AQM ASSIGNMENT

PRIYAM PANDIT

ANZAR NAWAZ

VICS
The Voluntary Interindustry Commerce Solutions (VICS) Association has
enabled companies in the retail and consumer-focused industries to
eliminate billions of dollars of waste and delay.
By creating voluntary guidelines, often referred to as standards, VICS
has created new best practices that ultimately lead to lower costs and
better availability of products for consumers.
VICS volunteer members improve the flow of products and information
throughout retailing and the consumer-focused industries that supply
retail. The Association provides leadership and an environment in which
executives can make a difference in their industry, their company
performance - and their personal commitment to make the world work a
little bit better. VICS members help define the next best practices in the
industries and thus anticipate and optimise business processes and
costs.

Mission
The mission of the VICS Association is to take a global leadership role in
the ongoing improvement of the flow of product and information about
the product throughout the entire supply chain in the retail industry.
VICS Members include the leading Global Retail and Consumer Goods
Manufacturers with a combined liquidity that exceeds $1.2 Trillion

Participation in VICS Committees enables firms and their trading

partners to leverage the benefits of Collaborative Commerce.

For many years the Apparel and General Merchandise Industry has
actively supported the importance of GS1 Standards and that
involvement continues to this day. What began decades ago with the
U.P.C. barcode, Electronic Data Interchange (EDI), and floor-ready
merchandise, has evolved to include the adoption and use of Electronic
Product Code (EPC)-enabled radio frequency identification (RFID)
technology.

Need and Implementation

The current system of inventory control has a history of errors at every
touch point, and at each of those touch points, there is a cost associated
with the error. On top of that, the current methods of capturing product

information provide marginal accuracy. For example, reading the bar

code with a scanner requires line of sight and being within 9-12 inches.
Given this circumstance, physical inventories take a long time and are
very costly. Consequently, most companies will take a physical inventory
once or twice a year, at their distribution center and in their stores, most
often using an outside contractor. Some companies use cycle counting,
which means they inventory product groups at different times of the year,
hoping this will solve their problem. And this could be true, but there are
a lot of conditions to be considered; for example, the number of
products, importance of date codes, and the number of manufacturing
and distribution points.
Typically, when a physical inventory is about to be taken, the accuracy of
the product inventorywhich takes into consideration the size, color,
and style of a stock-keeping unit (SKU)is in the range of 65 percent to
70 percent. The inventory count is somewhat accurate after a physical;
however, accuracy declines at a rate of 2-3 percent per month. So it is
understandable that at the end of a season or sales cycle, markdowns
are prevalent; they are an attempt to sell product that didn't move during
the season.
Among the typical reasons why that happens is that the product is in the
wrong store because the forecast was seriously in error, or the product
was hidden in the storage area of the store and not brought out to the
sales floor, or if it was on the sales floor, it was on the wrong rack or
rounder and was not noticed by the sales clerks. As a result, it was
missed by the consumer. From a practical standpoint, just walk the
garment floor of a retailer and ask yourself, "How difficult is it to find a
particular garment if it is on the wrong rack?
The major message to be gained from the scenarios outlined above is
that incorrect inventory information results in a substantial amount of
extra effort, cost, and lost sales! When the product isn't available when

the consumer is ready to buy, it causes numerous problems in terms of

consumer confidence. The damage done to consumer confidence is
exacerbated when the product is on promotion and not on the sales
floor. And just imagine the damage to the reputation of the store if the
inventory information is incorrect and the product is ultimately found and
moved to retail, but too latethe consumer has discovered the same
item on sale at a competitor's store and buys it there.
These problems can be avoided with item-level RFID. ILRFID is a
"magic wand" that can read tagged product even when it is inside a
case!
Here's an example. The supplier packs out a case of productlet's
say several pairs of socks, a few T-shirts, and for good measure, a
few boxer shorts. The supplier prepares a packing slip identifying
the customer and contents of the carton. The supplier electronically
"reads" the contents of the case to ensure there is agreement with
the packing slip. The information from each case that is packed
and read is used to complete an Advance Ship Notice (ASN),
which is transmitted to the retailer. When the order is received by
the retailer, the case is read again, and it's highly probable that
there is agreement in the 99.8 percent range.
Typically, today using the bar-code system, the retailer will pull up
to 10 percent of the cases off the receiving line to check them. If
there is an inaccuracythe ASN and the case contents are not in
agreement, for examplethen the retailer will short-pay the invoice
and complete reconciliation when the next inventory is completed.
Now, suppose that item-level RFID had been employed in the example
above. Imagine the productivity that could be realized on the receiving
floor, the rapidity of turning the door and truck around, the ability to read
each individual item inside the case, and more. Imagine how, with

ILRFID, a retailer could run product off an inbound truck and directly to
an outbound carrier destined for a store. It's about customer satisfaction,
solid retailer and seller relationships, and streamlined supply chain
operations. One can easily come to the conclusion that every touch
point can be positively affected by the use of ILRFID.

