Marks & Spencer (M&S) (www.marksandspencer.com) is one of the United Kingdoms leading retailers, selling high-quality clothing, home products, and innovative food items. Traditionally, M&S relied on optical scanners and bar codes to track its inventory. However, the process was too slow and error prone. As a result, M&S decided to implement RFID technology. The company has since become a pioneer in RFID use.

track deliveries of fresh food between its suppliers and distribution centers and to determine how well the RFID technology functioned. M&S suppliers place information on the tags indicating the content and expiration dates of the items on the trays. RFID readers scan the tags upon entry to the receiving depots, and they are then used to ensure that fresh merchandise is shipped rapidly to M&S stores. Empty trays are returned to suppliers to be washed, after which they are refi lled and recoded. The RFID deployment worked so well that M&S now tracks approximately 10 million RFID-tagged food trays, as well as trays containing fresh flowers and plants, as they move along its supply chain.

Based on the success of its initial efforts, in 2004 M&S deployed RFID to tag and track 10,000 items of mens suits, shirts, and ties. This effort increased inventory accuracy so impressively that M&S expanded the deployment to additional types of clothing, such as mens formal and casual trousers, jackets, and shirts, as well as ladies knitwear, coats, formal and casual trousers, and suits.

M&S identifi ed the clothing items with RFID tags from Avery Dennison Corporation, which had supplied M&S with 1 billion tags as of early 2015. Avery Dennison is a global manufacturer of pressure-sensitive adhesive materials, apparel labels and tags, and RFID tags.

Initially, M&S used fi xed RFID readers that were built into carts equipped with lead acid batteries as a power source. In 2006 and 2007, the company replaced these readers with two-piece readers that consisted of a reader linked to a handheld scanner via Bluetooth. The readers are stored in the back offi ce and are deployed on the sales fl oor either in the early morning or in the evening.

Sales assistants select a store department from a drop-down menu on the handheld device and then read each item located on the sales fl oor and within the stores stockroom. The RFID system enables M&S to accurately read merchandise at a rate of up to 15,000 items per hour. It also removes duplicate reads. After the scanning is completed, the mobile device transmits the data to a central RFID database via the stores wireless network. The company then uses this information to automatically update the stores database.

The item-level tagging of clothing provided M&S with a number of benefi ts. Perhaps most importantly, the retailer knows the exact amount of each particular item at each of its stores. Thanks to the new technology, M&S can ensure that the correct products are shipped to the right stores at the proper time. Inventory turnover has increased by 50 percent, and out-of-stock products have been reduced by 40 percent.

Essentially, RFID creates a single version of the truth for the inventory levels in a particular store. These inventory levels are then used by all other M&S systems to calculate the correct allocation of stock for each store. Missing items in each store are replenished by the distribution system as part of the normal daily store deliveries. Also, the companys ability to keep the right number of clothes for each clothing size in its stores has improved customer satisfaction

Another benefi t of the RFID system is the time savings generated by the reduced number of calls that individual stores make to the head offi ce or distribution center to order missing stock. The stores are confi dent that if stock is available, it will be sent to them. This process has enabled store teams to focus on customer service rather than on stock inventories and adjustments.

In 2012, M&S began deploying Generation 2 RFID technology on home goods such as bedding, accessories, and kitchenware. This technology enables users to manage multiple RFID readers and multiple RFID applications in close proximity. That is, it can manage interference between RFID readers. Generation 2 technology is also faster and more accurate than Generation 1.

M&S will use some tags for various apparel goods, others for beauty products, and still others for items containing metal. M&S is also working with Avery Dennison to develop a tag for liquid products. Metals and thick liquids can interfere with RFID signals, so they typically require more powerful RFID tags.

RFID also enables M&S offer its customers more complete product descriptions, including size, color, style, manufacturer, destination, and many other features. Further, it provides M&S with greater visibility into its supply chain in addition to more accurate item-level inventory. The retailer has reduced the costs associated with taking inventory annually, with excessive markdowns, and with theft and fraud. RFID also offers M&S the opportunity to implement an entire range of customer information services that help to seamlessly integrate the multiple channels through which customers interact with the retailer.

In 2014, M&S achieved a landmark when it became the fi rst retailer to have 100 percent of its merchandise tagged with RFID technology.

Questions

1. Describe how RFID technology can generate increased customer satisfaction.

2. What are potential disadvantages to implementing RFID technology in a retailer such as Marks & Spencer?

3. Why did Marks & Spencer initially deploy RFID technology on a limited basis? In your opinion, was this the correct strategy? Why or why not? Be specifi c.