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Wal-Mart's on schedule with RFID revolution


Wal-Mart has begun to implement its radio frequency identification (RFID) tag and electronic product code (EPC) program and insists that its supply chain partners are on track to meet its 2005 target for tagging goods. The giant retailer, whose support for RFID has driven take-up of the technology across the globe, is testing EPCs with eight manufacturers, including Gillette, Procter & Gamble, Kraft Foods and Unilever, at regional distribution facilities in the Dallas/Fort Worth area.

Launched on April 30, the trial initially involves 21 products in each of the seven stores in the North Texas area in hopes of paving the way for Wal-Mart to achieve a target of having the Top 100 suppliers using RFID by January 2005. The cases are tagged on the outermost packaging, and the cases and pallets of product from the eight suppliers are shipped to Wal-Mart's Sanger, TX, distribution center, and then onward to seven local Supercenters with RFID tags attached. Readers were only installed in the cited Dallas/Fort Worth stores, PD learns. The technology allows retailers like Wal-Mart greater visibility in monitoring product inventory from supplier to distribution center.

Wal-Mart has communicated to customers about the field trial, and so far it says that the initial reaction there indicates a consumer willingness to give EPC technology a shot at proving itself. To notify its customers during the initial rollout, Wal-Mart placed supplemental signage on shelves and/or aisles where tagged cases reside, and information pamphlets were provided, explaining Wal-Mart's EPC implementation and that customers may choose to keep the tags or discard them after purchasing the product. Since the initial rollout of EPCs, Wal-Mart is hinting at their long-term success.

In mid-May, Wal-Mart reported that it expected the number of its suppliers tagging cases and pallets to expand every few weeks. "To date, we've had no glitches—only positive glimpses of what's to come," says Linda Dillman, executive vp and chief information officer for Wal-Mart Stores, Inc. "During the test phase, we're experimenting with various tag types and tag placements to see how the tags impact readability on various products in a non-laboratory environment. We want all North Texas consumers to know we're testing the technology in the retail environment. RFID is very common and already a big part of people's lives. We want them to become comfortable with it in this new setting."

Wal-Mart initially announced its EPC initiatives in June 2003. At that time, the company stated that the first phase of implementation would involve the tagging of products headed to three Dallas/Fort Worth area distribution centers by January 2005. Since then, 37 more suppliers have volunteered to meet that same milestone.

Wal-Mart met with its top suppliers in mid-June 2004, to discuss details on the second phase of its RFID initiatives, the progress its suppliers are making and the challenges they're experiencing. Days later, Wal-Mart also met with the next 200 largest suppliers to discuss their upcoming participation in January 2006, alerting this second wave of things to expect as they face the mandate deadline to begin RFID-tagging pallets and cases. "Over the next sixteen months, we also plan to significantly increase the number of Wal-Mart stores and SAM's Club locations where customers can benefit from this revolutionary technology," Dillman adds. The retailer is working with suppliers to determine in which geographical region the expanded EPC implementation will occur. The primary consumer benefit expected during initial EPC adoption is better merchandise availability. Wal-Mart expects to improve its job of having the right product in the right place at the right time, improving the customer shopping experience.

Another related goal is to use RFID to reduce out-of-stock merchandise by locating tagged products in the supply chain. Supplier support will be vital to the project's success, at a time when many are raising doubts over RFID's benefits, emphasizes Dillman.

Great expectations

"We're seeing the positive results we expected," Dillman says. "We also anticipated hitting a few minor bumps in the road, which has happened. The whole reason for a pilot is to fix any last-minute issues and clear the path for a smooth implementation. We're looking forward to January 2005 with great expectations. We are grateful to these companies for their commitment to improving the supply chain process." She reports that it's not easy being a pioneer, but that's how progress is made. "These eight companies are revolutionizing the way we do business," she says.

