RFID Gazette

Wal-Mart RFID Plans Change

Computer World has a series of recent articles focusing on Wal-Mart's RFID efforts. First and foremost, Wal-Mart has shifted their efforts towards stores rather than distribution hubs.

This shift is due to an acknowledgement that they've missed their own goal of installing RFID in at least 12 of its 137 distribution centers by last year. Second, despite the fact that many small Wal-Mart suppliers have had trouble finding an ROI (return on investment) in implementing RFID in their supply chain, Procter & Gamble has found Wal-Mart's RFID effort effective.

Now, it should be pointed out that not only was P&G one of the first 100 Wal-Mart suppliers to implement RFID, they're also a giant company themselves. Their ROI in RFID can be realized in volume transactions - something small suppliers just cannot accomplish.

While it'd be nice to think/ hope otherwise, the evidence so far, plus statements from some smaller suppliers, suggests that compliance with Wal-Mart's RFID initiative is hurting them. Nevertheless, Wal-Mart is still promoting RFID adoption.

RFID and Wal-Mart: Going Over Like A Lead Balloon?

I doubt even a "little" thing such as supplier revolt will divert the steamroller known as Wal-Mart from pushing their RFID program forward. While suppliers probably aren't at the revolt stage yet, it does appear that they're not thrilled but afraid to criticize. And they have yet to find an ROI (return on investment), mainly because Wal-Mart declared last year that suppliers had to not only comply but had to find their own ROI. Wal-Mart wouldn't help.

That's a huge mistake, as far as I'm concerned. Instead of acting like a dictatorial government and holding threats of financial ruin over every supplier's head, they could have taking their integration sessions a bit further and nudged suppliers along with advice. Sure they're in business to make money. So charge for it then and stop being doofuses. I can't see Wal-Mart bartering, but you never know. For financially -strapped suppliers, Wal-Mart could consider product in exchange for some help finding ways to make RFID work for individual suppliers.

Ultimately, helping their suppliers find the ROI is a much wiser course of action that would help RFID take a better toehold in the supply chain. Not doing so suggests that Wal-Mart doesn't really care about anything but their bottom line - which is already the perception people in small towns have, where the retail giant has displaced mom and pop stores.

Does Wal-Mart Have Scale Advantages For RFID?

Imagine you are in a group of tired, chained beasts pulling a wagon and being whipped if you stop. That's what I imagine some suppliers to Wal-Mart, the US DoD (Dept of Defense), and other influential organizations may feel regarding RFID mandates. The latter organizations are seeing (or claiming) a high ROI (return on investment) on RFID implementation, the suppliers they have mandated to join the RFID club have not seen similar returns.

It's easy to say suppliers see no incentive for implementing the technology, but no doubt some of them feel that they might as well go out of business if they don't accomodate retail giants such as Wal-Mart. Wal-Mart has also indicated that, aside from helping prepare their suppliers to be compliant, companies have to find their own ROI in RFID. Which I think might be part of the problem of adoption.

As I haven't seen the balance sheets for any of these companies, I'm hypothesizing. Wal-Mart may have an "economies of scale" advantage over their suppliers in terms of cost of radio frequency technology. Though I'll admit I'm not sure whether Wal-Mart sources RFID technology for their suppliers, but I doubt it. That would mean, then, that suppliers pay higher prices for the same technology and likely cannot have the same type of ROI.

Even if Wal-Mart had a "Sam's Club" for RF tech for their suppliers, the latter are still at a disadvantage because implementing radio frequency technology cuts into heavily into the bottom line of smallest suppliers, who are already supply on slim margins for the bargain atmosphere of Wal-Mart. Where's the ROI in this scenario? Such a cost means bottlenecks in implementation.

The Network Effect Of RFID Use

Paul Faber of Industry Week gives a very nice explanation of a phenomenon called the network effect, where the value of a good or service increases in direct proportion to the number of people or companies using that good or service. For example, early email systems were only of value to those few researchers who had access. Now, email access is ubiquitous and valuable. Faber discusses how the network effect applies to RFID in retail, EPCglobal's EPC (Electronic Product Code), and container tracking.

The beauty of the EPC, aside from the fact that it's being promoted as a standard, is that it is designed for the sharing of information, collected by RFID readers, between organizations. So anyone in a particular supply chain that uses EPC could benefit from it. So while Wal-Mart's use of it is unfortunately relatively isolated, their mandate to introduce their suppliers to RFID and EPC should increase the value of its use to both them and the suppliers, especially beause Wal-Mart plans to share such data. However, at present, RFID in retail, Faber suggests, is not large enough yet to enjoy the positive side of the network effect, "[d]ue to the incomplete infrastructure of EPC RFID tools." Layoffs in companies such as Checkpoint Systems would bear that out.

Hot RFID Career Opportunities

With a predicted shortage in skilled workers for the RFID industry, the number of study programs in colleges and universities are growing. There are also companies like OTA Training, who offer both in-person workshops and classes, as well as e-learning programs. Then there's RFID Recruiters, a company that finds and places business and technical professionals with RFID knowledge/ skills.

They list some of the hot areas for career opportunties on their getting started page: supply chain project management, sales management, RFID tag product management/ marketing, tag design management, middleware business development, channel managers, pharmaceutical smart label sales, print-and-apply technicians. In their actual opportunities listings page, there are over 50 (at the time of writing) executive, sales and technical positions listed.

RFID Recruiters also suggests there will be a growing need for scientists and technicians, since there will be a need to design and test all the new RFID tags with sensor abilities - temperature, humidity, shock and vibration, light. And since the tags of the future will be "very small computers that happen to have a built-in wireless networking capability", there's a need for people with computer networking architecture and management skills. (A geeky aside: Star Trek-like "sensor" mesh networks might even be built in the future, with such RFID tags as the core component. And it'll take some incredible neural network programming skills to have them function correctly.)

Essentially, the whole RFID industry is waiting to boom. All it needs are more skilled workers. To those interested, RFID Recruiters suggests studying the Wal-Mart and DoD mandates, their suppliers, and the equipment/ middleware/ software providers to those suppliers - since Wal-Mart and DoD are driving some of the largest RFID projects.

Wal-Mart Doubling RFID-Enabled Stores

Contradicting even their own reports of their own setbacks and that many vendors are lagging behind in implementing RFID in their supply chains, Wal-Mart has announced [Extreme RFID] that they will be increasing the number of their own stores using RFID to over 1,000, by Jan 2007. As a spokesperson put it, they are moving ahead aggressively. They've had to push suppliers in the past to start implementing RFID technology by announcing mandates and deadlines for compliance. But while I'm not big on their whole project in the first place, I have to give the retail juggernaut credit: they've persisted despite setbacks.

