RFID After Marks & Spencer discovered its suppliers,
warehouses and storerooms were holding inaccurate records of stock,
it conducted a pilot study on item-level RFID tagging
High street retailer Marks & Spencer had been looking atradio
frequency identification technology for more than 10 years, but
until two years ago, the concept of item-level RFID was thought to
be unrealistic.
The technology is still unstable but has improved to the extent
that M&S is able to conduct trials based on item-level
tagging.
A three-person team worked on a four-week pilot project which ran
at the company's High Wycombe store in October 2003. The technology
test proved successful, according to Marks &Spencer, with
levels of accuracy of between 98% and 100% on fixed and mobile
readers.
The company is now planning to extend the trial across more stores
and for a longer period so that it can establish a "robust business
case".
The retailer hoped the October pilot could reduce the number of
mundane activities its staff had to do, such as inventory cycle
counting. This would free staff to serve customers and increase
sales opportunities.
The pilot was aimed at establishing a level of stock accuracy to
reduce the amount of "safety stocks" the warehouses held. The
stores were having problems with inaccurate records, deliveries and
damage to stock - which was having a knock-on effect down the
supply chain.
As a result, before the pilot the stock forecasts were driven by
deduced numbers rather than real figures. The only way around this
was to carry out manual counts. This took time, was expensive and
could disrupt business by removing employees from customer-facing
service.
Ideally, Marks &Spencer wanted to keep the minimum of stock,
maintained on a real-time basis. Each store can hold six weeks'
stock, but extra has traditionally been held in the warehouses
because staff mistrusted the forecast information. In addition to
this, inadequate forecasting meant that the supplier also held
safety stock.
Marks &Spencer did not see the pilot project as a business
process change, but rather as a way to allow the company to leap
ahead of process advances. If the company could reduce stock from
just one location, the project would pay for itself many times
over.
The technology
The RFID labels were supplied by Paxar, which also provided the
labels for Marks &Spencer's clothes. The tags contained a
unique identifier which was associated with a catalogue item in the
range. No other information was recorded on the tag and no
person-based information was held.
For the test, the initial association of tag and garment was made
manually by passing the labels across a dual reader once they were
attached to the items. In production, the association was made
during the garment manufacturing process or in the warehouse.
The paper tags were attached by a plastic connector, which could be
removed after purchase.
All the information from the tags was held behind the Marks
&Spencer firewall. The tags were 64 bit, UHF 868 MHz chips made
by a subsidiary of Swatch, EM Micro Electronics.
The scanner technology was supplied by Intellident, which was
already involved with Marks &Spencer through the RFID pilot on
its food range, where 2.5 million out of three million items were
tagged. However, item-level tagging of food is not likely to be
viable for at least three years because of the cost of tags. For
the High Wycombe project, less than 25,000 tags were used.
The company does not anticipate that live store roll-out will take
place until 2005, even if the project were to be given the
go-ahead. The tags used cost 30p, and Marks &Spencer expects it
to take at least two to three years for the price to fall to 5p.
Item-level food tagging requires the cost to be less than 1p.
RFID business case
Any company embarking on such a project must start with a tightly
scoped business case and a vision of the potential - only then does
the technology become an issue.
The Marks &Spencer pilot did not need a vast project team. It
had one full-time person and three part-time consultants.
Increasing stock accuracy not only reduces costs which, given the
complexity of Marks & Spencer's product ranges, can be more
than £10m per year, it can also significantly increase sales.
Marks &Spencer has not revealed how much the pilot cost, but
the company has shown that item-level tagging will become viable
over time. The question it now faces is whether to wait until it is
stable and commonplace, or to edge ahead of the competition.
Lessons learned from the M&S
pilot
M&S could not buy the handheld devices for the pilot
off-the-shelf and instead had to develop them from scratch. The
store found that existing devices either had an inconsistent range
or a limited battery life. To overcome this, M&S developed the
world's first mobile garment reader.
M&S decided not to use intelligent shelving, where shelves
are tagged to allow the retailer to track when they need to be
replenished. A store's layout changes dramatically depending on the
season, and installing an electricity supply for each shelf would
be too difficult.
However, the shelf could be tagged and the mobile reader used to
read and verify the shelf and its relationship to goods.
M&S found that UHF was the most accurate range to use, even
though the store had to set all of its devices to minimum power to
ensure regulatory compliance. M&S also discovered that metallic
ink used on the tags interfered with the signal.
Nigel Montgomery is director of European
research at AMR