Simon says, "Stick RFID tags on your products," and America's biggest consumer products companies promptly fall in line? That's precisely what happened when Simon (Langford) issued Wal-Mart's now famous RFID mandate. So what will Wal- Mart want next?
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
Not since the Y2K scare five years ago has the turn of the calendar year been the object of such intense speculation. But this time around, no one was hunkered down in a basement with a stash of canned spaghetti and bottled water waiting for planes to fall from the sky. In fact, those awaiting 2005's arrival displayed more curiosity than trepidation. And rather than prophets of doom, the curious were mostly consultants, manufacturers, retailers and RFID vendors with a single question on their minds: What would happen when 52 Wal-Mart suppliers officially began shipping pallets and cases tagged with tiny RFID chips to the mega-retailer's DCs?
Now, 60 days out, the verdict on Wal-Mart's bold experiment seems to be so far, so good. At this point, Wal-Mart appears to be solidly on track with its RFID initiative, which called for its 100 largest suppliers to begin using so-called smart tags to identify incoming pallets and cases. True, the retailer didn't have all 100 of its top suppliers on board on Jan. 1, but that was never the goal to begin with. All along,Wal-Mart had asked its top 100 suppliers to meet not a Jan. 1 deadline, but a January deadline, giving them the luxury of a 31-day window to get their cargo in chip-shape. And sure enough, by the end of January, 108 suppliers were shipping products carrying RFID tags to Wal-Mart, while another 29 expected to be on board by March 1. (Those who counted a total of 137 companies are correct. Aside from the mega-retailer's top 100 suppliers, 37 companies volunteered to participate.)
"There were no surprises in January and that's precisely what Wal-Mart wanted," says Kara Romanow, a research analyst at AMR Research, who tracks many of the consumer product goods (CPG) companies subject to Wal- Mart's mandate. But compliance, of course, is only a small part of the story.What about the retailer's larger goals, like cost savings and a reduction in stock-outs? "It's still too early to tell whether Wal-Mart will meet its goals," Romanow answers. "We really don't know if [RFID] will impact [stock-outs] yet. But this is not a failure either, just by the fact that there are so many technology companies out there investing to make RFID a more mature technology. Wal-Mart has absolutely moved both the technology and the CPG industry forward."
Working out the kinks
As for the Bentonville Behemoth's own assessment, preliminary indications are that Wal-Mart's management is pleased with what it sees so far. "Things are going well and we are pleased with the progress," said Simon Langford, the retailer's director of global RFID strategy, via e-mail. Langford reported that as of Jan. 27, 92 suppliers had shipped RFID-tagged merchandise to Wal-Mart DCs in Texas. So far, Wal-Mart has received more than 7,000 tagged pallets and 210,000 tagged cases, and has recorded 1.5 million electronic product code (EPC) reads.
That's not to say there haven't been some hiccups. But Langford remains optimistic that the kinks can be worked out. "As the tagged cases start to work through the supply chain, we will start to see improvements," Langford said. "We will be measuring these improvements ongoing as we roll our changes [out] to all [RFID-equipped] sites."
Of course, that's not to suggest that all of those suppliers are tagging 100 percent of their Wal-Mart-bound products. Wal-Mart has reported that on average, participants are tagging 65 percent of their stock-keeping units (SKUs). But some observers believe that figure is a bit misleading. Some smaller suppliers may be tagging a majority (or even all) of their stock-keeping units, they say, but most companies are tagging between two and 10 products. And it's important to keep in mind that "10 SKUs" may represent one product in 10 different sizes or colors.
"What you have to realize," says Romanow, "is that most of those top suppliers are only tagging a handful of products. So the 65 percent number doesn't [adjust] for the smaller suppliers who only have three or four products and who are tagging all of them, and it doesn't account for only the handful of products from the big guys."
The road ahead
Now that the first round of RFID implementations is over, all indications are that Wal-Mart intends to stay the course. For one thing, Wal- Mart is pressing ahead with the installation of RFID-reading equipment in more distribution centers and stores. In preparation for the January rollout, Langford reports, Wal-Mart outfitted 104 retail stores with RFID equipment, deployed 14,000 pieces of hardware and ran 230 miles of cable. Now, it's barreling ahead with an expansion program. The retailer expects to have six distribution centers and 250 stores equipped with RFID readers by June, and 12 DCs and 600 stores by October.
In addition, the retailer is forging ahead with plans to bring more suppliers on board.Wal-Mart has put its next 200 biggest suppliers on notice that they'll be expected to begin tagging pallets and cases of selected products by January 2006. By the end of 2006, the retailer expects its entire supplier base (up to 20,000 suppliers) to be "engaged in RFID in some form or fashion." Langford has not revealed when Wal-Mart might start to roll out RFID internationally.