More RFID Woes: Wal-Mart Sued For Alleged Patent Violation

Wal-Mart is being sued for supposedly violating an RFID-based inventory control patent filed in 2002 by a company called RFID World. Also named in the suit are Gillette (now owned by Procter & Gamble), Michelin, Home Depot, Target, and Pfizer). Visit RFID Journal for more details of the suit.

Wal-Mart and Target are probably two of the largest retailers using RFID for inventory control and supply chain management. Conflicting media reports suggest that Wal-Mart has had some difficulties with their RFID rollout and might have scaled back their expectations, but they say they are moving ahead. Some of their suppliers are reluctant to use RFID because they have not perceived a reasonable ROI (return on investment). As a result, some suppliers have lagged behind expected milestones from Wal-Mart, causing the retailer to get heavy-handed and mandate the use of RFID by all suppliers.

While implementing the technology is often perceived as being expensive, one small manufacturer managed their initial RFID trial for around US$6,000, with just one employee. Part of the misperception might come from the confusion betweeen item-level tagging and pallet- and case-level tagging - the latter two of which are generally less costly than item-level tagging. However, with a lawsuit in progress, one which suggests that suppliers will also be in violation RFID World's patent if they comply with Wal-Mart's standard, it's possible that there will be more setbacks in Wal-Mart'sRFID rollout.

RFID Roundup - Fri Aug 25/06

CPI To Make Wells Fargo Contactless Payment Cards
CPI Card Group will be making the cards for Wells Fargo Bank's Visa Contactless cards. [via Contactless News]

Swedish Miners Tracked With RFID For Safety
Miners working for Swedish mining company LKAB will be tracked with RFID for their safety. The Wtek wearable active RFID tags being used have a range of up to 100 meters. Scanners will be placed at a number of locations. [Ferret via RFID Blog] Wtek is involved in a number of projects that use RFID for safety. A number of other companies, such as AeroScout, are also exploring mine safety RFID applications.

RFID Volume Pricing Nonexistent?
In many industries, buying a company's product in bulk qualifies you for discount pricing. According to an eWeek article, that doesn't appear to be true for RFID. Quantity pricing of tags seems to be all over the place, depending on several factors including sector use, supplier, and country.

Wal-Mart Moving Ahead With RFID Plans

Last week, Wal-Mart's new CIO, Rollin Ford, talked about RFID at the NRFTech (National Retail Federation Tech) conference near San Diego. While less than 10% of their 6600+ worldwide stores are RFID-equipped, they do plan to continue with their RFID rollout. [via Extreme RFID]

This is despite all the little indicators that suggest that maybe their plans aren't going so well, primarily because their suppliers are lagging behind in implementing RFID due to the cost and the lack of incentive, from their point of view. (A Forrester Research report from 2004 says that the start-up cost is about $9M for the typical Wal-Mart supplier.)

So Which Is It? Boom Or Bust For RFID?

Depending on which articles you look at, the RFID market will either booming next year or will be down in revenue. For example, ABI Research dropped its revenue projection for RFID software and services by 15 percent, for a variety of reasons, including less spending by consumers. Still, they expect that next year's RFID market to generate over $3 billion, with the greatest gains in asset management and supply chain management.

Another reason for the reduced forecast from ABI has to do with market consolidations and collaborative solutions. Who would've thunk it, that collaborating might be bad for the bottom line?

Then there's the issue of Alien Technology indefinitely delaying their IPO. At first, I thought that this had more to do with the state of the stock market, especially for tech stocks, than with the RFID industry. However, the rumors from company insiders suggest otherwise. In fact, jobs were supposedly cut.

Whether jobs are cut or increased will likely significantly depend on the RFID programs of large retailers such as Wal-Mart. Despite public claims that they're moving forward with the RFID program, there are some indications they've scaled back, primarily because suppliers have not themselves move forward. Wal-Mart's actual decision will probably have a ripple effect through the RFID industry.

Still, given the positive RFID trials in other countries, it's likely that these are probably short-term situations, and that the growth of RFID is inevitable.

RFID Contactless Payment: Too Much Information?

Despite a savings from RFID-enabled inventory control and claims last year of high success rates, retailer Tesco has been having problems with their RFID trials. The foremost of this has been from customer concerns, as well as getting agreement with suppliers on who'll pay for RFID tagging of product.

Wal-Mart has had similar problems with suppliers and, like Tesco, has delayed deadlines for RFID implementation in someof their stores, or rolling back projects altogether, despite trying to throw down ultimatums about RFID use.

Other problems are more technical, and include UHF (Ultra High Frequency) interference between other RFID readers, even from a distance of a few kilometers. Much of these technical problems come from the lack of a single RFID standard, as well as different regulations about radio frequency use from each country's government, sometimes their military.

On the consumer side, American grocery chain Piggly Wiggly has had problems with acceptance of their biometric scanners. While some biometric scanners have been combined with RFID, Piggly Wiggly's are not. But similar to RFID concerns, some people feel that biometric scanners, with or without RFID, just require too much
information that a retailer simply does not need from the consumer.

From the consumer point of view, why should they care if RFID or biometrics makes a retailer's life easier if it gives the consumer little benefit and violates their privacy? In their eyes, a fingerprint scan in the hands of the wrong person definitely constitutes that. So does someone intercepting info from their RFID smartcard. If a government's employees cannot even keep important laptops full of data out of the hands of thieves, they feel, what's to say that a retailer's employees won't steal information, or facilitate, the theft of data collected with RFID and/or biometrics?

To get around these problems, besides technical issues and government regulations, consumers concerns have to be addressed with incontrovertible evidence that RFID-based payment systems are secure. The perception is that this critical issue has not been dealt with yet, even from the point of view of technology-savvy people.

Rethinking Data Flow For RFID Deployment

One of the common complaints about RFID, from companies considering its use on their products, is that item-level RFID tags significantly bump up the cost of tracking product. With the conventional barcode, one code typically sufficed for all items of a specific product. With item-level RFID, every single item has to be treated distinctly from its siblings on a store shelf, or what have you.

So if you have 1000 items to send out to a distributor, your cost of manufacturing and shipping goes up by 1000 times the cost of an item level tag, not to mention the cost of pallet- and case-level RFID tags. As well, each item's RFID tag has to be programmed with a unique code in the manufacturer's database. In this case, that's 1000 RFID codes instead of one barcode.

Imagine if you manufactured millions of items per year. This forces an overhaul in a manufacturer's product database and in system software (data collection, querying, reporting). In other words, more costs to an RFID deployment project, when barcoding works well enough for most manufacturers. (Keep in mind that, often, its the distributors that want to track items.)

At item-level RFID tags running around 40 cents, it's not always financially feasible to use them for low-ticket items. Pallet- and case-level tags tend to not only be cheaper, but there's obviously less of them required for a shipment.

