**1. Introduction**

136 Emerging Informatics – Innovative Concepts and Applications

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The main applications in the first wave of RFID have been in the supply chain mainly for improving the distribution of physical assets in the systems (Hardgrave and Miller, 2008; Sarma, 2008). The burgeoning use of RFID technology extends its applications to both upstream (supplier management) and downstream (retail and service) of manufacturing supply chains. RFID tags, also called "smart labels", together with other pervasive computing technologies realizes lean thinking in real-life and creates a smarter operating environment through adding *value* not only to customers with user-friendly shopping experience but also to merchants with agile and responsive store operations. Harrison and Hoek (2008), define *value* as relative advantage in general which is specified as *perceived benefit* obtained from the products or services in terms of the final customer, while as *economic profitability* in terms of the management, and the concept can be extended to other supply chain stakeholders as *value stream* which represents the *value-adding processes* beginning as raw materials from suppliers that are progressively converted into finished product bought by end-customers, such as aluminum is converted into one of the constituents of a can of coke. Being one of the management best practices, lean thinking preaches simplification and elimination of wasteful tasks, which is applicable to overly complex and nonintegrated processes that are inefficient and provide little added value. The firms following these practices have seen such dramatic improvement in performance that lean has spread across entire supply chains leading users to map their business processes to drive out *wastes* in operations, and becoming a lean enterprise has the potential to improve operations, reduce costs and deliver services with shorter lead times (King, 2009).

Ohno (1988) identified seven kinds of manufacturing *waste* that need to be eliminated: *overproduction*; *transportation*; *inventory*; *motion*; *defects*; *over-processing*; and *waiting*. These seven wastes represent the most commonly wasted resources and associated wasteful manufacturing activities which do not add value or are unproductive, in which the concept can be applied in non-manufacturing. Womack and Jones (2003) defined the eighth waste, i.e. delivering goods or services *not meeting customer need*, which represents a key attribute of a customer-centric lean enterprise. Lean thinking is proved to be an effective management system for manufacturing to improve overall efficiency and to enhance the work environment, in which the "getting more with less" concept can be applied in any type of business upon value creation (Aikens, 2011; Russell and Taylor, 2009). By offering the benefits of reducing complexity, improving efficiency, speeding delivery, and

RFID, an Emerging Wireless Technology for Sustainable Customer Centric Operations 139

communication technologies (ICT), e.g. RFID technology, add great values to retail sales and operations processes through enabling consumers to find information and alternative products and services more easily online leading to a greener and less wasteful consumption practice by

A RFID system essentially consists of three main components: RFID tag, RFID reader, and backend information system with middleware sitting between reader and backend system for carrying out data capturing, screening and routing (Glover and Bhatt, 2006). An RFID tag is a small object that can be attached to or incorporated into physical asset such as book, clothing, or person. When an RFID tag passes through the electromagnetic zone, it detects the reader's activation signal. The reader decodes the data encoded in the tag's integrated circuit (silicon chip) and the data is passed to the host computer for further processing (Finkenzeller, 2000; Hawrylak *et al.*, 2008; Shepard, 2005). RFID tags generally fall into two categories: passive, and active. Passive tags receive the most publicity and are currently being used by large retailers such as Wal-Mart and Metro to track inventory, and by the U.S. Department of Defense to track supplies (Hawrylak *et al.*, 2008). Unlike active tags, passive tags do not contain onboard power source and derive the power for operation from RFID interrogation signal in the course of communication (Finkenzeller, 2000; Hawrylak *et al.*,

Passive RFID tags communicate using one of two methods: near-field and far-field (Hawrylak *et al.*, 2008). Far-field RFID tags support longer communication range than nearfield tags, but they are comparatively more sensitive to tag orientation. The type of tags required for a RFID system would depend on their business applications, site conditions and system design requirements. In case of supply chain and retail applications, far-field RFID systems are used extensively. According to Hawrylak *et al.* (2008), the sensitivity of the system to RFID tag orientation is critical in many applications. The communication method used by far-field RFID system easily causes false detection and hence the design of middleware and upper layer application software becomes critical in order to effectively

Tracking the movements of product items in operations can be determined by three variables in a three-dimensional space, in which the first two are related to the "time" and "space" of item movement, while the third dimension concerns item identification by using RFID tags that carry Electronic Product Codes (EPCs) (Sarma, 2008). On this ground, RFID reader works with middleware to provide backend information systems with an "inventory snapshot" in its field of view which may cover a small corner of warehouse, distribution centre (DC) or backroom of retail store that essentially provides a series of item management function for improving the efficiency of supply chains including: (1) finding, (2) tracking, (3) tracing, (4) item count, and (5) time-intersections. Through querying of this corpus of data gathering from operations, two key metrics, i.e. *shrinkage* (caused by theft, damage, loss, and etc.) and *lead times* that concern operations visibility are evaluated (Hardgrave and Miller, 2008). In particular for apparel retailing, the "lost sales" causing by (1) misplacement, (2) damage, (3) theft, (4) shipping error, and (5) counterfeit of items can be reduced with the use of RFID which ultimately lead to increased product availability and

screen unwanted RFID signals emitted by nearby irrelevant product items.

**2.2 RFID in enabling sustainable retail operations** 

total cost saving (Ustundag and Tanyas, 2009).

helping them to make sustainable choices (UN, 2011).

2008; Shepard, 2005).

understanding customer needs, lean thinking has gained the wide acceptance in nonmanufacturing (Heizer and Render, 2007; Russell and Taylor, 2009). Successful cases of adopting lean thinking in services have been applied in some instances to insurance (Swank, 2003), healthcare (Miller, 2005), government (Gupta, 2004), library (So and Liu, 2007), and retailing (Heizer and Render, 2007; Russell and Taylor, 2009; So and Sun, 2010).

To adopt lean services effectively in operations, firms need to made changes on three aspects: (i) *standardization of tasks and procedures* which can be achieved by, for example, documenting the process flow, training, automating tasks, etc., such that people can be freed to spend more time being creative on value-added work, (ii) *consolidating common processes* to eliminate non-value-added cost and duplicative efforts that customers are not willing to pay for, and (iii) *eliminating loop-backs or delay* which will result in improving productivity levels (Swank, 2003; George and Wilson, 2004; Hanna, 2007). The fast-paced characteristics and changing customer expectations of the markets lead apparel retail to the characteristics of short lifecycle and high impulse purchase which are sensitive to inventory shrinkage and product flow delay in the supply chains. Also, the perception of customers on retail services would affect their purchase decision. Realizing lean thinking in apparel retail operations with RFID technology creates a leaner operating environment which offers not only userfriendly shopping experience to customers but also more agile and responsive store operations to retailers with less wasteful sales and operations process. Adopting lean services in apparel retailing may equally beneficial to this industry with potential of creating both user- and eco-friendly retail environment.

The purpose of this research is to provide management and practitioners with insights on implementing and adopting lean services in contemporary retail environment enabled with RFID, a communication technology that add value to the customer chain in apparel retailing through providing smart and agile service operation. This paper presents supportive literature on the principles and the process of value creating activities based on lean thinking (Womack and Jones, 2003) and CCOR model (SCC, 2010a) aimed at improving profitability. A case study is presented to demonstrate how the convergence of these two management approaches can be applied to an apparel retailer based on a novel RFIDenabled smart apparel system aimed at improving its service operations that lead to increased customer conversion. Lastly, the implications of adopting this new initiative in creating leaner and smarter retail operations are discussed with the purpose to ensure the delivery of maximum value as a strategic tool for apparel retailers.
