Group Assignment $6$ Marks & Spencer Embraces RFID

Marks & Spencer $($M&S$)($www$.$marksandspencerlondon.com$/$ca$)$ is an iconic British retailer,

selling clothing, housewares, and prepared food items. In the past, M&S tracked its inventory

with optical scanners and bar codes. But the system was too slow and error$-$prone. As a result,

M&S decided to implement RFID technology back in $2001.$ The company has since become a

pioneer in RFID use and has installed $100$ percent of its merchandise with RFID tags.

To see how well the technology worked, M&S started its RFID experiment by using reusable

RFID tags to track shipments of fresh food between its suppliers and distribution centres. M&S

suppliers place information on the tags indicating the food trays$$ content and expiration dates.

When the trays arrive at the M&S receiving depots, workers use RFID readers to scan the tags.

Fresh items with short shelf lives are then shipped quickly to M&S stores. After being distributed

to stores, the trays are returned to suppliers to be washed, refilled, and recoded. How did the

RFID experiment go$?$ The system was rolled out across the entire M&S network, one of the

biggest in the United Kingdom. M&S now tracks about $10$ million RFID$-$tagged trays containing

food or fresh flowers and plants, as they move along its supply chain.

Soon after the successful launch of RFID tags for its food items, M&S launched an RFID trial to

tag and track $10,000$ items of men$$s suits, shirts, and ties. This effort increased inventory

accuracy so impressively that M&S rolled out the RFID tagging to all types of men$$s and

women$$s clothing, from casual to dressy.

M&S identified the clothing items with RFID tags from Avery Dennison Corporation

$($www$.$averydennison.com$),$ which had supplied M&S with $1$ billion tags. Avery Dennison is a

global manufacturer of pressure$-$sensitive adhesive materials, apparel labels and tags, and RFID

tags.

Initially, M&S used fixed RFID readers that were built into carts equipped with lead acid

batteries as a power source. The company replaced these readers with two$-$piece readers that

consisted of a reader linked to a handheld scanner via Bluetooth. The readers are stored in the

back office and are deployed on the sales floor either in the early morning or in the evening.

The RFID system enables M&S to accurately read merchandise at a rate of up to $15,000$ items

per hour. It also removes duplicate reads. After the scanning is completed, the mobile device

transmits the data to a central RFID database via the store$$s wireless network. The company then

uses this information to automatically update the store$$s database.

The item$-$level tagging of clothing provided M&S with a number of benefits. Perhaps most

importantly, the retailer knows the exact amount of each particular item at each of its stores.

These inventory levels are then used by all other M&S systems to calculate the correct allocation

of stock for each store. Missing items in each store are replenished by the distribution system as

part of the normal daily store deliveries. Also, the company$$s ability to keep the right number of

clothes for each clothing size in its stores has improved customer satisfaction. Essentially, RFID

creates a $$single version of the truth$$ for the inventory levels in a particular store. Thanks to the

new technology, M&S can ensure that the right products are shipped to the right stores at the

right time. Inventory turnover has increased by $50$ percent, and stockouts have been reduced by

$40$ percent.

Another benefit of the RFID system is the time savings generated by the reduced number of calls

that individual stores make to the head office or distribution centre to order missing stock. The

stores are confident that if stock is available, it will be sent to them. This process has enabled

store teams to focus on customer service rather than on stock inventories and adjustments.

RFID also enables M&S to offer its customers more complete product descriptions, including

size, colour, style, manufacturer, destination, and many other features. Further, it provides M&S

with greater visibility into its supply chain in addition to more accurate item$-$level inventory. The

retailer has reduced the costs associated with taking inventory annually, with excessive

markdowns, and with theft and fraud. RFID also offers M&S the opportunity to implement an

entire range of customer information services that help to seamlessly integrate the multiple

channels through which customers interact with the retailer. Some have argued that the increase

in customer satisfaction due to the introduction of RFID can lead to an increase of $5$ percent in

gross sales.

The reality is that many other retailers have followed the example of Marks & Spencer since it

first introduced RFID into its stores. For example, lululemon, the Canadian athletic garment

retailer, adopted RFID technology at the item level in $2015$ across store locations in the