But the prices of item-level tags will go down. According to an article at Sterling Hoffman, Alien Technology announced a sub-ten cent passive RF chip at some point in the recent past. In fact, a Google search suggests the truth of the claim, but the linked URL does not exist on Alien's website. There is, however, a press release for a 12.9 cent EPC Class 1 chip. Still, RFID Times suggests that sub-five cent RFID tags will become commonplace, although probably not until 2013.

I don't doubt that the sub-ten cent barrier will be cracked, and likely well before 2013. It also helps that companies like Gillette recently ordered 500 mln chips. Evan Schuman at Storefront Talkback writes that 200 mln item-level tags will be sold this year out of a total of 1.3 bln RFID tags, followed by 2.2 bln next year. Procter & Gamble (new owners of Gillette - way to corner the razor market) is also conducting two RFID tests on their Fusion five-blade razors. (Which may explain why the darn things cost so much, and why I shave once a week now lol.)

These kinds of large orders will eventually bring the price of all types of RFID tags down. Unfortunately, most small vendors cannot currently afford to use item-level tags. This financial limitation hampers initiatives such as Wal-mart's plan to have all vendors eventually supply all their products complete with item-level RFID tags.

Alternatives being looked into included both "light-based" tags as well chip-less tags that created from thin-film transistor circuits and other means. Of course, there's always the option of combining RFID with barcoding, but that wouldn't let P&G know how many times a week I'm shaving.

Gemini seeks RFID tags from Wal-Mart

Chennai-based networking solutions company Gemini Communications Ltd. and US retail major Wal-Mart have joined hands to give fillip to RFID technology in India. Gemini is interested to acquire around 1,000 RFID tags from Wal-Mart.

Gemini will soon open a new RFID plant in Baddi, Himachal Pradesh and seeks Wal-Mart’s support. The company is also in touch with the UK-based Tesco for supply of RFID tags for its retail forays in India, says Vijay Kumar, Chairperson of Gemini Communications. The company has decided to invest Rs 20 crore in Baddi. The new plant will have a capacity of 6,000 tags an hour, he adds.

Via dnaindia

Kimberly-Clark starts shipping Gen 2- tagged cases

Kimberly-Clark, which owns the Huggies Brand among others, has started shipping out Gen. 2 RFID-tagged cases to Wal-Mart.

To start with, Kimberly-Clark has dispatched 100,000 cases of Huggies brand diapers and other infant and childcare products to Wal-Mart since March this year.

Readers understand that Gen. 2 tags are the future of RFID and are universal in nature. Kimberly-Clark is the first major Wal-Mart supplier to have announced Gen. 2 tagging and commencement of shipping and soon others will announce their commitments.

Via Post Crescent

More Wal-Mart suppliers will use RFID

At present around 100 Wal-Mart suppliers use RFID tags. However, this number will increase to 300 by the end of this year. The retailing giant is installing systems for another 200 of its suppliers to become RFID compliant by the end of 2006. 

In addition, Wal-Mart says that another 300 suppliers will be RFID-compliant by the end of 2007, bringing the total to 600.

In the words of a top company official, RFID-compliance is a long-term project, which the retailer will seriously pursuit.

Via Marketwatch

Wal-Mart’s new CIO reassures suppliers & Vendors on RFID

Finally, Wal-Mart suppliers and RFID vendors can get a peace of mind. They were in spot of suspense when the person credited with started the RFID boom in the retailing business, Linda Dillman, the erstwhile CIO, was replaced. 

However, her replacement, Rollin Ford has recently said in an in-house CIO Summit that he too is prepared to go the whole way with RFID. That also kind of reiterates the that Wal-Mart is committed to fine-tune the supply and distribution chain on a continual basis. This commitment transformed Wal-Mart into the dominating retail giant of modern times.

Via eWeek

Carton Converters and RFID still unexplored

While Wal-Mart and other retailers have implemented RFID solutions in all aspects of their supply and distribution value chain, they have thus far focused on corrugated container. They have not yet focused on folding carton converters.

However, going by recent developments, soon carton converters will attach RFID tags to individual cartons.

This brings all the benefits of implementing RFID. Retailers can enjoy a multitude of benefits including automated data capture, real-time remote monitoring, inventory tracking, theft and diversion detection, demand planning and more.

Via Packaging Online

The person who supported RFID at Wal-Mart moves up

There has been a minor reshuffle at retail giant Walmart's current CIO Linda Dillman has been made the executive vice president of risk management and benefits administration.

Linda Dillman is a well-known figure in the RFID world. She is seen by many to be the driving force behind Wal-Mart's decision back in 2003 making RFID mandatory to its top 100 suppliers. This decision single-handedly pushed RFID out into the public domain for discussion and adoption in a big way. 

Fittingly, InformationWeek awarded Linda Dillman and her staff with its "Team of the Year" title for their work in RFID.

Via RFID Update

Wal-Mart persists with its RFid tag initiatives

Wal-Mart is continuing with its RFid tag initiatives by adding new uses for the supply chain technology and is getting more partners and suppliers to comply with its RFid mandates. The company started implementing RFid since January 2005 after conducting pilot tests at its distribution centers in Dallas.

Wal-Mart has had a return on investment without any extensive process changes. The benefits that Wal-Mart has got are that out of stock items are being replenished three times faster than before and the amount of out of stock items that have to be manually filled has been cut by 10%.

via [ComputerWorld]

A Dozen Lucky Wal-Mart Suppliers will get RFID Tracking Service for only $25 K

Radio Frequency Identification (RFID) consulting company RFID, LTD of Denver has announced to give its exclusive Black Box compliance service for only $25,000 to the first 12 suppliers who sign up.

It is common knowledge that Walmart has around 70,000 suppliers all of whom are required by the company to use RFID chips for better tracking.

Forrester Research estimates that it can cost $9 million and above for a big supplier to set up an RFID tracking system.

The offer has been open since March 1 this year. To be approved, a supplier must agree to have the multi-day implementation process filmed for a documentary and for RFID, LTD's marketing purposes. Participants will be announced by April 1.

Contact information:

Website: www.rfid-ltd.com

Call 800-961-6125

Email lucky12@rfid-ltd.com

Via [RFID Blog]

Marks and Spencer extends trial of RFid technology

Marks and Spencer plans to extend its trial of RFid technology on individual products. The retailer is already using RFid to track fresh foods in its supply chain. Marks and Spencer is implementing the second phase of this technology in order to improve the availability of multi sized items which includes women’s underwear and men’s suites.

