RFID Technology in the Fashion Supply Chain: An Exploratory Analysis

Introduction

The Radio Frequency Identification (RFID) is the generic name of technologies that use radio waves (Jones, Clarke-Hill, & Hiller, 2005) for automatic identification of objects, positions or persons through electromagnet reception in considerable distances” (So & Liu, 2006). Therefore, RFID is an automatic identification technology, which identifies and gathers data on items without human intervention or data entry (Wyld, 2006).

Although commercial applications of RFID date back to the 1960s, the use of RFID in supply chain management is relatively new. The RFID applications are diverse and are growing in various sectors for different purposes. In Europe and USA, RFID has been adopted by some major retailers. In 2003, the world’s leading retailers, including Metro Group in Germany, Marks & Spencer in the UK, and Wal-Mart in the USA, mandated the use of RFID in tracking supplies (Cover Pages, 2003; Roberti, 2003). Since then, many other retailers in the world have announced adoption plans, including Tesco in the UK, Coles Myer in Australia and Mitsukoshi in Japan (Roussos, 2006). The rapid increase in the number of RFID users suggests a major research opportunity in the retail industry (Sethuraman & Parasuraman, 2005). This technology it is now at a stage, in which there are potentially larger benefits for a wider application, yet barriers remain including a necessary policy framework for enhancing business and consumer benefits while effectively addressing security and privacy issues (OECD, 2006).

The RFID has improved many processes in the supply chain such as handling materials with better efficiency, management of assets more effectively and improving products availability (Reyes & Jaska, 2006). The tracking of items (e.g. assets, containers, reusable bins) has become automated by the extensive use of RFID throughout the supply chain (Tajima, 2007).

The value of RFID technology is particularly visible in fast moving Fashion Supply Chains (FSC’s), as the fashion business is characterized by a wide assortment of products, short life-cycles, high seasonality, high volatility, high-impulse purchasing and complicated distribution and logistics operations (Christopher, Lowson, & Peck, 2004). Peterson, Chang, Wong and Lawrence (2010) used the term “fast fashion” to describe a new business model where the tendencies are fresh products, shorter life cycles and faster production. This business model puts significant pressure for rapid delivery, high quality products, and low prices for each supply chain segment. In the highly competitive retail environment, the availability for a certain product category (or a specific item) is a relevant source of value to customers, since there are huge penalties due to out of stock of the current season “must-have” advertised items (Brun & Castelli, 2008). To respond to customer needs, “time compression” and flexibility should be developed along the whole supply chain. Castelli and Brun (2010) also stress the need to align operations of different FSC members along the supply chain to enhance information exchange, through the use of new communication tools and process coordination practices. Despite the potential value of RFID technology in FSCM, Loebbecke (2007) stress that ‘the actual examination of the influences and impacts of RFID has been less well documented.’ Moreover, prior works does not have a holist perspective of the RFID deployment in FSC, only provide some insights about particular issues of RFID deployment in FSC, like, potential benefits (Kwok & Wu, 2009), implementation issues (Kwok & Wu, 2009; Loebbecke, 2007), RFID technology economic value (Bottani, Ferretti, Montanari, & Rizz, 2009), cost-benefit sharing issues (Bensel, Gunther, Tribowski, & Vogeler, 2008) or do it only at the retailer level (Moon & Ngai, 2008). The present work objective is to present a holistic perspective on RFID value in FSC using empirical examples from case studies related to the RFID deployment by companies belonging to FSC.