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Déjà Vu All Over Again

As they did with Wal-Mart, many suppliers are assuming Sam's Club will back off its EPC tagging requirements.
By Mark Roberti
Sep 08, 2008Three times last week, I heard from suppliers who said they're not taking steps to comply with Sam's Club's requirement to apply RFID tags carrying Electronic Product Codes (EPCs) on sellable units (see Sam's Club Tells Suppliers to Tag or Pay). These companies said they simply don't believe the retailerer will go through with the deployment.

Two systems integrators I spoke with also told me that while they'd completed preliminary work with Sam's Club suppliers, the work had been shut down because "it appears Sam's Club is backing off its requirements." If this sounds familiar, it's only because it is—the same thing happened when Wal-Mart initially rolled out its RFID plans. At that time, some suppliers swore up and down that the retailer would back off its tagging requirements.

Wal-Mart did make some adjustments to its rollout plan—for instance, it focused more on stores than on distribution centers, because early work determined there were more benefits to be had at the store level. But here we are, three years later, and Wal-Mart has not pulled RFID out of its stores. Instead, the retailer continues to explore the benefits and employ the technology where it's delivering the most value.

Those who dragged their feet were forced to implement slap-and-ship tagging systems, which deliver no benefits back to them. Other companies, such as Beaver Street Fisheries, Kimberly-Clark, Procter & Gamble and World Kitchen, took an approach that either minimized additional labor costs, or delivered benefits by allowing them to utilize the data to improve sales and cut costs.

I know the folks at Sam's Club are currently refining their rollout plan. These are smart folks, and they'll continually examine where the benefits lie, where the technology delivers the most value and what suppliers are capable of achieving, then adjust their plans and implementation strategy accordingly. That's just good business practice.


William James 2008-09-12 10:47:41 AM
Sam's Club Initiative Mark, Very good analysis of the Sam's Club initiative. I'd on suggest that one of the incentives to help the suppliers really push hard to item level tagging is the payback they will get by gaining visibility to their product moving through the Sam's Club supply chain. By actually seeing what products are coming out of the store or off the shelf and displays they will have a much more accurate count on their inventory positions they need to maintain upstream. The problem they are all chasing is the out of stocks which they solve by moving product into the DC's so it's readily available for shipment into Sam's. This stuffing of the supply chain is costing them millions in inventory capital. Additionally, having visibility to the item level data helps them to better fine tune their promotions and category management. This is especially important when a supplier runs a promotion with Sam's, the execution is critical to the success of the promotion and today they have no real "in-store" data to tell them if they met their marks. By having access to the item level data that hopefully will be shared back with them they can better tune their supply chains which will save millions on fuel and transportation, packaging, shipping, and other sustainability goals they are trying to meet. Sam's should help the suppliers by giving them access to the data at the item level so they can feed it back into their production planning systems. At that point they will start to realize the ROI's they so rightly long for. Bill James VP Business Development Seeonic Inc. www.seeonic.com

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