1 macy’s, inc. – bloomingdale’s item level rfid pilot overview macy’s logistics rfid...
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MACY’S, INC. – Bloomingdale’s Item Level RFID Pilot Overview
Macy’s Logistics RFID Technology in Furniture & Bedding
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Macy’s Today
Macy*s
• Annual Sales = $20B
• Stores = 808
• In 45 States,
The District of Columbia, Guam & Puerto Rico
• Macys.com
Bloomingdale’s
• Annual Sales = $2B
• Stores = 40
• In 12 States +
1st International Location – Dubai in 2010
• Bloomingdales.com
•Annual Sales – $22 Billion
NYSE Symbol “M”
Diverse Workforce Of Approx. 167,000 Employees
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RFID Pilot-Phase IBloomingdale’s Item-Level RFID Pilot through VICS
Objective:
Pilot the use of item-level RFID technology in a Bloomingdale’s store location to determine impact in the areas of inventory accuracy, out of stock, locating product,loss prevention and sales.
Project ‘kick-off’ with Bloomingdale’s, ADT, Avery Dennison, Macy’s Logistics/Systems, Motorola U of Ark, Stealth Network Communications 2 Pilot stores: 1 RFID-enabled – SOHO, NY,NY; 1 non-RFID stores – Short Hills,NJ (control store) Men’s and Women’s premium denim jeans; 10,000 units each store. Pilot ran Sept 08 to December 08
Both control and pilot store executed 3 barcode and 3 RFID inventories a week.
Store associated RFID tags with UPC during daily receiving process.
Standalone system.SKU file updates to VUE software weekly.Decommissioning station at POS.
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Pilot Metrics PHASE l
Data Collection Metrics for PilotR
FID
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Detail EPC/UPC UPC UPC UPC UPC UPC
start/stop time
start/stop time
30 random samples
sampling to be
decided
tracking by LP in
store
Middleware activation report vs pipeline receipts
Format RFID system Excel Excel Excel Excel Excel
Short Hills X X X X X X X X X X X X X X X
Soho X X X X X X X X X X X X X X XRFI
DValidated analytics for ourselves.Forced ourselves to look into the data.Questioned everything!
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The Foundation for a Business case.Concept of Gross Inventory Distortion and the Impact to Item File Accuracy
I – Sources of Distortion:
• POS transactions - sales and returns
• Booking errors - both DC and store direct (over bookings, vendor misroutes ASN/128 )
• Shortage- Stolen, Fraud
• Re-ticketing
• Vendor Substitutions
• Handling of RTV and Damages
• Inventory taking
II – What does Distortion Impact?
• Item file integrity• Reporting tools- any report associated with
on hands • Replenishment (in-store reporting/inforem;
ROP release• Item locator system/ store to door
III- How do we Correct?
• Frequent Item updates
• Communication and education at all levels
• Focus on high distortion, high replenishment and high velocity businesses for now.
• Measure results; drive Macy’s to change their existing inventory model.
V- What could we Gain?
• Release of ROP more often perpetuates turn
• Stockroom to floor – drive c/s representation
(large doors)
• Inventory management
• Accurate reporting
• Associate confidence
• Customer satisfaction
IV – What are the Risks?
• Could create more distortion• Place us in overstock position
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Soho Expansion-Phase ll• Secured capital funding
• Expand RFID throughout the Soho store excluding shoes, FA, and cosmetics (200,000 units tagged to date)
• Additional infrastructure to include readers/antennas in all stockrooms, receiving and DC.
• Read/write stations at registers
• MST network integration and enterprise solution.
• Perpetual inventory integration ( Work in progress)
• POS integration (work in progress)
• Expanded reporting (work in progress)
Added additional tracking zones, to include DC.
Store works replenishment reporting 3x daily
Store use Geiger counter method to find merchandise.
