Uwe Hennig
Director-RFID Market Development Avery Dennison Smartrac
RFID technology can bring inventory accuracy up to 99%
Headquartered in Glendale, California, Avery Dennison Corporation is a global materials science company specialising in the design and manufacture of a wide variety of labelling and functional materials. In a conversation with Fibre2Fashion, Avery Dennison Smartrac’s Director for RFID Market Development Uwe Hennig discusses the design and implementation of RFID and Avery Dennison Smartrac systems for real time supply chain management, in-store analytics and omni-channel retail.
What were the major highlights in terms of business for Avery Dennison for the current year?
2021 brought different challenges with it. We were all happy when the COVID-19 situation became better, lockdowns disappeared, and consumers were able to go back into physical stores. However, e-commerce continued to grow, “real” omnichannel, visibility across the channels became critical for apparel retail success. Then the supply chain challenge started with shortages on some materials as well as on labour and capacities. Our teams have done a fantastic job to support our customers around the globe with constant deliveries of what we call ‘digital triggers’ as well as with a lot of new solutions and innovation in apparel. At this moment, we cannot share detailed financial results, but speaking to many of our customers I got outstanding feedback on our performance. We saw continued momentum as more and more businesses understand that getting visibility into their supply chain drives customer experience, costs down and circularity. A major highlight for our business was the adoption of atma.io, our digital product cloud platform that enables brands to connect each single item and all events around this item to the cloud. This means every participant along the supply chain can easily have access to all information that is needed to better steer its business — from source/manufacturing via retail to the consumer and beyond. This can enable circularity initiatives such as re-commerce and many more use cases, including authentication and traceability.
What is your strategy to counter competition?
A big strength of Avery Dennison is our constant investments into innovation. Given our long history in RFID applications, our global teams’ relationship to our customers about their todays and tomorrow’s needs enables us to be very often ‘first-to-market’ with highly innovative solutions. Our customers and our people are playing a big role here. Our strategy is to remain focused on our customers’ needs and to work closely with them to anticipate and respond to the ever-changing retail landscape. We know that transparency, trust, circularity, safety, sustainability, and decarbonisation are among some of the most important topics facing business today, so we will continue to invest in solutions that help our customers meet these needs and growing consumer expectations.
Which are your major international markets? Are you planning to expand to any other regions in the near future?
We currently operate in more than 50 countries worldwide, but our major markets include North America, Asia, Europe and LATAM (Latin America).
What would the recent acquisition of Vestcom mean for you?
Vestcom’s relationships and solutions, in combination with our own, will complement our strategy to accelerate Intelligent Label adoption beyond apparel. We are in an omnichannel era, where a rapidly changing landscape and evolving consumer behaviour have given way to a far more complex shopper journey. Vestcom uses data management capabilities to synthesise and streamline store-level data and deliver item-specific, price-integrated messaging at the shopper’s point of decision allowing retailers to deliver a better shopper experience and fuelling profitable growth.
How many different products do you have in labelling and functional materials? Any new products in the offering?
We design, develop and manufacture a wide variety of labelling and functional materials and end-to-end solutions based on this. Our products are used in nearly every major industry, including pressure-sensitive materials for labels and graphic applications; tapes and other bonding solutions for industrial, medical and retail applications; tags, labels and embellishments for apparel; and radio-frequency identification (RFID) solutions serving apparel retail and other markets.
The continued growth of e-commerce means there is a pressing need for sustainable packaging across sectors. Consumers expect retailers to offer sustainable packaging options – 73 per cent of people want online retailers to use recyclable packaging and 74 per cent expect them to minimise their use of packaging. In response, brands and retailers are reducing the footprint of their packaging by enhancing its recyclability and increasing the use of sustainable materials. But what’s the use of a compostable bag if it has a label which interferes with its composting? The primary packaging holds true value, but if the label hinders recycling, you waste a lot of packaging, which is why Avery Dennison has created a portfolio of compostable labels to ensure that all elements of the package can be composted. We have also created a recycled direct thermal paper, a sustainable label which contains post-consumer recycled waste, ensuring the label on an e-commerce shipment is as sustainable as the packaging.
We will continue to innovate in this space and think about products in a new way, beyond the point of use. We’re leveraging our legacy of innovation in labels and packaging to design sustainable solutions that are better for our planet.
What role is technology playing in keeping the labelling business relevant during current times?