Marks and Spencer would be implementing the initial item level tests which were launched last year in nine stores to another six shops while a further 36 UK stores have been earmarked for pilots before the end of April.

via   [Yahoo]

Chinese market driven by mandates from Wal-Mart and European retailers

In the year 2005, RFid market in China crossed 1.6 billion RMB Yuan and is expected to grow strongly in the coming years. RFid products have a huge potential in China. Currently the Chinese market is driven by the mandates issued by Wal-Mart and other European retailers. It is expected that China would supply more than five trillion tags annually to Wal-Mart. In the coming years, China is also expected to become a large consumer market for RFid products as well. RFid technology would also be used in 2008 Olympics to be held in Beijing.

via   [Businesswire]

Wal-Mart to test RFid data sharing project

Wal-Mart is testing a technique to share data from RFid tags through automated EDI. The trial is being conducted with the help of EPC global and a few suppliers. This process will enable to track the goods in transit. There is also a plan to ensure that RFid tags provide advanced ship notices through the EPC Information Service network each time a supplier ships the products. Supplier will be able to check the information by logging onto Retail link in Wal-Mart’s web based software. Expansion in the field of RFid and supply chain has always been on the agenda of Wal-Mart and it has started implementing it quite successfully.

via [InformationWeek]

Wal-Mart and RFID technology

RFID technology is quietly and surely becoming a part of Wal-Mart. As Wal-Mart is incorporating RFID in its retailing and supply chain system, it is influencing not only its vendors but also its customers. Incorporating RFID technology will not only increase the efficiency of Wal-Mart but will also simplify its supply chain system. By incorporating RFID Wal-Mart will not only make its customers and vendors aware of this technology but also put a message across that it is making a bold use of RFID. In the long run this step will help the company in knocking out competition.

What RFID did for Wal-Mart

Wal-Mart identified the specific process improvements brought about by RFID which helped it in achieving cost savings. A major part of the savings was brought about by the automatic generation of pick lists of items which were needed to restock the shelves. The white paper released on Wal-Mart does not talk about the amount of savings but it points out that RFID also brought about considerable savings in form of labor and time. Certainly the results of the pilot project carried out by Wal-Mart are encouraging and RFID has a bright future.

[Read more]

E&PS products from Texas Instruments

The Educational & Productivity Solutions (E&PS) business of Texas Instruments has become the first consumer goods supplier to supply RFID tagged cases and pallets to Wal-Mart as per the Gen 2 EPC specification. TI E&PS is a Wal-Mart next 200 supplier and will ship twelve SKUs to five distribution centers.

The twelve SKUs cover the entire range of calculator products that E&PS delivers to Wal-Mart. It will employ RFID tagging solutions from TI RFID systems, NCR Corporation, and Zebra Technologies. morerfid.com reports:

TI E&PS began its development and implementation of EPC Gen 2 in 2004, deciding to leapfrog legacy EPC Gen 1 solutions which will be phased out in 2006.

Read More: Texas Instruments Educational & Productivity Solutions

Texas Instrument becomes first to ship Walmart with Gen 2 Rfid tags

Texas Instruments Inc has announced that it has become the first supplier of Wal-Mart to ship pallets and cases with Gen 2 RFID tags.

Test shipments started on December 29 and the company is shipping dozen Stock Keeping Units to Wal-Mart distribution centers in Arkansas, Alabama, Louisiana, Oklahoma and Texas.

As for now the Gen 2 RFID tags would be embedded on cases and pallets only. Using RFID, Texas Instruments not only wants to keep a track on its supply chain process but also on its environmental disposal.

Read more

Wal-Mart pushes its not-so-eager suppliers

Wal-Mart has been pushing aggressively for RFID adoption. According to a report by AMR Research that was written in late 2004, the retailer has not received whole-hearted support from its vendors. Most of the vendors feel that the costs far outweigh any potential benefits and have fulfilled the minimum basic requirements only. This has resulted in RFID-tagging of select products and the deployment is mostly of the “slap and ship” kind. In a study published in 2004, A.T. Kearney stated that the cost of an RFID deployment in a distribution center for a large retailer would be around $ 400,000 and RFID-enabling a store would cost $ 100,000. nwaonline.net reports:

Some Wal-Mart suppliers are reportedly dragging their feet when it comes to getting with the retailer's radio frequency identification program, and now the company is laying down the law.

Read More: Wal-Mart Prods Suppliers On RFID

Wal-Mart to intensify compliance drive

Wal-Mart is planning to push harder to get its suppliers to follow its wireless tagging mandates. Wal-Mart has already deployed RFID at five distribution centers and at 500 stores. The company plans to extend RFID to 1000 stores by the end of 2006. msnbc.msn.com reports:

"We've started communicating to some of the suppliers who have been reluctant – which is a nice way of saying it – to say, 'We can't invest any more time in you'."

Read More:WalMart toughens push on wireless tagging

RFID in Malaysia

Of the 4000 suppliers of Wal-Mart in the Asia-Pacific region, 10% are in Malaysia and they are trying hard to become RFID compliant by 2008. Korea and Japan have taken the lead in RFID adoption in Asia. Southeast Asian countries are following suit but at a slow pace. morerfid.com reports:

Frost & Sullivan is pleased to bring you these exclusive insights at an analyst briefing on Thursday, December 15, 2005 at 11:00am (Singapore) (GMT +08:00).

Read More: Higher Frequency for RFID in Malaysia

RFID attracts retailers

Wal-Mart has led the way in RFID deployment in terms of the number of stores and suppliers involved. A strong indicator of a business case for RFID deployment is the scope for reducing out-of-stocks. Wal-Mart initiated a major study to understand the effect of RFID on out-of-stocks. The study was conducted from February 14 to September 12, 2005. It covered 24 Wal-Mart stores that represented all the different store formats. The initial results of the study show that the test stores have registered a better performance in terms of out-of-stocks as compared to the other stores.

Wal-Mart first issued a request to its top 100 suppliers to begin tagging pallets in June 2003. The DoD, Best Buy, Target, etc followed Wal-Mart’s lead in issuing RFID-related mandates to the retailers. The early mandates were directed toward big suppliers such as P&G, Gillette, Kraft, etc. According to a survey conducted by Frost and Sullivan that covered 510 companies, the prime reason for the deployment of RFID is not retailer mandates but the idea of improved processes at the shop floor, distribution centers, etc. Corsten and Gruen, 2003 state that at any given point in time, 8% of all items are out-of-stock. This results in a potential loss of 3.4% and 2.6% for the retailers and suppliers, respectively. Metro was able to register an 11% reduction in out-of-stocks at their test sites where RFID-tagging was implemented in this year.