Inventories every other week.Cumulative data collection at exits
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Responsibility Matrix
Function Tasks Measure
Logistics Divert Tag WriteRe-packShip
Touch Labor ExpenseVendor Accuracy (distortion)Impact and value of outsourcing tagging
Receiving Ready Merchandise for Floor Accuracy received vs LogisticsTouch Labor opportunities, Merchandising Efficiencies
Operations / Merchandising
Follow set planogram/color sizeInventory bi-monthlyExecution/Training
Touch Labor reduction and reallocation.Replenishment Execution.Impact to stockroom inventory
Sales Value of color/size full representationWrite tags for re-ticketing(reticketing impact)Merchandise to floor not stockroom
Replenishment Sales- back to frontFrozen release impactImpact - item update to salesCustomer impact
Shortage Control Item file updatesSKU file (Planogram) updatesEAS v RFIDAudit program
In-store DistortionInventory Results/efficienciesItem Updates Loss Prevention (case productivity)
MST Primary - Network Integration (on-net)Secondary - POS Integration , PI integration
Sustainability
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Driving the business case @ a larger scale
• Replenishment sales – promo/non-promo• Release of reorder point allowing for replenishment• One and two rule- item locator-increase the % of filled orders• AUR increase • MKD decrease the % of goods “aging” in the stockroom• Gross Margin increase• Touch labor reduction or reallocation• Liquidation compliances increase-all existing mdse found• Shortage reduction• Improved Inventory management performance • RFID provides continuity of operational effectiveness beyond promotional
periodTo prove viability we should show:1. Improved store performance versus ty/ly, plan,
other stores with like business.
2. Grow incremental sales?
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What we are Learning
Granularity into the business makes a difference, we can work smarter not harder and improve service and sales.
Removing distortion resets the foundation our tools are based on bringing back confidence to the users.
We can work within our current systems not around them as they were intended alleviating more problems.
Taking an inventory once a year is not enough, but it doesn’t need be once a week either.
We have opportunity in replenishment on many levels.
RFID implementation is flexible and should be adjusted as the business need is determined. Know your model, know the ROI, leveraging the technology to fit your business needs.
We run our business well, we can run it well everyday!
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MACY*S Furniture & Bedding
•2008 Annual Sales – 1 Billion +
• Units Received – 2.1 Million
• DC Network – 14 Parent / 6 Hubs
• Supports 432 Macy’s stores / 284 Macy’s Furniture Only Stores
• Supports 26 Bloomingdale’s stores (6 Bedding Only; 2 Furniture Only)
• Supports all Macy’s Inc internet selling
• 800,000 Customer Deliveries
• 5 Trading partners represent 50% of Furniture Purchases
• 20 Trading Partners represent 75% of Furniture Purchases
• Technology Focus - Barcode RF Scanning / EDI
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Technology Focus - Macy’s Logistics Furniture & Bedding
Why RFID?
•Used in enterprise supply chain management with various companies to improve the efficiency of inventory tracking and management. •Is superior to barcode identification that we use today in that it does not rely on the line-of-sight reading that bar code scanning requires to work.•lays the foundation for future process improvements
RFID is an advanced technology … it works!
Why in Furniture & Bedding Warehouse Facilities?
•High density product, High Average Unit Retail •Consistent Operational standards and processes •Will gain enhanced inventory visibility with improved accuracyand reduction in ‘not in location” units resulting in increased sales opportunities. •Limited vendor / supplier base to collaborate with on upstream supply chain solutions
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Objectives• Validate that the use of RFID tags and readers will enable ‘Macy’s Logistics’
Furniture and Bedding Operations to significantly reduce: – time and resource required for Cycle Counting – “not in location” stock issues
Assumptions • To develop ability to apply pre-encoded / printed RFID tags and/or print tags in-
house on demand and scan to cross reference the tag to internal locator cards • Initial deploy – integration with RFID and Cycle Count programs - replacing the
piece by piece barcode scan in the bins.• Develop an integrated solution into Macy’s systems to enable future
partnerships with vendors, who would apply an RFID tag using the UCC128 number as the ID.
Macy’s Logistics RFID Technology in Furniture & Bedding RFID Objectives and Assumptions- Initial Phase Cycle Counting
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Key Metrics•Improved inventory accuracy and reduced cycle count time
Benefits•Reduction in cycle count time and labor with RFID-enabled readers •Enhanced inventory visibility with improved tracking and reduction in “Not in Location pieces”, resulting in increased availability of product for sale. •Vendor provided RFID tags would expedite new receipts and put away of the merchandise and eventually eliminate tag printing in the facilities.
Scope• Implement RFID for Cycle Count in the 8 parent Furniture & Bedding warehouses.
Macy’s Logistics RFID Technology in Furniture & Bedding Metrics and Benefits – Initial Phase Cycle Counting
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•Use pre-encoded / printed RFID tags and apply to merchandise in receiving, inbound returns, and transfers (1 tag per unit)• Process: Scan UCC 128, print internal locator card, apply the RFID tag, and “associate” the RFID tag to the locator tag via barcode scanning.
