D-Day is fast approaching for Wal-Mart's biggest suppliers, which face a January deadline for sticking RFID tags on the pallets and cases they ship to the mega-retailer's distribution centers. And there's no use asking for an extension. At a June 14 informational meeting for suppliers, the world's largest retailer made it clear that the deadline will not be adjusted.
In fact,Wal-Mart is pushing ahead with an aggressive timetable. The corporation says it will extend its tagging requirements next June to include up to six DCs, representing an additional 250 stores. By October of 2005, the mandate will expand to include 13 distribution centers covering 600 stores.
In the meantime, the retailer has already begun testing the tags. On April 30, the first cases and pallets bearing RFID tags rolled into a distribution center near Dallas. Eight suppliers took part in the pilot, using RFID tags to identify cases containing products ranging from paper towels to cat food.Wal-Mart expects several more suppliers to join the pilot every few weeks from here on out, allowing it to test the use of tags on electronic products and oversized items like bicycles and lawnmowers.
That's not to say that everything's gone smoothly. "When you move from a lab setting into a store and DC environment there will be some bumps along the way," says Gus Whitcomb, director of public relations at Wal-Mart. "We're pleased we're seeing those bumps now so we can get those issues worked out."Whitcomb wouldn't elaborate on the "bumps," but Wal-Mart did discuss tag placement and tag read rates at the supplier meeting. "We've learned a few things,"Whitcomb says, "and our hope is that [suppliers] can use this information as they move forward."
It could cost up to $23 million for consumer products suppliers shipping 50 million cases a year.
 | Tags and readers |
 | Systems integration |
 | Changes to existing supply chain applications |
 | Data storage/analytics |
Source: AMR Research
Analysts say one of the issues Wal-Mart faces is reading tags on liquid-based items like water and shampoo. Metal products also create interference problems, making it hard for scanners to read the tags. And it's no secret that manufacturers believe that any return on their considerable investment will be a long time coming.
But that hasn't stopped them from scrambling to get RFID-ready. Although two of Wal-Mart's top 100 suppliers have been granted waivers for the 2005 deadline owing to internal issues, the rest are apparently falling into line. They've been joined by another 37 suppliers that have volunteered to meet the January deadline. And it appears that the ranks of RFID users will swell further before too long: Wal-Mart has told its next 200 largest suppliers they must start tagging cases and pallets by January 2006.
What about the rest of the retailer's 24,000 domestic suppliers? Wal-Mart won't comment on its plans for them. "The only thing we've said is that we expect all of our suppliers to be involved at some level by the end of 2006,"Whitcomb says. "Involved can be defined many ways, not just by shipping product." Of course, by then, RFID may have become so commonplace that a mandate's no longer necessary.
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