As for the 100 top suppliers, they're not off the hook yet. Wal-Mart has asked them to tag more products. But even without Wal-Mart's latest request, they'd still be facing a new set of challenges. In late December, the standards body EPCglobal ratified the Generation 2 standard for RFID tags. With the Gen 2 technology expected to become available in the second half of the year, many of the top 100 suppliers have resigned themselves to writing off their initial investments and starting over with the newer technology.
That Gen 2 rollout has thrown a wrench into the plans of others as well. Initially, industry analysts had predicted that compliance would be easier for the 200 suppliers in the second wave (which includes companies like E.&J. Gallo Winery), assuming that they could ride the coattails of the first wave of suppliers. But now, it looks like the advent of Gen 2 technology will make much of that early experience irrelevant.
Still, at least they're not starting from scratch. "For those next 200 suppliers, there are some small advantages in … that we have some standards out there now and that there is some knowledge about readers and antenna placement that they can leverage during their pilot," says Gene Alvarez, vice president at Stamford, Conn.-based Meta Group.
Has that assurance provided any consolation for the suppliers preparing for Round 2? "I've had two reactions from my clients," Alvarez says. "One wants to get on this as quickly as possible because if they can beat a competitor, maybe they gain preferred supplier status with Wal-Mart. The other client doesn't have a great deal of money to invest and wants to do the bare minimum, waiting things out until [it] can implement RFID properly. I think we'll see more people in that category."
Metro goes on the record
Wal-Mart isn't the only retailer riding the RFID wave. Metro Group, the world's third largest retailer, has also been busy deploying RFID. In fact, Metro has a bit more RFID experience under its belt at this point than its Arkansas-based counterpart does: Metro's RFID mandate carried a November 2004 deadline.
Unlike the notoriously tight-lipped Wal-Mart, which hasn't spoken much publicly about its experience, the Düsseldorf, Germany-based Metro has been publicly touting the cost savings and operations improvements it's realized from RFID. For one thing, the company says it has found that RFID-tagged shipments can be unloaded and checked in faster than their tagless counterparts, averaging just 15 to 20 minutes per truck. For another, it reports that RFID has helped it identify and eliminate weak spots in its handling processes.
According to the retailer, Metro has integrated RFID into existing operations so that RFID-tagged pallets and cases can be detected and recorded at the shipping pOréal. Tag IDs are then transmitted over a local area network (LAN) to a local server. The tag number, which functions as a serial shipping container code (SSCC), is then compared with electronic data interchange (EDI) data from the retailer's merchandise managing system on a central server. At that point, shipments can be either cleared or flagged if there is a discrepancy between the shipment and the EDI documentation or if the scanner experiences problems reading the RFID tag.
So what's next for Metro's RFID initiative? Gerd Wolfram, director of IT strategy, buying and development services for MGI Metro Group Information Technology, a Metro subsidiary that supplies the company with IT services, says that by the end of 2005, Metro expects to have 100 companies in its supply chain sending it RFID-tagged shipments. Next year, Metro expects to receive tagged shipments from its top 300 suppliers, which provide the retailer with merchandise that accounts for 60 to 80 percent of its total revenue.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Two European companies are among the most recent firms to put autonomous last-mile delivery to the test with a project in Bern, Switzerland, that debuted this month.
Swiss transportation and logistics company Planzer has teamed up with fellow Swiss firm Loxo, which develops autonomous driving software solutions, for a two-year pilot project in which a Loxo-equipped, Planzer parcel delivery van will handle last-mile logistics in Bern’s city center.
The project coincides with Swiss regulations on autonomous driving that are expected to take effect next spring.
Referred to as “Planzer–Dynamic Micro-Hub w LOXO,” the project aims to address both sustainability issues and traffic congestion in urban areas.
The delivery vehicle, a Volkswagen ID. Buzz battery-electric minivan, will feature Loxo’s Level 4 Digital Driver navigation software, a highly automated solution that allows driverless operation. The van was retrofitted to include space for two swap boxes for parcel storage.
During the two-year pilot phase, Loxo’s Digital Driver will navigate a commercial vehicle several times a day from Planzer’s railway center to various logistics points in Bern's city center. There, the parcels will be reloaded onto small electric vehicles and delivered to end customers by Planzer’s parcel delivery staff.
Following the completion of the pilot phase, Planzer and Loxo will build on the program for rollout in other Swiss cities, the companies said.
The partners said the project addresses the increasing requirements of urban supply chains and aims to ensure the “scalability of their disruptive solution.” With largely emission-free delivery, it contributes to greater levels of sustainability for the city as a living space, they also said.
“The uniqueness of this project lies in the fact that it will have a direct impact on society,” Planzer’s CEO and Chairman Nils Planzer said in a statement announcing the project. “We didn't just want to integrate automated technology into existing systems, we wanted to develop a completely new concept and a new business model.”
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.