Technology is an integral part of what we do across the entire business. Within the Avery Dennison Smartrac division we have a wide range of intelligent labels and ID technologies. We are seeing the adoption of digital identifiers on each single item as critical for the whole retail industry and COVID-19 has even accelerated this. So far, our customers have involved us in more than 100 projects with billions of tags utilised.
In the past, these technologies were viewed as a useful tool for tracking items, pallets and cases in the supply chain and in stores, but are now being utilised in innovative ways to deliver on a number of different business cases. For example, one major sports retailer is piloting using digital ID technology and atma.io to trace the carbon footprint of its raw materials. We are also working with a major lingerie retailer, Etam, who is deploying digital ID technology from Avery Dennison Smartrac, including RFID and QR coded hangtags to digitise its whole value chain and processes, along with vendor shipments, store inventory accuracy, self-check-outs, returns or reverse logistics, e-commerce, and the retailer’s Try@home initiative.
We’ve found that RFID technology can bring inventory accuracy up to 99 per cent compared to traditional store inventory accuracy, which is often below 70 per cent. In the apparel industry alone, RFID has proven to reduce inventories by 2-13 per cent while at the same time providing a sales lift of 1.5-5.5 per cent. Moreover, according to a recent Accenture retail report, 87 per cent of the respondents said focusing on RFID enabled them to deliver better omnichannel experiences during the pandemic.
How has the pandemic made an impact on Avery Dennison’s sustainability strategy?
Sustainability is central to our purpose as a values-driven company. We believe it is also central to our long-term financial success. The pandemic has only amplified our ambitions and we want to continue to raise the bar on our sustainability goals. Our emissions reduction targets have recently been approved by the Science Based Targets initiative (SBTi) as consistent with levels required to meet the goals of the Paris Agreement. This means that our targets covering greenhouse gas emissions from scopes 1 and 2 operations are in line with reductions required to keep warming to no more than 1.5°C. We have taken this a step further by setting a target for the emissions from our value chain (scope 3), which also meets the SBTi’s criteria for ambitious value chain goals.
We will continue to deliver against our 2030 targets, which fall under three broad sustainability goals: deliver innovations that advance the circular economy; reduce the environmental impact in our operations and supply chain; and make a positive social impact by improving the livelihoods of people and communities.
Which brands and retailers are you currently associated with?
Avery Dennison has a long history in retail, especially in apparel. Our global footprint in manufacturing as well as in services allows us to work with many different global brands and retailers around the world. Many people know us from large deployments in the classical Western markets but let me share a recent project we’re incredibly proud of in Australia in a smaller size apparel brand, KOOKAÏ. KOOKAÏ is using an RFID solution from us starting with tagging all garments at source with an integrated RFID Printed Fabric Label (PFL). Our partner Sensormatic has implemented their TrueVue Cloud platform and with the digital trigger at each garment they are able to track the inventory from production to quality control and then to finished goods into retail. This has delivered dramatic productivity improvements. At the Fiji factory, KOOKAÏ data indicates that 30,000 items can be counted in just 30 minutes – a process which used to take a few days in the past. KOOKAÏ is also experiencing benefits in store by reducing its out-of-stocks and gaining visibility into inventory levels so that re-stocks can be increased ahead of time for fast selling items.
How does Avery Dennison work with its brands to work towards the collective sustainability goals?
By delivering innovations and technological solutions that can help brands to trace and track their environmental footprint, enable re-commerce and circularity, and avoid waste and over-production. For example, as re-commerce and in-store recycling gains in popularity, digital labels can offer a way for consumers to quickly learn how to dispose of their goods once they have finished with them. Levi’s partnered with Hong Kong upcycling brand The R Collective to create a fully traceable denim collection. Each item has an Avery Dennison-enabled digital label with a QR code that informs consumers how to care for their garment and how to recycle at its end of life.
What would be your focus areas for 2022?
One of our focus areas for 2022 will be in helping our brands and customers move toward regenerative retail systems. This means recovering and recycling materials at a faster rate than we are using them and creating greener last-mile solutions for packaging, shipping and returns as e-commerce grows. It means digitising the supply chain so retailers can have a better understanding of their inefficiencies and waste to create more circular business models. And it means not only promising not to do harm to the planet, but also proactively contributing to make the natural world a better place for all its inhabitants.
Published on: 17/01/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
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