Dillman points out that Wal-Mart wanted to make the information available to its suppliers early on, so that they could incorporate it into their efforts to meet the readability goals Wal-Mart has established. Says Dillman, "From the start, we'll target 100-percent readability of pallets at dock doors and 100-percent readability of cases on our DC conveyors."

The initial test will also involve three products in which the case is also consumer packaging for a computer printer and a scanner. An EPCglobal sticker next to the RFID tag will notify customers of its existence. It's expected that the other products will include electronics or large items such as bicycles and lawn mowers.

The retailer's June gatherings in Arkansas of the top suppliers to share early lessons from the pilot are part of a series of group and individual meetings Wal-Mart has held with suppliers to assist them in implementing EPCs. What about the supplier's supplier?
With so many different RFID products being developed or already available in the market, Wal-Mart's top suppliers and others have nearly an unlimited selection from which to choose to implement RFID programs.

The big question is, what to choose? Markem Corp. (www.markem.com), for example, has launched an entire Applied Intelligence Group within the company that focuses on developing integrated solutions to help such suppliers comply with RFID and EPC requirements. With a wide range of design, installation and services in the product-identification system arena, Markem's Applied Intelligence Solutions are designed to offer the ability to apply RFID tags and EPCs and manage the resulting digital identity at any point in the supply chain. The solutions are designed as open-architecture systems that allow customers to opt for the tag and technology best suited to their needs while still meeting outside demands.

Like others, Markem is engaging in pilot testing with automated tag programmer/applicators for cases and pallets and with software to manage the EPC codes/digital identity of products. Software is being offered to allow manual entry of Global Trade Item Numbers (GTINs) or automatic downloading of number allocation.

Todd Warden, vp of business development at Markem, says in general, the Wal-Mart mandate is sizing up to be the first of many other overall adoptions of RFID. "Wal-Mart's being the most articulate and aggressive in their RFID rollout, but obviously we've seen Target and Albertsons, and Metro and Tesco in Europe, so there's a lot of excitement around EPC and the benefits of using RFID. They include being non-line-of-sight, automatic identification, and basically they give a quantum leap in the actual automation of applying and collecting information to provide a more granular view as to where things are in the supply chain and what is transpiring as goods move along the supply chain."

Warden says that Markem's edge is with a large number of the Top 100 Wal-Mart Suppliers, which happen to be customers. "What we're seeing is virtually an extension of the same type of product identification solutions that we provide to our customers. This is a new technology—a next-generation per sé—of technology being adopted for product identification and data collection solutions," he tells PD. "There are good and interesting business opportunities here, but with that, there are also a lot of challenges. In effect, you're really introducing a radio system into the whole [production] mix. With RFID, we have to be able to manage information and program and encode that information onto the tags before they're applied and then validate and verify that the tags have been encoded properly, manage that information, collect the data and much more. So how that whole system interacts and how to utilize that data poses all sorts of new challenges from a technical perspective. We saw RFID early on as an emerging opportunity, and that has helped us get in a position to understand how the market is evolving and make the appropriate investments in it accordingly."

No company is an island

And evolving it is. MPI Label Systems' (www.mpilabels.com) Mike Sanzone, engineering manager, Machine Div., who spoke in May about RFID Basics and Logistics at New York City's HBA Innovative Packaging Symposium, echoes Warden's assessment: "RFID technology is evolving at such a rapid pace, there's probably not any one company out there that can stand autonomously without the support of others. As far as the technology goes, we work with customers on whatever products they would prefer [to use]. No doubt, RFID will be an expanding area of our business."

Primarily a pressure-sensitive label and automatic labeling equipment supplier, MPI Label Systems offers RFID tags, labels, applicators, tag readers and dispensers, and systems to inspect and accurately write in real time to RFID transponders embedded in the p-s labels.
Sanzone says that currently, some customers claim they aren't always completely sure about what products they need for RFID applications. "And we don't try to steer them in any one direction," he says. "We want to give them an unbiased education so that they can make their own informed decisions."

