Like Clockwork

Switzerland's largest clothing retailer is in the process of minimizing stock-outs, reducing shrink and enhancing operational efficiencies by becoming one of the first merchants to place RFID tags on all the SKUs it carries.

Charles Vögele Group operates 850 stores and five warehouses in nine countries: Holland, Belgium, Poland, Germany, Switzerland, Austria, Czech Republic, Hungary and Slovenia. It uses third parties for transportation throughout Europe and buys from more than 400 suppliers, turning an average of 70 million SKUs annually. Its stores sell a variety of company-branded apparel for men, women and children; some larger stores also sell name brands.

During a year-long pilot, the company cut stock-outs and the time spent counting inventory in half, says vice president of supply chain Thomas Beckmann.

The pilot took place in Slovenia and involved four completely RFID-equipped stores, two control stores without RFID, one RFID-enabled distribution center, one RFID enabled carrier, two enabled suppliers and 12 enabled factories.

Thorofare, N.J.-based Checkpoint Systems was a business partner in the project, providing passive EPC Gen 2 RFID tags, readers and interrogator antennas. At the store level, Checkpoint's RFID readers tracked which items were available, both on the floor and in the backroom. They monitored how many items were brought into fitting rooms, and how many of those items were purchased. Germany's KooBra Software provided the platform for collecting and interpreting the data provided by the interrogators.

One of the most damaging black holes in a supply chain, Beckmann says, occurs during the period between the delivery of new products to a store's backroom and their placement on a rack or shelf.

We have a saying in Europe that up to 60 percent of your logistics costs and shrink loss happen in that space because you don't know what's going on there, he says. A store may seem like it is out-of-stock on items customers want but those items can be somewhere in the backroom and the staff won't know that.

The implementation process began with Charles Vögele installing readers and placing passive tags on all items during the packing process at the supplier's facility. Those items were read again at a container freight station in Shanghai, and again at what Beckmann describes as the company's European hub, a German warehouse where the retailer breaks down deliveries from all sources worldwide.

At its DC in Austria, Charles Vögele added carton check using RFID. It also implemented RFID readers and tags at its finisher's facility, where garments are steamed in preparation for display. That was to check to be sure the tags could survive heat and steam, Beckmann says.

Read-rate testing
To maximize read rates, the retailer tried different configurations. We tried to find out what the best technical set-up would be for each process, Beckmann says. Since humans can't see a high-frequency read register, you have to be very careful not to read wrong RFID tags. A successful read depends on the readers, the direction of the read, the power a reader uses to send a frequency, programming the software so it knows where to send a read and where not to send a read, etc. It's a bit enterprising, but it works.