•Next Steps: Select Pilot Vendor (s) would begin affixing RFID labels to cartons with the UCC128 number as the RFID number
Cycle Counting via RFID Process Overview:Cross Reference RFID tags with Internal Locator Tags
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Cycle Counting via RFID Process Overview :Tag Inlays – Bin Labeling and Merchandise Labeling
AD-223 Inlay - into a 4x1" tag with high grade adhesive. The Inlay, embedded into the label, is encoded with a (7) digit location number and a visual printed (7) digit location number. The tag/inlay is placed on a 4x1 foam backing placed onto metal racking.
The AD-224 Inlay, into a 4x2" tag with high grade adhesive. The Inlay, embedded into the label, is encoded with a (20) digit, sequential serial number with a visual printed (20) digit sequential serial number and bar code. The tag/inlay is placed on product.
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• Motorola RD5000 RFID readers are mounted on one side of the lifts used for cycle counting.
•A second antenna is attached to provide two individual read zones:
•One for Product tags•One for Bin tags
Cycle Counting via RFID Process Overview :Collecting Data via RFID
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•Lifts follow a prescribed path on each side of the test aisles following each shelf, then up a level and back, etc.
•Product and bin tags would be read automatically.
•Software will use read time stamps and other values to determine current bin and product within the bin.
Cycle Counting via RFID Process Overview :Collecting Data via RFID
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SummaryBarcode Cycle Count RFID
Data Collection Cycle Counter hand scans each unit RFID readers mounted to forklifts
Reconciliation Unit variances reported and researched No Change to current process
Controls Perpetual Inventory Report Card No Change to current process
Perpetual Inventory Health ReportCycle Count Discrepancy ReportCycle Count Error Resolution Weekly Audits
RFID will replace the manual scanning of units during cycle counts Data will be posted to cycle count system and variances will be reported in same
manner as current process and variance reconciliation will remain as it does today
Benefits of RFID Cycle Count Payroll savings/productivity improvements Reduced cycle count time
Increase number of counts each quarter Additional time to reconcile/resolve NILs Improve accuracy of counts
Establishes framework for future use of RFID functionality
First use of this technology integrated to Macy’s systems!
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RFID Readers(Fixed, Mobile)
RFID Printer
DC Server
Mainframe
ProductTags
BinLabels
RackingWood/Metal
Phy
sica
l Lay
erH
ard
war
e L
aye
rM
iddl
eware
Lay
erB
ack
end
Lega
cy S
yste
ms
Hardware OSWinCE / Win Mobile
BizTalk RFID Mobile Application
Device Service Provider
.Net
Fra
mew
ork
DataStore
BizTalk RFID - Event Processing
BizTalk RFID - Device Management
BizTalk Business Rules OrchestrationSQL
Server
WebServices
CICS Service Layer
DB2Store
COBOLServices
BatchServices
Macy’s RFID Architecture
Host systemcommunicates withBizTalk to control
devices and collectdata
BizTalk / BizTalk RFIDcontrol devices, collect data,
and orchestrate businessrules.
Devices capture data andforward to BizTalk RFID forcollection and integration to
back-end systems.
Physical layerprovides data input to
RFID readers.
RFID Technology – High Level Architecture
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Lessons Learned: Initial Phase
•Involve key internal stake holders to develop the business case
•Keep it simple with a narrow scope for the first phase
•Partnership with key technology vendors is key!
•Detailed Site analysis during planning and development prior to ‘smoke’ testing and ‘go live’
•Environment specific hardware installation
•Technical testing with readers / tags - ensure read rates outside of the application
•Reader and Inlay matching process – allow time for tuning
•Begin testing back end processes as soon as possible
•RFID technology works!
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RFID Technology - Next Steps … 2010 / 2011
Phase II: RFID Data Capture – Receiving •Interface with Receiving; Eliminate locator tag printing
•Enable scan of UCC128 label instead of locator tag
•Select Pilot Vendor(s) to begin affixing RFID labels to cartons (UCC128)
Phase III: Delivery Binning via RFID•Capture RFID as merchandise is moved into the delivery bin and update
record to binned•Provide visibility / manifesting tracking for line haul – movement between
hubs and stores
Phase IV: “Hands Free” Putaway and Picking•Utilizing the forklift mounted readers eliminate hand held scanning during
putaway and pick keeping the associates hands free to handle the merchandise.
Other Areas: Furniture & Bedding Departments within Store / Gallery Locations