Ebook Supply Chain Management in the European Textile industry
The clothing sector seems to be one of the most suited industries for EPC/RFID on item level. The high turnover of garments in the DC, the short time to market processes, the continuously changing assortments and finally the different designs, cuts and colours require an efficient coordination in supply chain processes. Also the average price of each garment is comparatively high. With an adequate implementation of RFID technology, a positive return of investment is possible for different business models. Not only large retailers can profit from EPC/RFID, but also SME manufacturers and retailers. In this report several business cases are analysed.
The focus of this report is the whole textile supply chain beginning at the manufacturer’s warehouse and ending at the point of sale (POS). Carrefour, gardeur, Kaufhof, and Northland have calculated a business case for EPC/RFID item level tagging taking into account their real business processes and data. Since in this document they cannot reveal most of the actual data due to the sensitive nature of this information, we substantiate our claim with exemplary calculations in three scenarios using typical input values where possible. The exemplary calculations closely follow the actual cases from Kaufhof, gardeur, Carrefour, and Northland, without revealing any sensitive data.
The scenarios are based on an implementation of EPC/RFID technology in the whole company and not only a single EPC/RFID pilot. All required parameters and data were calculated with an excel-based calculation tool, which was developed by the Research Center of the University of Dortmund.
The results show that textile companies have several implementation options in the supply chain, which can provide benefits. For all three scenarios a positive return on investment in 2 to 3 years could be achieved. This certifies that EPC/RFID is an important technology for the textile sector in future.
However this report also demonstrates that the adoption of EPC/RFID requires a detailed analysis of the companies’ processes, particularly the process steps. Also the current prerequisites of the textile companies’ structure and further developments of the technology will influence the results of the business case whether there is a return on investment or not.
Content
1 Introduction
- 1.1. Objective
1.2. Working Approach
1.3. Focus
2 Dimensions of a Business Case Calculation
- 2.1 General company parameters
2.2 Collection of actual data in the textile supply chain
2.3 Identification of individual process steps
2.4 EPC/RFID Implementation Costs
2.4.1 Hard and software costs
2.4.2 Further costs related to an EPC/RFID implementation
2.5 Requirements of the calculation tool
3 Approach for the Business Case Calculation
- 3.1 Development of Scenarios
3.2 Process selection and data input requirements
3.3 Definition of expected results:
3.3.1 Cost savings in processes (hard facts)
3.3.2 Quality improvements through EPC/RFID
3.3.3 Expected effects on business volume (soft facts)
3.3.4 Overall expected financial results
4 Business Case Calculation
- 4.1 Cost parameters and assumptions
4.2 Definition and calculation of different scenarios
4.2.1 Scenario I: Department Store
4.2.1.1 General parameters
4.2.1.2 EPC/RFID installations
4.2.1.3 Results
4.2.2 Scenario II: Hyper and supermarket
4.2.2.1 General parameters
4.2.2.2 EPC/RFID installations
4.2.2.3 Results
4.2.3 Scenario III: SME manufacturer
4.2.3.1 General parameters
4.2.3.2 EPC/RFID installations
4.2.3.3 Results
5 Discussion and conclusion
- 5.1 Discussion of all scenario results
5.2 Conclusion
References
List of tables:
Table 1: Status quo of process efficiency
Table 2: Soft facts possible sources for research
Table 3: General calculation parameters
Table 4: Average labour costs in regions
Table 5: General cost estimations for hardware and software (without tags)
Table 6: Estimations of lump sum and miscellaneous costs
Table 7: General parameters of a department store
Table 8: Tag costs department store
Table 9: Implementation progress EPC/RFID
Table 10: Calculation of installation costs for the department store
Table 11: Example of RFID investments in a medium sized department store
Table 12: Example Process step analysis by the EHI retail institute store level
Table 13: EPC/RFID benefits department store
Table 14: Final results department store
Table 15: General parameter hyper and supermarket
Table 16: Tag costs hyper and supermarket
Table 17: Installation costs hyper and supermarket
Table 18: EPC/RFID benefits hyper and supermarket
Table 19: Final results hyperand supermarket
Table 20: General parameters SME manufacturer
Table 21: Tag costs SME manufacturer
Table 22: EPC/RFID installation costs SME manufacturer
Table 23: EPC/RFID benefits SME manufacturer
Table 24: Final results SME manufacturer
Table 25: Value of garments and the effects on the payback period
List of Figures:
Figure 1: Working Approach
Figure 2: Process step analysis time verification store processes and potential benefits
Figure 3: Additional cost next to hard and software
Figure 4: payback period SME manufacturer
Figure 5: Incoming and outgoing cash flow
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