Companies have been attracted toward RFID because of its various advantages such as no line of sight required and high read rates. RFID read fields are present throughout a supply chain for the purpose of capturing data as a crate moves to its final destination, the retailer’s shelves. Wal-Mart replenishes stocks by either replenishing the shelves directly from the delivery stores or by using a picklist. Traditionally, picklists have been created by visual inspection of shelves with the help of bar-code scanners. This is a laborious and not very accurate method of preventing an out-of-stock. RFID enables automatic generation of picklists in real time as the product is tracked on the sales floor, in the backroom, and at the distribution center.

Joint exercise

Wal-Mart and Target are jointly participating in a project that has them sharing EPC data with 13 suppliers. ccmsectorinvest.com reports:

The pilot reinforces a second important trend in the RFID supply chain, Michielsen adds. “To date, the retailers have driven RFID momentum with mandate announcements and, in the case of Wal-Mart, continued rollout roadmap communication,” he says.

Read More: Target and Wal-Mart agree to share RFID information

RFID concerns for retailers

Even though the trial results of Wal Mart’s RFID initiative have been positive, they have failed to impress everyone. This is because although RFID delivers an ROI to the retailer, it is not as yet such an attractive proposition for the manufacturers and distributors. The current quality of the tags is not up to the mark and is a function of the immaturity of the technology. Thus, not many buyers are willing to place large orders with the vendors.

The industry has set a target of achieving a price of 5 cents per tag for volume purchases. However, at present the most cost-effective tag is the SmartCode, which is a Gen 2 tag, available at 7.5 cents for orders of over 1 million and for 7.2 cents for quantities of over 10 million. There are several suppliers who feel that even at 5 cents, they may not get the desired ROI; this implies that Wal-Mart and DoD may have some problems in getting all their suppliers to comply with their mandates. ccmsectorinvest.com reports:

The conclusions of AMR Research's report are potentially even darker for full-scale implementation of RFID technology in large retail stores. Use of such technology based on pallet and case tagging will not generate revenue to add appreciably to the bottom line, the report says. This means that with today's technology-and today's costs-RFID is not economically justified for retailers.

Read More: To RFID Or Not?

Positive results at Wal-Mart

Even though the trial results of Wal Mart’s RFID initiative have been positive, they have failed to impress everyone. This is because although RFID delivers an ROI to the retailer, it is not as yet such an attractive proposition for the manufacturers and distributors. The current quality of the tags is not up to the mark and is a function of the immaturity of the technology. Thus, not many buyers are willing to place large orders with the vendors.

The industry has set a target of achieving a price of 5 cents per tag for volume purchases. However, at present the most cost-effective tag is the SmartCode, which is a Gen 2 tag, available at 7.5 cents for orders of over 1 million and for 7.2 cents for quantities of over 10 million. There are several suppliers who feel that even at 5 cents, they may not get the desired ROI; this implies that Wal-Mart and DoD may have some problems in getting all their suppliers to comply with their mandates. ccmsectorinvest.com reports:

The conclusions of AMR Research's report are potentially even darker for full-scale implementation of RFID technology in large retail stores. Use of such technology based on pallet and case tagging will not generate revenue to add appreciably to the bottom line, the report says. This means that with today's technology-and today's costs-RFID is not economically justified for retailers.

Read More: To RFID Or Not?

Wal-Mart to share EPC data

Two of the largest retailers in the US, Target and Wal-Mart, will be sharing their EPC data with 13 manufacturers under a pilot program. The applicability statement 2 (AS2), which is an Internet-based electronic data interchange, is being used to transmit the data in a standardized format.

The pilot should help in understanding the possible ways in which the manufacturers can benefit from the tagging that they do for the retailers. The EPC data includes information on the product status, stage of the business process, etc. Awareness of this information will help the manufacturers to plan better and be prepared, thereby improving the level of their service to the retailers.

"This data-exchange pilot is a huge tipping point," says Raymond Blanchard, a member of EPCglobal's Data-Exchange Working Group and cofounder of TrueDemand Software. TrueDemand has developed applications that can take advantage of EPC data and enable several of the business cases created by the EPCglobal Business Action Group.

Read More: Target, Wal-Mart Share EPC Data

Wal-Mart furthers its RFID strategy

Simon Langford, Manager for RFID strategies, Wal-Mart has stated that the company is working with its suppliers in order to increase the number of SKUs being tagged. Some suppliers are already tagging 100% of the items that they supply to Wal-Mart.

Wal-Mart says that by the end of this month, it will have installed radio frequency identification systems in more than 500 stores and five distribution centers. The retail giant is currently requiring its top 100 suppliers to ship tagged pallets and cases of specific stock-keeping units (SKUs) to three distribution centers and some 150 stores in the Texas area.

Read More: Wal-Mart To Expand RFID Tagging Requirement

RFID at Wal-Mart

A study conducted by the University of Arkansas has reported that customers at Wal-Mart stores are finding that the items they desire are more often in stock in the stores that use RFID. The study also reported that stores that used RFID were able to replenish out-of-stock merchandise three times faster than those that were using bar-codes. There was also a 16% reduction in out-of-stock goods at stores furnished with RFID labels.

The study was conducted over a period of 29 weeks and it covered the Wal-Mart supercenters, Discount Stores, and neighborhood markets. The objective of the study was to compare the effect of RFID on product availability. 12 stores with RFID and 12 stores without the technology were included in the study. In order to have a baseline reference, the 24 stores were monitored for out-of-stock items for 29 weeks before initiating the study.

Apart from improving the availability of the in-stock merchandise, Wal-Mart is also aiming to reduce the instances of manual order placements and has in fact succeeded in reducing them by 10%. The reduction in inlay prices should encourage the suppliers to tag a greater number of products. Wal-Mart is in the final phase of testing Gen 2 tags, which it expects will gain widespread usage as a global standard by the middle of 2006.

By the end of October 2005, more than 500 Wal-Mart stores and clubs as well as five distribution centers will be equipped with RFID. The number stores that will go live with RFID will be round 1000 by the end of 2006 and by the early months of 2007 the number of suppliers using RFID should be more than 600.

Wal-Mart Looks At Forklift Reader And Next Generation Tag

Wal-Mart is looking to add mobility to its RFID tag readers. At its lab in Bentonville, Ark., it is testing an RFID reader that could be installed on a forklift. This reader would read tags on pallets and transmit data through the RFID network, informing users a myriad of supply-chain data. In six weeks, Wal-Mart hopes to run trials on a new type of RFID tag that uses ultra-high frequency. Such tags are more akin to a global RFID standard.

Standards group EPCglobal Inc. is spearheading efforts for adoption of Gen 2 specifications by manufacturers of RFID tags, readers, printers, and antennas. Three classes are being developed, including semipassive tags that operate on low-power batteries. Working with suppliers to deploy those tags and create a temperature-sensor network for cold-storage food is a possibility within the next 18 months, Langford says. The network would monitor temperature so employees will know if goods thawed at any point during shipping, for example.