The use of the Electronic Product Code (EPC) with RFID provides
an effective bridge from today's barcode-based systems to RFID
without losing your current investment in identification systems,
transaction systems, or other information sharing techniques.
EPC-enabled RFID, coupled with serialization techniques,
represent a way for your company to extend your current
investment in the GS1 Standards to take advantage of the benefits
of RFID as a data capture technology, while still using the GS1
standards for identification and data exchange. [1]

Implementation in Apparel Industry

Item Level RFID Workgroup
Inventory accuracy is foundational to delivering unified omni-channel
commerce and the always-on, always-open consumer experience.
EPC-enabled item level RFID is the key driver for implementation

success in every product categorybecause you cant sell, what you

cant see, or dont really have in stock.
The industry is nearing an adoption and usage tipping point! EPCenabled RFID has moved beyond inventory replenishment. It is an
essential component to enable the supply chain visibility and inventory
accuracy needed to know whats available, where its located, and how
to best deliver ithelping meet consumer expectations anytime,
anywhere. A growing number of retailers and brand owners are already
using this transformational technology across several lines of business
and reporting great successreducing receiving/packing costs,
improving shipment validation, implementing flexible omni-channel
fulfilment options, increasing margins, optimising forecasting and
replenishment, and driving sales lift.
The GS1 US Item Level RFID Workgroup is focused on building industry
awareness and supporting the adoption of EPC-enabled RFID
technology. It provides a forum for peer-to-peer outreach and
implementation lesson sharing to:
Develop guidelines and best practices
Ensure sustainability of investments
Demonstrate the technologys ongoing benefits across business
processes
Reinforce the responsible use of the technology
The GS1 US Item Level RFID Workgroup is comprised of two very active
subgroups:
Executive Peer-to-Peer Discussion Group: Comprised of leading
retailer and supplier executives who meet regularly to jointly develop
industry implementation, education and communication outreach

strategies that assist retailers and suppliers in integrating the technology

into their operations.
Industry Implementation Task Group: As adoption grows throughout
the industry, there is a need for coordination and guidance on
implementation practices. This group is focused on solving those
challenges by developing, testing and publishing guideline documents
focused on the adoption and use of RFID technology in the apparel and
general merchandise sectors.
Workgroup participants include leading retailers, suppliers, solution
providers, academia, and industry associationsthose who are
implementing and/or investigating item level RFID. [2]

Benefits of Using Gs1 (VICS) standards

Reducing out-of-stocksThis is more critical than ever, not
only for apparel, but in all product groups. Keeping store inventory to
an absolute minimum is critical to success. Sacrificing efficiency in
order to meet consumer expectationsand vice versais no longer
an option. Today's highly competitive marketplace dictates that
companies must do both to be successful.

Increasing sales and increasing store and supply chain

productivityThis will certainly make a contribution to the retailer's
and the supplier's bottom line. Pilots have indicated that having the
right mix of products that consumers want to buy will maximize sales,
maintain adequate shelf availability, and help keep prices competitive.

Lowering the cost of inventoryAvoiding out-of-stocks and

markdowns is very important, but the limited selling seasons of
apparel and the frequent reconfiguration of products on the sales floor
makes this challenge very difficult without item-level RFID.

Improvement of speed to marketWith many products,

trends and consumer preferences emerge rapidly, especially in the
fashion business. Products have to get from design to the store faster
than ever, sell, and be replenished as quickly as possible, while
consumer interest is at its highest and before the next selling season
begins.

Reducing laborRetailers routinely slash prices to move

merchandise, which results in lower gross margins. Improving storelevel inventory accuracy and the number of SKUs that can be read
with item-level RFID vs. the bar code reduces labor for taking inventory
and searching for products. As source tagging is broadly implemented,
retail and manufacturer labor productivity will improve. The supplier will
also have fewer order discrepancies to resolve along with order status.

