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Meeting Wal-Mart’s RFID Mandate

Three of Wal-Mart’s top suppliers discuss how they are coping with the retailer’s requirement to tag pallets and cases by 2005.
By Bob Violino
Oct 20, 2003Oct. 21, 2003 - Three of Wal-Mart’s top 100 suppliers are moving forward to meet the retailer’s requirement that they tag pallets and cases beginning in January 2005. Key executives from Kraft Foods, Proctor & Gamble and Pfizer spoke at a meeting of the Warehousing Education and Research Council held in Cleveland, Ohio, last week.

The event was organized and broadcast over the Internet by Material Handling Management magazine. A replay is available on the Web.

Chris Golinski, Pfizer’s customer logistics manager, said Wal-Mart’s RFID mandate was a wake-up call: "The Wal-Mart announcement meant there was no more time for procrastination."

Pfizer plans to complete a feasibility study by the end of 2003. The company also will test 20 products that are representative of its overall portfolio to see how well tags placed on them can be read. "Pfizer sat on the sidelines when there were limitations in tagging liquids or metal, because that makes up 80 percent of our products," said Golinski.

Pfizer will begin lab testing RFID systems within the next week or two, and it plans to do site surveys in its packaging and distribution centers in November. Next year, the company will carry out an extensive cost/benefit analysis.

Golinski also stressed that companies need to look at their own operations and determine where they can and cannot get benefits from using RFID technologies. "We already have pretty accurate shipping and receiving at our distribution centers, so there are no early wins for us and no low-hanging fruit," said Golinski.

Benefits from EPC deployments, such as cutting costs by improving inventory management and reducing shrinkage, will come only after thorough examination of a company’s supply chains and identifying where improvements can be made, according to Doug Naal, electronic business program manager at Kraft. "Just sticking an EPC label on a carton is not going to get you these benefits," he said.

The executives from the three companies said they started their EPC deployment plans by putting together a multi-disciplinary team made up of people from several departments, including finance, IT and distribution. They stressed that the technology must be carefully considered before any potential deployment can bring real returns.

P&G has already done an extensive business case analysis and is now in the process of testing the performance of RFID tags and readers from different vendors, said Tom Torre, EPC project manager for P&G’s B2B Supply Chain Innovation group. "A lot of people want to push into pilots first," he said. "Our experience is [you should] do the business case first."

Companies also have to be prepared to deal with the deluge of data that RFID deployment will inevitably create. "The competitive advantage in the long term is about what you do with the data to make better business decisions," said Torre. He added that P&G already has an IT director working on analyzing the right IT infrastructure for the company to make the most of that data.

For those companies yet to deploy, Kraft’s Naal suggested starting with an internal pilot that will bring a return on investment. "If you are just getting started, look at a closed loop," he said. "It's a good way to get your feet wet."

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