Read the case and answer the questions that follow. Studying this case will help you better understand how concepts relating to controlling through RFID technology can be applied in an organization such as Serge Blanco.

The world of consumer products retailing is definitely changing. With ever more purchases being made online and an increasing number of purchases being made through mobile devices, how we shop today is very different from how we shopped just a few years ago. But not only are our shopping methods changing; retailers are also altering how the supply of goods gets from manufacturer to store shelves. Most dramatically is the rise in use of radio-frequency identification (RFID).

An RFID is any device that uses radio frequencies to provide data. Typically very small—about the size of a pinhead—an RFID differs from a bar code in that it doesn’t have to be physically lined up with the electronic reader. The data emitted is read by a device that may be several feet away. Examples include toll road RFIDs for cars, tracking devices on products, and implants in pets and livestock. As a form of control, RFIDs permit companies to keep a more precise track of inventory. For example, companies that institute RFID technology have seen accuracy rates for inventory counts well above 95 percent (Napolitano, 2012). A number of retailers, such as Wal-Mart, J. C. Penney, Banana Republic, and Macy’s, have started using RFIDs (Kay, 2010).

One manufacturing and retailing firm that has jumped head-on into RFID technology is Serge Blanco. The French apparel manufacturer, named in 1992 after an international rugby star, originally focused on luxury men’s wear but now also makes clothes for infants and women (Speer, 2011). The company has grown tremendously since its start-up days, and today, its stores are located throughout Europe, the Middle East, Africa, and Russia. Additionally, they move more than 2 million items through their supply chain each year (Albright, 2010). With such a high volume, they decided to implement RFID technology in 100 percent of their products, even if some of the retailers they supply are not currently using RFID readers.

The reason for the shift was that Serge Blanco discovered that there were times when discrepancies existed between what was on the sales floor and what was in their computer system. In addition, bottlenecks emerged in the manufacturing and distribution processes, thereby costing the company money (Speer, 2011). So, the company made the switch to RFID technology, and things have improved greatly. “Now 100% of our products are identified with a unique ID number,” said Mathieu Pradier, vice president of operations for Serge Blanco. “RFID brings us a lot of new item-level information about our merchandise. For example, when we read the RFID tags at receiving, we have exact visibility into the incoming stock, we can identify any shipping mistakes by the supplier, and we can measure the productivity level of our staff” (Albright, 2010).

In addition to improving Serge Blanco’s inventory control, the company has enhanced operations through more efficient staffing. According to Pradier, “Previously, in a busy day of receiving goods, with 10 men we were able to receive 25,000 items, and with the new system we needed only two people and received 35,000 items” (Speer, 2011). In addition, the RFID technology has helped improve operations at the store level by providing important retail data that would not have been gathered prior to implementing the system. “In the stores,” Pradier said, “we expect it will give us real-time information about our inventory, sales, and shrink. Fitting rooms have also been equipped with RFID stations, enabling our staff to accurately access the conversion rates of products that customers try on versus the ones they actually purchase” (Speer, 2011).

RFID technology is often viewed as a more effective means of control than bar codes for several reasons. First, literally hundreds of RFID chips can be read at once, whereas typically, only one bar code can be read at a time. Second, the chip can be placed anywhere in or on an object; it doesn’t have to be visible. And finally, the cost of RFID chips and the software associated with them has dropped dramatically as improvements in the technology have advanced. For all kinds of companies, the future of RFID is wide open. Some applications include obvious ones such as preventing theft, but the technology can also be used for safeguarding pharmaceuticals to reduce counterfeiting, instructing robots in manufacturing plants, and helping magazine publishers understand how long an issue is read (“RFID for What?”).

For Serge Blanco, the technology has greatly improved its business; sales are now topping $40 million per year. As Pradier said, “Our objective was to really optimize the distribution channel, and this has been achieved. We have reduced entry and exit times by almost tenfold, which means that we are now ready for business growth of 40 percent to 50 percent. . . . RFID is not a passing fashion. It’s a real solution” (Speer, 2011).56