Read more: Wal-Mart Assesses New Uses For RFID

Wal-Mart 100% RFID Compliant

Wal-Mart has confirmed a 100% compliance of RFID. Badri Devalla, a principal architect with Infosys, argues that the presence of Wal-Mart in the RFID market truly brought the technology to the consumer goods sector. While gaining press in recent years, the story of RFID began over fifty years ago. In 1948, it was invented by Harry Stockman, yet had to wait its turn before emerging onto the common market. The lack infrastructure kept RFID quiet until the late 1990's. Techtarget writes:

Clients who want to go further than the "slap and ship" approach, said Devalla, are looking at it in two ways: closed-loop strategies (focusing within the company) and supply chain strategies (more collaborative efforts, possibly including packaging suppliers, contract manufacturers, third-party logistics players and retailers). Internal closed-loop systems are an easy starting point because companies can avoid issues with industry standards and synchronization with exterior partners.

Read more: Who gains, who loses, from RFID's growing presence in the marketplace?

Companies Look for New Ways to Implement RFID

Over 100 suppliers have begun to send RFID tagged freight to Wal-Mart, according to CIO Linda Dillman. RFID technology will provide immeasurable solutions to current problems if the data is able to be effectively used. Today, suppliers have devoted extensive time to making the technology work. Companies such as Kimberly Clark plan to explore ways to implement RFID into their own production lines. Mike O'Shea, director of corporate Auto-ID/RFID strategies and technology at Kimberly-Clark Corporation, remarked that proof of delivery was a very appealing side to RFID. ComputerWorld reports:

Suppliers won't be the only ones plotting business process changes. Dillman said Wal-Mart has "just barely touched the tip of the iceberg" with RFID. Initial process changes include creating automated and prioritized pick lists for store employees to use when stock is low on shelves and products are available in the back room, plus exception reporting capabilities for when that isn't the case, she said.

Read more: Suppliers eye RFID data, search for potential uses

P&G, Gillette Merger to Challenge Wal-Mart's RFID Position

Proctor & Gamble's recent $57 billion purchase of Gillette has created what Warren Buffett calls "the greatest consumer products company in the world." Such a conglomerate could use RFID and other technologies to flatten competitors or change the way Wal-Mart thinks about forcing their suppliers into adopting RFID. According to ExtremeTech:

"With P&G, there's a much stronger voice on technology standards on the supplier side," says Forrester analyst Christine Spivey Overby. "I think all suppliers will benefit."

Meanwhile, Overby says both P&G and Gillette are considered leaders on RFID and global data synchronization, an effort to standardize product information such as weight, dimension and height.

Read more: Procter & Gamble, Gillette Merger Could Challenge Wal-Mart RFID Adoption

Gillette, Wal-Mart, RFID

Gillette is one of the first eight companies to participate in the initial RFID pilot with Wal-Mart. Today, they use RFID technology to track their inventory as it moves through the supply chain, from the manufacturer to the distribution center, to the retailer stock room, to the shelf on the sales floor of the store.

According to Tech World:

Gillette is already getting access to data from Wal-Mart and is working with the retailer to understand the optimal use of the data, Burstein says.

A spokesman for Wal-Mart says it provides options for suppliers through its Retail Link extranet site. With Retail Link, suppliers have to "pull" data; a dashboard provides customisation options. That system was used during the pilot, and many suppliers will continue using it, the spokesman says.

Read more: Gillette shaves costs with RFID

Wal-Mart RFID Rollout Delayed

In mid-2003, Wal-Mart announced that it expected that its top 100 suppliers would be RFID-compliant by January 1, 2005. With that date less than a week away, Wal-Mart is admitting that the goal will not be met by most suppliers.

According to the New York Times:

Wal-Mart's goal was to wring billions of dollars from the supply chain by using the tags to keep shelves filled with whatever consumers were buying, cut back on shipments of other goods and combat theft.

The mandate was soon defined in narrower, more practical terms as supplying tagged cartons and pallets, not individual items, to a limited number of stores through just three Texas distribution centers by the Jan. 1 deadline.

Wal-Mart said recently that more than 100 suppliers would be tagging bulk shipments to the three Texas centers next month. But only 40 will be tagging everything they send.

Read more: Despite Wal-Mart's Edict, Radio Tags Will Take Time

Wal-Mart Pushes RFID Market

Wal-Mart is singlehandedly responsible for fueling the RFID industy, according to AMR analyst Kara Romanow, who says this despite pushes from other retailers and the department of defense.

According to ZDNet:

Romanow noted that several other major retailers, including Albertsons, Best Buy, Target and Britain's Tesco, are also launching RFID projects with their merchandise suppliers. The U.S. Department of Defense and the Food and Drug Administration are encouraging companies to deploy the technology, too.

But Wal-Mart appears to be leading the way. The company's project may more than double the U.S. retail industry's spending on RFID equipment this year.

Read more: Wal-Mart tagging fuels RFID market

Many Suppliers Won't Make Wal-Mart RFID Deadline

With Wal-Mart's January 1 deadline given to their top 100 suppliers to implement RFID looming just weeks away, ABI Research is estimating that only 30 will be compliant by then.

According to TelecomWeb:

According to Erik Michielsen, ABI Research's director of RFID and ubiquitous technologies, the fact that only around 30 percent of Wal-Mart's suppliers will have done full-scale RFID implementations by New Year’s Day isn't the issue. What's really important, he believes, is what the other 70 percent will do during the course of the coming year.

In a new RFID study produced by ABI, Michielsen says he doesn't believe that lack of money for integration trials has been the problem for most of these laggards.

Read more: Why Wal-Mart May Have To Scale Back RFID Plans

Jack Link's Beef Jerky Gets RFID for Wal-Mart Shipments

Microsoft Business Solutions-Navision is integrating Jack Link's Beef Jerky's pallet-level RFID tags shipping from the snack manufacturer to Wal-Mart stores. Jack Link's Beef Jerky is a meat manufacturer and therefore must meet U.S. Department of Agriculture traceability requirements.

According to InformationWeek:

Although Jack Link's Beef Jerky has never experienced an actual meat recall, it carries out frequent mock recalls that show it takes between 12 and 16 hours to manually track every case that came out of one specific lot recall. That's because the company needs to track the customers it shipped to as well as sales orders to which the shipment is tied. "I'm shooting from the hip, but I bet with RFID we can get this processes in under a half an hour," Paepke says.

Read more: RFID Gives Manufacturer A Better Handle On Its Snacks

RFID in China's Manufacturing and Healthcare Sectors

China manufactures approximately one-half of all products sold by mega-retailers, like Wal-Mart, in the U.S. This fact will invariably lead to an RFID revolution in China.