Generating data to maximize programsThe marketplace is

rapidly embracing marketing programs with a goal of driving store
traffic. Retailers need accurate, real-time information to determine
what promotions are working and which ones aren't. Suppliers need
this information to determine which marketing campaigns they will
continue to fund. Retailer promotional programs represent about 25
percent of sales, so the impact can be substantial.

Preserving brand integrityCounterfeiting is a significant

problem, estimated to be at US $1 trillion worldwide. It erodes brands
and margins, and it causes confusion in the marketplace. Consumers
don't know if they are buying legitimate, branded products. Item-level
RFID, with GS1 US EPC-enabled serialization, is the one approach
that can comprehensively address this challenge.

Consumer satisfactionHarvard Business School research

has consistently found that when a product is out of stock, the
interested customer is highly unlikely to return to that outlet, and will
shop for the product in another store. Research by the University of
Arkansas found that the retailers participating in item-level RFID pilots
each saw an increase in sales as a result of having product in stock
(about 6 percent).
Reducing shrinkThe overall average for retail shrink is 1.45
percent of sales. The average in apparel is 1.87 percent, computer
and electronics is 0.97 percent, cosmetics and perfume are 1.79
percent, jewelry is 1.06 percent, shoes is 0.85 percent, and vehicle
parts is 1.77 percent. There is a major opportunity to reduce shrink,
including customer and employee theft, with item-level RFID.

Case Study
Levis Straus

In recognition of its pioneering efforts in implementing the autoidentification technology, the iconic clothing manufacturer recently won
the 2016 Apparel and General Merchandise Operational Excellence
Award presented by GS1 US, the standards organization that is
responsible for the electronic product codes (EPC) and standards used
with RFID. The award is based on a vote of the 130 member companies
in the organization's Apparel and General Merchandise Initiative.
Levi Strauss's RFID journey began in 2005 with a pilot program that
involved tagging individual pieces of clothing for one customer in the
United States and Levi Strauss retail stores in Mexico. Since then the
company has expanded its efforts and is now tagging 12 million items
each year.
"Levi Strauss was one of the first companies that stood up on behalf of
the technology and promoted it as a powerful tool for improving
inventory accuracy," says Melanie Nuce, GS1 US vice president of
apparel and general merchandise.
As it ramped up implementation of the technology, however, the clothing
company found that it also had to rework its supply chain operations.
Originally, Levi Strauss tagged its jeans and khakis at its distribution
centers (DCs), but that soon became inefficient. The company then
decided to move RFID tagging to the factories and worked with its 50plus manufacturing partners to do so. According to Nuce, tagging at the
manufacturing source has proved to be more cost-effective and scalable
than tagging at distribution centers further downstream because RFID
tags can be applied at the same time that other clothing labels and tags
are attached to the merchandise.
To accomplish the transfer of tagging to the manufacturing facilities, Levi
Strauss worked closely with its partners to educate them on using EPC

standards, sourcing and applying RFID tags, compliance requirements,

and the overall benefits of RFID. In 18 months, the company went from
tagging 100 percent of its U.S. apparel at its own DCs to tagging more
than 85 percent at its vendors' manufacturing sites. The company plans
to continue to expand the program.
That change resulted in significant productivity improvements and
double-digit cost savings, according to Levi Strauss' award application.
Tagging at the manufacturing source also has the capability to minimize
disruption with the company's garment vendors (by simplifying the
tagging process), improved inventory accuracy throughout the entire
supply chain, and reduced shipping costs, according to the apparel
maker. [3]

Attachments
We have attached 2 documents along with this document which
include sample voluntary guideline manuals.

Attachment 1: EDI voluntary guidelines

Attachment 2: BOL (Bill of Lading) voluntary guidelines and
suggested formats.

Reference:

1. Supply Chain Quarterly By Joseph C. Andraski | From the Quarter

4 2013 issue Supply Chain Quarterly
[http://www.supplychainquarterly.com/topics/Technology/20140110the-case-for-item-level-rfid/]
2. https://www.gs1us.org/industries/apparel-generalmerchandise/workgroups/item-level-rfid

3. Levi Strauss' "wonderful world" of RFID

By Susan Lacefield | June 13, 2016 Supply Chain Quarterly
http://www.supplychainquarterly.com/news/20160613-levi-strausswonderful-world-of-rfid/

Pictures taken from the official website www.gs1us.org.