID antennas in drawers behind the counters.
But for all its potential, RFID is still far from a plug-and-play solution and possesses technological challenges when it’s being deployed in a live environment. ITC Lifestyle Retailing had to take on radical changes in processes, face problems with integrating the technology with existing systems and deal with an unavailability of a standard program interface for RFID hardware.
The high price of RFID tags, too, has traditionally been a stumbling block for the technology, and Bansal couldn’t get away from it. “Earlier, we used tags that were worth Rs 6 or Rs 7. That’s almost 1 percent of my product cost and that is significant,” he says.
To mitigate the high costs of the tags, other organizations normally reuse them. But that solution would not cut ice at ITC Lifestyle Retailing . Bansal says that it was not feasible to reuse the tags since the logistics of retrieving the tags and reprinting information on them — on repetitive basis — was a sizeable task.
However, there was good news. Over a single season, the company saw the prices of the tags fall by over 30 percent. But given that ITC Lifestyle Retailing is currently tagging 1.6 million garments a year, price is still a challenge, says Bansal.
But what really worries Bansal is the changing nature of the technology. Every investment the company makes today could be outdated tomorrow — or worse worthless. “We are still experimenting. Whatever we may have done so far may become obsolete. That is one of our biggest challenges,” says Bansal.
In the cutthroat retail business, higher efficiencies are not a luxury, they are a must. RFID has brought that advantage to ITC Lifestyle Retailing. Under their old barcode system, each carton had to be manually opened, every piece scanned and entries made. And that was only when it entered the warehouse. The process had to be repeated when garments left the warehouse.
With the RFID tags, entire cartons can be scanned. Gone are the days, when boxes had to be opened by legions of workers, today, boxes are simply pushed through the RFID tunnel. It now takes 20-30 seconds to inventory 30-35 garments (about one boxes worth) — from between five and eight minutes. Currently, on any given day, each worker can handle between 2,000 and 3,000 garments — from by 300 to 400 — an incredible efficiency jump, which translates to savings of about Rs 15 lakh a year.
Rs 15 lakh will get the bean counters whistling, but Bansal is focused on another, more important benefit. “I am not looking at this as a labor saving activity. If we can save time in the warehouse that means every garment is getting about seven days earlier to the store. And that makes more business sense to me,” says Bansal.
Since the implementation, the extra time every garment spends in the store is affecting the company’s bottomline positively. With some garments getting as much as extra 10 to 15-day window, ITC Lifestyle Retailing has seen a 1 to 2 percent uptick in sales.
Another advantage is a huge reduction in the return of non-saleable goods from the showroom. As a direct result of mishandling in the warehouse, an astonishing 20 percent of garments were returned from the stores. Now that boxes don’t have to be opened, the fewer number of non-saleable goods is saving the company about Rs 15 lakh a year. Also, the percentage of manual errors has been reduced greatly because each tag has a unique identity and reconciliation is more accurate. Assuming a 0.1 percent error rate across three lakh products every month, Bansal estimates saving worth Rs 60 lakh a year.
Like a stone in a pond, the benefits of the RFID implementation are sending ripples that will be felt years from today. Because the company can ship inventory in and out of its warehouses faster, it can make do with less warehouse space, creating savings in real estate. Bansal estimates that over a period of three years the implementation will save the company about Rs 10 lakh in real estate costs.
Sanjeev Khanna, who is in charge of logistics, says, “The operational benefits that we’re deriving post the RFID implementation can be summed-up in two important words: efficiency and accuracy.”
And at the store, the RFID implementation has created time for service executives. Time-consuming jobs like taking physical stock counts and back room management are now non-existent. “This gives a store’s staff more time to converse with customers about products and promotions, which in turn increase customer satisfaction,” says Bansal. “Plus it has opened the door for future-looking applications like trial room experience, smart shelves, contact-less payment, etcetera.”
The project has already been rolled out across two major warehouses in Delhi and Bangalore and across all Wills Lifestyle Retail stores in the National Capital Region. In its second phase, RFID will taken to other stores across the country. RFID could be coming to a store near you.
This story, “RFID ratchets up responsiveness for Wills Lifestyle Retail” was originally published by
Copyright © 2008 IDG Communications, Inc.