According to Asia Times Online:

Naturally, given the depth of China's involvement in global manufacture, the retailer's directions to its suppliers in the US on RFID tags will have a major impact on China in course of time. "The Chinese are not unfamiliar with RFID technology. However, the true impact of Wal-Mart's direction to its suppliers would be felt in 12 months' time in China," estimates Tony Cotterell, principal and consumer business industry leader in China for Deloitte Touche Tohmatsu.

In addition to its manufacturing sector having a demand for RFID technology, China's healthcare sector is looking into implementing RFID to help track donated blood bags, specifically to deal with HIV and hepatitus.

Read more: Radio tags for China's products, blood and people

Wal-Mart to Expand RFID in 2005

Wal-Mart announced that while their top 100 suppliers will be using RFID by January 1, 2005, their next 200 top suppliers will have to meet a compliance deadline by January 1, 2006.

According to Information Week:

But Langford added that another 37 small and midsize companies, including Beaver Street Fisheries and BP Amoco's Castrol North America Inc. division, that recognize RFID's potential benefits will also begin using the technology to track goods shipped to Wal-Mart at the start of the year.

Read more: Wal-Mart Plans Next Phase Of RFID

Wal-Mart's Size Helps Advance RFID Usage

Without Wal-Mart, it is hard to tell where RFID technology would be today. Although still a technology in the works, RFID has come a long way due in large part to the retail giant.

According to CBS MarketWatch:

"The cost of this still-fledgling use of this technology is astronomical. Shifting from bar codes to these chips that look like a speck of dirt on a baby's finger is a multibillion dollar undertaking.

"Printing bar-code labels on packages is considerably cheaper than the present 30 cent to 60 cent cost per chip. Judy Dobson, managing partner of NCR, said the costs inevitably will go down, but probably not soon enough." Read more

800 Wal-Mart Stores to Be RFID Compliant by October 2005

Steve Brown, executive vice president of business development at Acsis, says that Wal-Mart's 200 tier 2 suppliers will have until the start of 2006 to be RFID compliant. Wal-Mart promises suppliers that RFID will be beneficial to all parties involved.

According to ComputerWeekly:

"RFID readers will now be deployed at the back door of its stores so that suppliers will know when goods have arrived. In addition, another RFID tag will be placed at the entrance to the sales floor so a supplier can tell what is on the sales floor and what is left in the backroom.

"This type of information will give suppliers a good read on their inventory and sales velocity and give them more demand signals for forecasting." Read more

Wal-Mart Suppliers to Deploy RFID Technology in China

Many manufacturers that ship products to Wal-Mart have plants located in China. Rolling out RFID technology there, however, is problematic due to the lack of standards.

According to Information Week:

"Between 50% and 70% of nonfood products shipped to Wal-Mart are made in China, analysts say. As the retailer deploys passive RFID technology in more distribution centers and stores, some of its suppliers are increasingly eager to take advantage of efficiencies and lower costs that could come from tagging pallets and cases at offshore plants. Pacific Cycle, whose iconic brands are Schwinn, GT, and Mongoose, has invested about $50,000 in RFID to date and has budgeted $1 million for 2005, not including tags." Read more

Wal-Mart to Have 137 RFID-Compliant Suppliers by January

Simon Langford, Wal-Mart's manager for RFID strategies, has announced that 137 of its suppliers will be RFID-compliant by the January 2005 deadline, exceeding the initial goal of 100.

According to eWeek:

"Langford declined to name the volunteers. Currently, Wal-Mart is undergoing pilots in the Dallas area with eight key suppliers: The Gillette Co., Hewlett-Packard Co., Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestle Purina PetCare Company, Procter & Gamble and Unilever." Read more

Wal-Mart RFID Implementation on Track

Australian IT News reports:

"The first RFID-enabled pallets arrived at seven Wal-Mart stores and a distribution center in Texas in late April.

"Eight suppliers and 21 product lines are involved in the test.

"The suppliers include Proctor and Gamble, Hewlett-Packard, Gillette, Johnson and Johnson, Kimberly-Clark, Kraft Foods, Nestle, Purina Pet Care and Unilever." Read more

When Wal-Mart Talks, Suppliers Listen

Information Week reports:

"It was at last year's Retail Systems conference in Chicago that Wal-Mart CIO Linda Dillman seized the industry's attention by announcing the goal of having the retailer's top 100 suppliers deliver cases and pallets with RFID tags by January 2005. Last week, Wal-Mart was back at the Retail Systems conference, promising to get 200 more suppliers into the RFID effort this summer and to keep the pressure on suppliers, tech companies, and even rivals to make RFID a reality. 'This joint work has ensured that many months, and even years, have been taken out of the traditional development cycle for a project like RFID,' Wal-Mart stores division CEO Mike Duke said." Read more

Retailers Express Different RFID Expectations

According to ARNnet:

"Retailers expressed divergent views of the revenue-generating potential of radio frequency identification technology at the Retail Systems conference. Executives from Wal-Mart, Marks & Spencer and Target said it's possible to make a business case for using RFID in the supply chain today, while others expressed less optimistic assessments of payback potential given the technology's current level of maturity.

"'One of the greatest benefits will be increased sales,' said an executive vice-president at Wal-Mart, Michael Duke, in his keynote address." Read more

Kimberly-Clark RFID Trial with Wal-Mart Succeeding So Far

Consumer-packaged goods manufacturer Kimberly Clark has successfully RFID tagged its shipments to the Wal-Mart distribution center in Sanger, Texas.

According to Information Week:

"The trial, which officially kicked off the last week of April, involves Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestlé Purina PetCare, Procter & Gamble, and Unilever and includes just 21 of the more than 100,000 products carried in a typical Wal-Mart Supercenter. Tagged pallets are being delivered to the Sanger distribution center and to seven Wal-Mart stores in the Dallas/Fort Worth area in the trial, with RFID readers at dock doors to scan shipments.

"Kimberly-Clark had the trial's first successful reading--a case of Scott paper towels was the first product shipment to pass under a Wal-Mart RFID scanner." Read more

CASPIAN Fights Item-Level RFID Tagging in Wal-Mart Stores

Wal-Mart has begun item-level tagging some of its items in seven of its stores in the Dallas-Fort Worth area of Texas. Hewlett-Packard products for sale in the consumer electronics departments of these stores have live RFID tags attached to them. The implementation of this technology, however, has consumer and privacy rights activists up in arms.

Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN) is one of the groups to lash out against Wal-Mart, saying that item-level RFID tagging violates a moratorium issued last November by 40 civil liberties organizations.

"Wal-Mart is blatantly ignoring the research and recommendations of dozens of privacy experts," says Katherine Albrecht, founder and director of CASPIAN. "When the world's largest retailer adopts a technology with chilling societal implications, and does so irresponsibly, we should all be deeply concerned."

