American Apparel RFID Case Study: The Challenges
American Apparel’s practice of stocking only one of each SKU on the sales floor allowed the company to offer customers many more items in the same square footage. However, it did not provide for safety stock on the sales floor. This resulted in sales floor in-stock levels of approximately 90% and created two distinct challenges:
Challenge 1—Ensure that 100% of the items in the store were available on the sales floor. The sales floor inventory and the stockroom inventory needed to be separate, accurate and instantly updated. “Sales associates should be on the floor talking to customers, not in back searching through boxes or behind checkouts counting clothes,” Noted Zander Livingston— RFID Director, American Apparel.
Challenge 2—Stockroom associates required reliable and instantaneous information about items needed for the sales floor so that replenishment could occur within minutes of a sale.
A whole store inventory that once required 120 work-hours can now be accomplished in 15 work hours.
The Innovative Solution
Livingston was brought on board in 2007 to help American Apparel reclaim its “lost 10%.” This refers to inventory that was supposed to be on the retail floor but was “lost” in the sea of merchandise in the stockroom.
For each of the pilot stores, Livingston chose a complete item-level RFID inventory tracking solution consisting of:
- RFID inlays, printers and tags from Avery Dennison
- RFID handheld and portable readers and antennas from Motorola
- In-store inventory tracking software
The Implementation
Step one called for attaching RFID-enabled tags to every item. This was accomplished using Avery Dennison AD-222 inlays, chosen for their consistency and accuracy. These tags were then attached to the garments and individually encoded on-site at the pilot store.
Step two involved establishing four RFID stations at key in-store locations to track inventory. The station functions were as follows:
- Receiving (entering and leaving the stockroom): To capture/verify merchandise being received into the stockroom inventory, as well as items shipped out of inventory (factory returns, damaged goods, items for display, etc.). The receiving station tracks all inventory except for items on their way to the sales floor.
- Fill Station (exiting the stockroom): To verify that replenishment orders pulled from the stockroom inventory match up with the sales floor POS replenishment orders.
- Validation Point (entering the sales floor): To verify that the replenishment order from the fill station is accurate and authorize the movement of inventory from the stockroom to the sales floor inventory.
- Point of Sale (on the sales floor): To capture the sale, adjust store inventory and generate a replenishment order for the stockroom.
Item Level RFID Tagging Identifies "Missing Inventroy"
Summary: American Apparel - An RFID Success Story
The Challenge: Reclaim the "Lost 10%" of Inventory
The Results: 99% Inventory Accuracy
Additional Benefits: Sales Up 14%. Inventory Down 15%
Want to Know More About What RFID Can Do For You?
Contact a Avery Dennison RFID specialist today.
