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The Danger for Sam's Club Suppliers

Waiting too long to become EPC-compliant will result in higher costs in the end.
By Mark Roberti
Dec 01, 2008With only a few exceptions, most Sam's Club suppliers are not preparing to meet the retailer's requirements for affixing RFID tags based on the Electronic Product Code (EPC) standard to sellable units beginning October 2009, and this concerns me. Many suppliers are apparently gambling that Sam's Club isn't serious about its mandate, so they are not yet investing in learning how to become compliant. The problem is, if Sam's Club doesn't back off in the end, these firms will then have to spend a lot of money to meet the requirement at the last minute.

Several suppliers have told me they have not received any communication from Sam's Club since the retailer sent out a letter in January of this year (see Sam's Club Tells Suppliers to Tag or Pay), while others indicate they have not received any communication at all. Many suppliers are currently paying a fee for each untagged pallet they ship to Sam's Club, rather than tagging the pallets.


The real issue is tagging sellable units, because the volumes are much higher than for tagging pallets and, therefore, inherently more difficult. Suppliers that ship to Sam's Club's DeSoto, Texas, distribution center are required to begin tagging sellable units by next October. Those shipping to DCs in Dayton, Kansas City, Searcy and Villa Rica, meanwhile, will have to tag sellable units by Jan. 30, 2010. And all sellable units must be tagged by Oct. 31, 2010.

Companies seem to be taking Sam's Club's lack of communication as a sign that the retailer is not very serious about requiring them to tag sellable units. But from everything I've heard Sam's say, both publicly and privately, it appears the company is serious, and that it plans to go ahead with the requirement and continue rolling out equipment to its stores.

Sam's Club assumes suppliers will comply with the mandate, so we could be headed for a situation in which most companies will waste the next six or eight months doing nothing, then suddenly realize they do, in fact, need to tag sellable units by October. At that point, most suppliers—those with very low volumes of sales are an exception—will need to spend a lot more money then they would have spent had they begun getting compliant much earlier.

USER COMMENTS

Richard Keefe 2008-12-04 11:57:10 PM
Automating tagging Smart packaging is coming sooner than many in the industry believe. The Gen 2 technology and the push to wider usage will reduce tag costs - the pressure is on for the makers to support the demand and there is now technology that can support 'Smart Boxes' corrugated or folding cartons.

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