Sanzone explains that MPI's customers who are getting firsthand experience sending product through the Wal-Mart DCs in the Wal-Mart test--as well as other customers--say they've had a similar perspective trying to find out what it takes to meet such mandates. "It seems that the majority of customers are currently thinking in terms of the slap-and-ship approach, and they're realizing the technology is evolving all the time. So the thinking is, why waste time trying to build ROI into technology that hasn't really matured yet? The slap-and-ship approach gives them the benefit of buying time at this point, so that some of the issues can get ironed out and hopefully simplify the ability of putting together a sound business case."

Other pilots

Unilever is leveraging RedPrairie Corp.'s (www.redprairie.com) RFID Accelerator to prepare for compliance with Wal-Mart's initiatives. According to a PR Newswire report in early May, RedPrairie began leading an RFID pilot at three Unilever North America locations. The pilot will enable Unilever to implement and test RFID technology in its supply chain without replacing existing infrastructures to prepare for compliance with the mandates from Wal-Mart, other retailers and the U.S. Department of Defense to ship products using RFID at the pallet and case level next year.

The pilot locations include a manufacturing site, a home and personal care distribution center and a Best Foods DC. RedPrairie says it has managed Unilever's home and personal care DC network for more than eight years and has partnered with Unilever on RFID projects since co-founding the RFID Center of Excellence in March 2002. Says Unilever's supply chain futurist, Simon Ellis, "Unilever has been researching and testing the value of RFID for our company over the past three years. Our goal for this pilot is to meet rapidly approaching retailer compliance deadlines, while simultaneously understanding value from RFID within our own supply chain."

Intermec Technologies Corp.'s (www.intermec.com) recently announced RFID migration strategy was also developed to help customers meet evolving RFID requirements. Retailers and others, including the U.S. Dept. of Defense, have outlined requirements for full read/write capabilities, global compliance, interoperability and rapid read rates in order to meet their inbound receiving and supply-chain requirements. This way, customers can receive a business value while dealing with developing RFID standards, reports Intermec's vp Mike Wills. "Our goal is to help customers receive a significant business value while dealing with developing RFID standards."

Supply chain execution (SCE) and optimization solutions provider Manhattan Associates (www. manh.com) says it's ready to help suppliers comply with the RFID requirements of retailers preparing to roll out strategies to leverage RFID for improved supply chain performance across their operations with its RFID in a Box.e The initiative has already enjoyed success in helping various suppliers comply with the RFID compliance mandates issued by several U.S.-based organizations, including Wal-Mart, and is currently being unveiled across Europe.

The system comprises a bundled demonstration package of the company's RFID technology hardware, including EPC-compliant tags, readers, antennae and printers and Microsoft-based SCE and RFID applications. In May, Manhattan brought RFID in a Box to European retailers in Germany as Metro's Fachcongress für Partner der Metro Group briefing convention in Cologne. At the event, Manhattan Associates demonstrated Microsoft-based RFID in a Box solution in Microsoft's RFID Solution Centre.

"We predict that the application of RFID will gain momentum as a key industry initiative in Europe for the remainder of this year and beyond as a growing number of retailers and suppliers across the region start to embrace and exploit this technology's potential," notes Jeff Baum, senior vp of international operations. "Leading European retailers are also setting specific dates by which they will require RFID compliance, and this is already playing a major role in shaping the strategies of any supplier that does business with them."

More information is available:
Applied Intelligence Group, integrated RFID solutions:
Markem Corp., 866/263-4644. www.markem.com. Circle No. 201.
Pilot program:RedPrairie Corp., 877/733-7724. www.redprairie.com. Circle No. 202.
Labels, tags, labeling equipment, RFID products:MPI Label Systems, Inc., 800/837-2134. www.mpilabels.com. Circle No. 203.
Supply chain execution, optimization solutions:Manhattan Associates, 770/955-7070. www.manh.com. Circle No. 204.
Supply chain solutions, RFID migration strategies:Intermec Technologies Corp., 425/356-1747. www.intermec.com. Circle No. 205

 

 

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