Albrecht also warns consumers that the industry's ultimate goal is to have an electronic product code (EPC) embedded in an RFID tag on every item in the world. This would create a society in which everything can be kept under surveillance at all times. While this complaint may seem like something out of Brave New World or 1984, the capability of such a reality may be closer than most are willing to admit. It seems unlikely, however, that this will actually come to pass, seeing as how many consumers have begun lashing out against such an invasion of privacy.

More information can be found at the Register, out-law.com, Wal-Mart's FAQs and CASPIAN.

Unilever Uses RedPraire RFID to Meet Wal-Mart, DoD Deadline

According to Using RFID:

"RedPrairie Corporation says that it is leading an RFID pilot for Unilever North America to allow the company to implement and test RFID technology within its supply chain in preparation for the pallet and case level RFID mandates issued by Wal-Mart and the US Department of Defense.

"Three Unilever locations have been chosen for the pilot, including a manufacturing site, a Home and Personal Care distribution centre, and a Best Foods distribution centre. RedPrairie's RFID Accelerator solution will be tested for its ability to meet the mandates' demands without having to replace Unilever's existing infrastructure." Read more, including comments from Unilever's supply chain futurist, Simon Ellis, and RedPraire company leader, John Jazwiec.

Applied Wireless Makes RFID Readers for Supply Chain

According to the Journal News:

"When Wal-Mart speaks, the business world listens.

"And last spring, when the world's largest retailer announced it would require its top suppliers to use radio frequency identification to track their merchandise, Donny V. Lee was listening intently.

"Lee is chairman and chief executive officer of Monsey-based Applied Wireless Identifications Group Inc., which makes radio frequency identification tags and readers." Read more

Wal-Mart Begins RFID Tracking Today

RFID Journal reports:

"Wal-Mart today begins receiving cases and pallets of product with RFID tags carrying Electronic Product Codes (EPCs) at a distribution center in the Dallas/Fortworth area as part of a test being conducted with eight suppliers. The tagged goods will be tracked to the back of seven Wal-Mart stores in Texas.

"Wal-Mart is billing this as a trial, but Simon Langford, Wal-Mart's manager of RFID strategies, told RFID Journal that this is the beginning of the company's planned roll-out of EPC technology." Read more

Suppliers, Wal-Mart Not in Agreement

A new Forrester Research study shows that while Wal-Mart may think that implementing RFID is the next logical step in supply chain efficiency, many of its suppliers disagree. The suppliers claim that RFID will still not help them match supply to demand.

Food.com reports:

"The consensus among the manufacturers interviewed, it seems, is that production networks still suffer from a lack of visibility with customers and suppliers, and it is this that results in mismatches between supply and demand.

"'The problem that we have is that the vast majority of retail clients don't have ways to manage their store inventory, so they walk around the store trying to find the voids,' said a food manufacturer. 'Once, we visited one of their stores, which had stock-outs for their most profitable, best-selling item. We went back and realized that they weren't ordering that product; they were ordering the wrong stuff.'" Read more

Wal-Mart's New Deadline for Pharmaceuticals: June 30

Despite the setbacks of RFID regarding both cost and readability of tags on cases inside of pallets and through metals and liquids, Wal-Mart is confident that all 18 of its pharmaceutical suppliers will be RFID compliant by the end of the second quarter.

Computerworld reports:

"But the missed deadline [March 31] highlights the challenges that all suppliers face as they try to adopt RFID technology. And the compliance delays may not be the only ones Wal-Mart encounters as its leading suppliers strive to fully meet the RFID directives it set last year, predicted analysts at Forrester Research Inc., Gartner Inc. and five other market-research and consulting firms." Read more

RFID Reality Check: Deadline Quickly Approaching

A report on Information Week analyzes the Forrester Research study that was published last week:

"Companies are scrambling to figure out how to pay for and implement radio-frequency identification technology in order to comply with mandates from some of the world's largest retailers, such as Wal-Mart Stores Inc. and Target Corp., as well as the Department of Defense. But the rush is hitting some serious speed bumps."

The article also breaks down Forrester's $9.1 million dollar RFID startup cost. $7.6 million would be spent on tags alone in the first year. Read more

Forrester Research Projects RFID Costs

Forrester Research's report, "RFID: At What Cost?" estimates RFID start-up costs at approximately $9 million for a typical Wal-Mart supplier. Bad news for Wal-Mart: Forrester estimates that only 25% of suppliers will be able to meet the January 1, 2005 deadline.

According to Business Wire:

"'There is no business case for most suppliers in the short term,' says Forrester Research Senior Analyst, Christine Overby. 'The technology is not ready and there is a lack of deep expertise in the industry to help suppliers implement RFID.' ...

"The report recommends that Wal-Mart redefine the scope of its RFID mandate, by narrowing the scope of products to those with limited amounts of metal and liquid." Read more

Wal-Mart to Begin RFID Testing on April 19

According to Information Week:

"Wal-Mart Stores Inc. next month will launch its first real-world radio-frequency identification test with eight as-yet-unnamed suppliers, according to Linda Dillman, the retailer's executive VP and CIO of information systems. Cases and pallets of products with passive RFID tags will be shipped to three of Wal-Mart's Dallas distribution warehouses starting April 19.

"Gillette, Kimberly Clark, Nestlé, Procter & Gamble, Purina, SE Johnson, and Unilever are among the suppliers whose RFID projects are the furthest along, and industry execs and analysts say they're likely participants in the April pilot."

VF Corp. to Begin RFID Testing in September

VF Corp., the world's largest apparel manufacturer recently outlined its plans to implement RFID technology to all of its distribution centers by early December, a few weeks ahead of Wal-Mart's January 2005 deadline.

According to Information Week:

"'Wal-Mart is our No. 1 customer, so there is no way we will put at risk that partnership,' says Eric Anthony, VP of IT services at VF. 'And we do believe RFID is a strategic technology for the apparel industry. In the long term, there is tremendous value, particularly in the individual tagging of items.' ...

"All told, Anthony says, the RFID implementation will cost VF several million dollars."

Wal-Mart Hits RFID Snag

According to the New York Times:

"When Wal-Mart Stores surprised its suppliers last summer by announcing an aggressive timetable for them to put radio frequency tags on their shipments, it put manufacturers of the most tightly controlled prescription drugs on the fastest track of all. They were supposed to send bulk shipments of such drugs in radio tag containers to a distribution center near the company's headquarters in Bentonville, Ark., by the end of March.

"With that deadline just days away, Wal-Mart is now admitting that it will not be met."

Although some companies have begun sending radio-tagged drugs, analysts do not expect complete radio-tagging at Wal-Mart until 2005. At 25 to 30 cents per tag, the cost is one of the major reasons for the setback. Read more