Chipping products as veterinarians chip pets, Wal-Mart has declared, is what their suppliers must do. They must also pay for it themselves, as a cost of being a Wal-Mart supplier, although Wal-Mart claims that suppliers, also, will ultimately benefit from using the devices, which would be used to track product stock levels and movement throughout Wal-Mart’s empire.
Since a test in Texas in January of 2005, Wal-Mart has been implementing RFID tagging technology, and, according to the Financial Times, suppliers and other retailers are remaining skeptical.
After originally requiring top suppliers to “tag” all their products in a fast roll-out already in progress, Wal-Mart is focusing the effort on products where “we absolutely feel the business case” to have the tags, said Wal-Mart CIO Rollin Ford, quoted in the Financial Times. But the target would still be to tag most products, he said. New tags now have prices as low as 15 cents, but implementation is still seen as a challenge to smaller suppliers.
RFID chips are small, passive radio devices, which emit a code when near an RFID scanner, much as barcodes currently do when passed by a laser scanning device. Already in use in lost pet identification systems, corporate ID systems, and other applications, the chips are seen as extremely useful but also vulnerable to “hacking” and authorized duplication and modification.
In an article today in Computerworld, vitamin manufacturer Schiff, which is one of the companies given an earlier deadline to implement RFID by Wal-Mart, is said to be struggling to implement the technology in its own supply chain, concerned that Wal-Mart’s requirement represents only a small fraction – less than one percent – of their total shipments, but the company also sees a significant advantage in being ready as other retailers adopt the technology. Ron Farrimond, manager of business analysis at Schiff, is quoted in Computerworld as saying, about being ready to support other retailers, “When we can tell that to our customers, then they see us as an enabler in the supply chain, as opposed to somebody who’s whining that the initiative costs a lot of money.”
When the first 100 suppliers were notified that they were to be part of the initial implementation in 2005, Wal-Mart representatives said that they questioned the costs involved, and the advantages the program would yield. Costs have since been dropping significantly on the technology, and if suppliers such as Schiff move forward to implement the technology in their own supply chain to further benefit, then Wal-Mart’s initiative could result in several waves of suppliers gaining in efficiency and ready to meet the RFID needs of other retailers as they implement the technology.
“Wal-Mart pushes on with product ID tags”, February 22, 2007, Financial Times (Print Edition)