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American Apparel Case Study
American Apparel Case Study
At that point, the company turned to 1. The first step in the process is to tag
Microsoft® BizTalk® Server RFID and the every piece of merchandise with an
Clarity ARS Advanced Retail System from RFID tag. This is done at the com-
Xterprise, a Microsoft Gold Certified pany’s California factory.
Partner. ―We were interested in the BizTalk 2. The tagged merchandise is read by the
RFID platform because it offered low total scanners at the in-store receiving sta-
cost of ownership and the ability to tion when it arrives from the factory, a
integrate both into our current systems distribution center, or another store.
and into systems we are likely to adopt in 3. A ―fill station‖ in the store’s backroom
the future. It also gave us maximum serves a dual function. First, its screen
flexibility in our choice of hardware— constantly informs store personnel
such as RFID handheld and stationary what merchandise needs to be
scanners—to use with the solution,‖ says brought up to the sales floor (based
Kris Doane, Technical Lead, American on readings from the point-of-sale
Apparel. ―We chose Xterprise and the scanner; see step 5). Second, em-
Clarity ARS solution because, in our ployees use the station to inform the
research, Xterprise kept coming up as the system what merchandise they are in
best BizTalk RFID provider.‖ fact bringing to the sales floor, by
holding the merchandise near the fill
The planned deployment of BizTalk Server station’s reader.
RFID and Clarity ARS will stretch from 4. A ―validation point‖ between the
California to Manhattan, from the backroom and the retail floor provides
company’s manufacturing facility to all 31 a checkpoint to ensure that the proper
of its retail locations in North America. The merchandise is being brought to the
The Clarity ARS system, based
solution consists of four RFID reading floor. If it’s not, employees have the
on BizTalk Server RFID, provides
stations at each of the stores using the opportunity to make corrections
an end-to-end solution that
Xterprise Clarity ARS application, along without having first to bring merchan-
extends from the moment
with hardware including Motorola dise all the way to its position on the
merchandise is tagged to the
handheld RFID scanners and Motorola sales floor.
analysis of store sales.
―The business 5. The point-of-sale RFID reader likewise increase in net income of $126,900 per
serves a dual function. It not only ties store. Factoring in its investment in the
intelligence portion of to the retail ERP system and imple- Xterprise and Microsoft solution, American
ments the transaction, but also sends Apparel expects each store to achieve
the Xterprise solution to the fill station information about payback in an average of just 4.5 months.
makes it possible for us replacement merchandise to be
brought to the retail floor. The system also helps reduce costs because
to check, in real time, on conducting cycle counts and replenishing
The servers hosting the solution in each of merchandise are far more cost-effective
the heartbeat of each the stores communicate with a central than before. Cycle counts that formerly
store using the system.‖ server at American Apparel headquarters, took 20 to 30 hours twice a week are now
where data on store sales and other opera- accomplished in about 3 hours—a time
Zander Livingston, Director of RFID, tional data is fed into a business intelli- savings of 90 percent. The time spent on
American Apparel gence application from Xterprise. Managers handling inventory and thus the associated
and executives use the dashboard to costs are down by 35 percent.
receive overview as well as detailed infor-
mation about how long it takes to get That means that stockroom personnel who
items onto the sales floor, what merchan- were spending half their time on cycle
dise is out of stock at a given store, top counts now can spend 75 percent of their
sellers, incoming shipments, how long it time on more value-added functions, such
takes to scan merchandise, and more. as replenishment and customer service.
―The business intelligence portion of the Meanwhile, sales are up because replenish-
Xterprise solution makes it possible for ment takes place far more quickly—needed
us to check, in real time, on the heartbeat merchandise is generally replaced within a
of each store using the system,‖ says minute of being sold—so American Apparel
Livingston. doesn’t lose sales because customers can’t
find the merchandise they want. Moreover,
Benefits employees who spend less time on inven-
The Xterprise solution, based on Microsoft tory replenishment have more time to
BizTalk Server RFID, cuts costs, boosts sales, spend on customer service, including cross-
serves as a foundation for an extensible selling and selling more valuable merchan-
solution, and provides managers with real- dise, further driving up revenues.
time performance data that they can act on
in real time. ―If I’m at an American Apparel store and I’m
looking for a specific item, it’s going to be
Store Sales Up 14 Percent on the sales floor,‖ says Livingston. ―At the
―Doing more with less‖ is the maxim of same time we’re selling more, we have
business, especially during tough economic more satisfied customers.
times. The BizTalk Server RFID solution has
turned that philosophy into reality for ―RFID is the future of retail because it’s a
American Apparel, which now really is better way of counting inventory, period,‖
doing more with less—increasing profits continues Livingston. ―Working with a 65
while reducing the money that it spends to percent or 75 percent inventory accuracy is
generate those profits. The company a thing of the past. Every retailer can make
estimates that sales in the RFID-equipped more money by making replenishment
stores are up 14 percent, for an average
―There’s an almost more efficient, and that’s only the start of intelligence benefits that are now possible
what RFID does for us.‖ with the solution.
limitless range of ways
System Supports Extensible Solutions ―The reporting tools we use with the
we can take advantage For example, Livingston and his colleagues Xterprise solution give us visibility into the
of RFID in retail.‖ are now looking at extending the BizTalk health of the store and are useful in dif-
Server RFID–based system to achieve two ferent ways to the in-store manager, the
Zander Livingston, Director of RFID, additional goals: reduce shrinkage and district manager, and corporate executives,‖
American Apparel increase in-store sales. says Livingston. ―Store operational intel-
ligence gives them a true sense of how a
As a result of deploying the solution, store or a set of stores is performing in real
American Apparel discovered that its time. And that provides a level of account-
shrinkage rate was 20 percent—twice the ability we never had before.‖
rate it had estimated. Having an accurate
view of shrinkage is the first step in For example, Livingston points to the ability
reducing that shrinkage. The company to determine manager performance very
could add RFID scanners specifically to quickly. ―We can retrain managers if
monitor and address shrinkage at the needed,‖ he says. ―In extreme cases, we can
entrance and in the fitting room—key sites make a change in store management.
for shrinkage problems. Either way, we can take action much faster
than before because we can spot problems
RFID scanners in the fitting room could also much faster than before.‖
boost customer service and sales. Custom-
ers could request additional merchandise—
say, a sweater in another color or size—
while they’re in the fitting room trying on
the first sweater. Store personnel, now
freed from much of their inventory-
processing chores, could bring the addi-
tional merchandise to them without
requiring the customers to first leave the
fitting room to request it. All this makes it
more likely that customers will leave having
made a purchase.
For more information about American For more information about Microsoft
Apparel products and services, visit the solutions for the retail industry, go to:
Web site at: www.microsoft.com/resources/retail
www.americanapparel.com