Benetton in Major RFID Initiative

Clothier to tag, track millions of clothing items from production to point-of-sale

San Jose, CA — March 12, 2003 — Benetton will use radio frequency identification (RFID) technology to tag and track millions of items of clothing from production to point of sale as the clothier embarks on the fashion industry's most ambitious item-level tagging implementation of RFID to date.

Solution providers Royal Philips Electronics, LAB ID and Psion Teklogix will participate in the initiative, under which clothes produced for Benetton's core brand Sisley are being fitted with RFID-enabled labels based on Philips' I.CODE semiconductor technology. These labels are part of a system by LAB ID, an Italian system integrator, and are being used by Benetton to track its garments throughout the company's entire supply chain.

As part of this initiative, all garment box shipments from United Colours of Benetton are also to be labeled with I.CODE-based smart labels. These are tracked using I.CODE-compatible readers and wireless LAN netpads developed and manufactured by LAB ID and Psion Teklogix, respectively.

"Benetton has thousands of retail outlets worldwide and therefore wanted to put in place a future-proof technology to bring clear cost benefits to the business while seamlessly enabling garments to be tracked throughout their lifetime," said Terry Phipps, electronic data processing (EDP) director at the Benetton Group. "Working with Philips and LAB ID has allowed us to create an integrated system that encompasses our entire business from the initial manufacturing stages right through to assisting our retail staffing with in-store tracking, ordering and inventory control."

Scott McGregor, CEO at Philips Semiconductors, said his company anticipates shipping 15 million I.CODE "smart tags" to Benetton for this project in 2003, making it the single biggest roll-out of RFID technology in the fashion industry to date. "Philips and LAB ID's work for Benetton proves to the supply chain management community that RFID technology is now being used in large volumes for item tracking and is beginning to reach the end consumer," McGregor added.

Philips' I.CODE tags, which are embedded in labels, are incorporated into garments during the manufacturing process. Philips said the labels are imperceptible to the wearer and remain in individual items of clothing throughout their lifetime. The labels, which can be scanned from a range of up to about three feet, store information relating to the style, size, color and intended destination of items, automating key aspects of Benetton's supply chain from manufacturing and distribution through to inventory control across the company's 5,000 stores worldwide.

The box labels are used to track box shipments throughout Benetton's logistics process enabling improved identification and item to box correlation, while optimizing the timing of shipments and inventory control and minimizing distribution errors.

Smart label advocates say the labels overcome the limitations of traditional barcode technology, which requires manual scanning. For the fashion industry this could be particularly important in terms of authentication, accurate inventory control and checking multiple items in and out of the various stages of the supply chain.

Philips said its I.CODE ICs enable a highly automated scanning process that does not require line of sight but allows for scanning multiple items at once. This means that a box containing a variety of garments in different styles, colors and sizes, which traditionally would have been unpacked and checked by hand, can be scanned in one go and the information uploaded directly into the company's main computer system.

In store, Benetton will use RFID technology in smart shelves and in dressing rooms to highlight where individual garments are located. This technology will also be employed at the point of sale, automatically registering sales and returns and feeding information back into the company's ordering system to ensure that stock levels are replenished in the most efficient way possible.

Various consumer products goods companies and retailers have initiated pilot projects to demonstrate the return on investment in RFID technology for tracking inventory through the CPG and retail supply chains. These early adopters include such companies as Procter & Gamble, Unilever, J. Sainsbury, Tesco and Gillette, which in January announced that it would buy half-a-billion RFID tags for use in its supply chain and in retail stores over the next several years.

For more information on RFID-based tracking solutions for the supply chain, see "Needle in a Supply Chain Haystack," the Net Best Thing column in the January 2002 issue of iSource Business.