Philips Semiconductor on Tuesday announced that it has provided partners with radio frequency identification (RFID) chips that they'll use in efforts to improve Benetton's supply-chain management system. What this means is that a box containing clothes of varying styles, colors and sizes can be scanned, and the information can be uploaded to Benetton's inventory tracking system instead of having to be checked in one piece at a time. The process could be faster, more accurate and efficient than bar codes because it wouldn't require the unpacking and hand checking of each garment.
While the market for RFID chips is small now, their potential for improving visibility of inventory on an almost instantaneous basis is of significant value, said Karsten Ottenberg, senior vice president of Philips. This is especially true for retail businesses, which are consistently concerned with striking a good balance between supply and demand. Retailers want to make sure there are enough products on the shelves to meet demand but not so much that they are sitting in a warehouse taking up costly inventory space.
In the case of Benetton, labels on its Sisley clothing brand have been fitted with Philips' RFID-enabled i.code chips. The chips, which are incorporated into the clothes during manufacturing and are imperceptible to the consumer, indicate where a garment is in the inventory process or within the company's 5,000 stores. Philips plans to ship 15 million i.code chips this year to Benetton.
The operating distance of the chips is up to 1.5 meters, so the clothing isn't tracked once it is out of reach of monitors in the stores and warehouses.
System integrator Lab ID will work to add RFID technology to Benetton's shelves and warehouses, while mobile device maker Psion Teklogix will work on RFID handheld readers for the retailer. The system is expected to be released this year.
RFID chips, which are thin and small, vary in price depending on the amount of product information a retailer wants to receive from each chip. Chips that tell the retailer only whether a product has been sold can cost less than 5 cents per chip.
Earlier this year, Gillette, Wal-Mart and U.K.-based supermarket chain Tesco announced a plan to install specially designedthat can read radio frequency waves emitted by microchips embedded in millions of shavers and related products.