Put RFID on front burner: Wal-Mart

The best way for Canadian manufacturers, distribution firms and retailers to wrap their collective, corporate heads around radio-frequency identification (RFID) is to start experimenting with the technology, according to a Wal-Mart Stores Inc. vice-president.

“Get a lab going,” said Kerry Pauling, Wal-Mart’s vice-president, information services. “You will learn (that) if you stick a tag on a Coke can, it’s not going to work very well.”

RFID is wireless technology that’s supposed to help companies track goods. The infrastructure includes scanners and RFID tags that tell the scanners all about the products tags are attached to. The scanners automatically distribute rich information across the supply chain, so retailers know where shipments are (on the road, or perhaps in a distribution centre waiting for transport), and suppliers know when their retailing partners are out of stock, for instance.

Wal-Mart is an early RFID adopter. The Bentonville, Ark.-based retailer mandated RFID use for its top 100 suppliers by early 2005. According to Pauling, all of the expected participants in the Wal-Mart RFID launch joined the wireless infrastructure within weeks of the deadline.

Pauling was speaking at EPCglobal Canada’s RFID conference in Toronto yesterday. EPCglobal works with like-minded organizations in other parts of the world to develop RFID and electronic product code standards.

Pauling touched on the challenges and the expected roadmap for Wal-Mart, a company considered to be on the RFID forefront.

In the early stages, one of the most pressing challenges for Wal-Mart was finding the right place to put RFID tags on the products — the optimal spot, so RFID scanners could read tags easily. That’s where the lab work came in, Pauling said. It took time to discover the right placement.

Although RFID tags are expensive these days — some say 30 to 50 cents a piece — Pauling said the price should come down as an increasing number of companies implement the technology.

He said the read-rate debate isn’t that big a deal. The read rate indicates the chances that an RFID scanner will recognize an RFID tag. Read rates tend to be around 85 per cent, according to one conference participant. Pauling pointed out that most RFID infrastructures include multiple scanners. If the scanner at the dock door doesn’t register a tag, the scanner in the stock room likely will. “RFID is probably the best self-healing system,” he said.

These days Wal-Mart is concerned less about the technology, and more with how RFID affects business processes.

The retailer has experienced some efficiencies from its 104-store RFID pilot, Pauling said. The tags and readers make it easier to know which products are out of stock, for example. That makes enables the store to keep shelves full — something Wal-Mart has had trouble with in the past, Pauling said. “At the same time, suppliers win too,” Pauling said. They get details about shipments (whether Wal-Mart received them; where they are in the supply chain) and out-of-stock situations, which lets them prep shipments in advance of a request from the retailer.

Now that the top 100 suppliers are on board, Wal-Mart is turning its attention to the next-biggest group, 200 second-tier suppliers – companies that the retailing giant wants to see become RFID savvy by early 2006. In 2005 Wal-Mart will expand its footprint of RFID-enabled stores, so 600 locations across the U.S. will have the technology in place.

Pauling didn’t give details about Wal-Mart’s Canadian stores, although he did mention an ensuing RFID business plan for the retailer’s international locations. “There will be more information to come on that,” he said.

He said Wal-Mart’s RFID infrastructure includes 14,000 pieces of hardware and 370 kilometres of cable to connect the RFID equipment to the computer network. So far Wal-Mart has processed more than 23,000 RFID-tagged palettes of goods.

Pauling advised the EPCglobal audience, consisting of retailers and manufacturers for the most part, to start testing RFID in their own environments, but he also cautioned them to start small. “Don’t go after the hardest problem,” he said.

But start now. “Don’t wait,” Pauling said, channeling a notion popular at this conference that hesitation is death when it comes to RFID. “Figure out what works for you and what doesn’t work for you.”

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