Providing a Road Map for Sam's Suppliers

By Mark Roberti

Jan. 28, 2008—In June 2003, when Linda Dillman, then Wal-Mart's CIO, announced that the retailer would ask its top 100 suppliers to begin tagging pallets and cases of some stock-keeping units (SKUs) in January 2005, there wasn't even a first-generation Electronic Product Code (EPC) air interface standard yet, never mind standards for how interrogators communicate with middleware and how companies share data. And the road on which suppliers needed to travel to achieve a return on investment had not yet been paved.

In the five years since then, a great deal has been accomplished. The second-generation EPC air interface standard is an enormous improvement. Many issues surrounding tagging products have been overcome, and standards for employing and sharing EPC data have been established. Suppliers to Wal-Mart—large companies, such as Procter & Gamble and Kimberly-Clark, and smaller companies, such as Daisy Brand and Hampton Products—have found ways to use the data to improve their operations and increase sales.


All this means it should be far easier for Sam's Club suppliers (those not already tagging for Wal-Mart) to not just meet the tagging requirements but also achieve actual benefits (see Sam's Club Tells Suppliers to Tag or Pay and Sam's Club Letter Shakes Things Up). But for that to happen, the RFID industry needs to do a better job of explaining the benefits of using EPC data, as well as drawing a map showing Sam's suppliers how to get from basic compliance to the deployment of applications that deliver an ROI.

The sad fact is that there are still only a small number of companies exploiting the EPC data Wal-Mart provides to its suppliers. Many suppliers still just slap tags on cases and ship them off. They don't see—or perhaps don't wish to see—that they can combine data from EPC systems showing where tags were read with point-of-sale (POS) and other data to improve how they do business.

I spoke to one supplier who complained about not getting any return on investment from the tags his company places on shipments to Wal-Mart. I asked him how he was using the data, and he responded, "What data?" He had never even looked at the data Wal-Mart provides back to its suppliers. (And I'm not making this up.)

A person from another large company didn't have any idea how to utilize the EPC data to improve promotions tracking. I sent him the case study we published on Kimberly-Clark tracking promotions (see Kimberly-Clark Gets an Early Win), which offers as clear a road map to using EPC data as you can provide, and he was shocked. "I can't believe we're not doing this," he responded via e-mail. "I've got to bring this up with top management."