High Level of Interest

Late last year, clothing manufacturer VF Corp. signed a three-year agreement to purchase RFID tags and readers from Alien Technology to identify products in cases and pallets headed to Wal-Mart and other retailers that use RFID. VF will initially equip seven of its U.S. distribution centers with RFID systems to monitor the tagged cases and pallets. Known for its Lee, Wrangler, Nautica, The North Face and Vanity Fair brands, VF has already begun shipping tagged cases of its products to Wal-Mart's three distribution centers and says it expects to use around 600,000 RFID tags a year at first. The company will initially use Alien's 64-bit EPC Class 1 tags but will switch to a 96-bit version later this year. VF expects to increase its orders for Alien RFID tags as it attempts to keep up with growing demand for its products.

Eric Anthony, vice president of IT for VF Corp., says the Alien investment bolsters his company's stance on furthering the advancement of RFID.
"We want to promote this technology because as you get to the item-level tagging, there could be some real benefits to help VF and also the retail industry in general," says Anthony.

As one of Wal-Mart's Top 100 suppliers, VF had a relatively smooth transition meeting the mega-retailer's mandate, according to Anthony. While shipping tagged cases and pallets was not as difficult as initially thought, Anthony says he questions the maturity of RFID solutions. "We're having failure rate on tags anywhere from 1.8 percent to 10 percent. Those are not great numbers. It definitely calls for some additional manual processes in the distribution center. But if you remove that aspect, our RFID project has been a very big success for VF. We don't anticipate any additional problems and we think we have the right platform to move forward with Target as well."

Experience in the Field
To improve the robustness of tag reads, Anthony feels that tag manufacturers and vendors need more experience in the field to make the appropriate technical adjustments to the technology. Over the next six months, Anthony anticipates that more stories will surface around the failure ratio of tags. "At the end of the day, if the vendors obtain that extra experience, it will only help them refine the technology," says Anthony, who cites Alien and Accenture as true RFID partners and leaders in the RFID space. "Accenture was very instrumental in building our RFID plan. We attribute a big part of our success to the skill and people that they brought in."

As far as fine-tuning tags, Anthony believes testing needs to occur in different environments. "Metal can obviously have a huge impact on an RF signal. As vendors learn more about what works and doesn't work and apply those lessons learned to the customer, I think we will see the necessary improvement take place."
VF has learned first hand, how erratic RFID tags can be, even in similar DC scenarios. By deploying the same RFID process in three different DCs, VF learned that the failure rate of tags all came back different: 1.8 percent, 2 percent and 10 percent. "If it's the exact same process there must be something going on infrastructure wise, not necessarily just the tags," says Anthony. "That's what the vendors need to work on. How do they learn about the different environmental impacts to this equipment, not just a creation of these tags."

Eye Toward Item-Level
Anthony says item-level tracking will provide retailers with the ability to do things that they can't do today. Wal-Mart says it loses a billion dollars in sales, for instance, because it doesn't replenish the shelves until late at night. If retailers like Wal-Mart had a command center that was monitoring all of the shelves, it could detect that a best-selling pair of jeans for instance was not on the shelf and it could replenish that shelf during the day. Or, if a consumer is notified somehow via RFID that a particular shirt sold with the type of jeans they are trying on, it would invigorate sales growth. "The more item level tagging and the more things the retailer does to take advantage of that furthers the technology," says Anthony. "If a person has a great experience at a store they are more likely to come back. On top of that, if the product is on the shelf when it needs to be at the right time, it is going to make that consumer's experience so much better. We think RFID in the long run is going to play a big part in that."