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Answering Questions from Sam's Club Supplies

On Oct. 7, we ran a webinar for Sam's Club suppliers, explaining how to tag sellable units. We received many questions, not all of which we could answer, so I'm posting answers in my blog.
Posted By Mark Roberti, 10.08.2008
Q: We ship corrugated cases with 12 units in them, each with 2 pounds that are sold as a two-pound item to Sam's customers. What is the "sellable" that needs to be RFID-tagged?

A: The two-pound item is the sellable unit.

* * *

Q: My understanding is Sam's is not requiring suppliers to afix RFID tags to cartons for the Jan 2009 date, but will tag the cartons themselves.

A: Sam's Club is requiring suppliers to tag pallets and charge $2 per pallet, rising to $3 per pallet, for those who don't place the tag themselves.

* * *

Q: Are there specific data carrier requirements for unit level SKU's—i.e, UHF RFID with a human readable backup or 1D/2D bar code?

A: Yes, the Sam's Club compliance document, available on Retail Link, spells out exactly what's required. You will need both an EPC, based on serialized GTINs, and the existing bar-code markings.

* * *

Q: Is aggregation of units to cases to pallet serial numbers required? Are complete hierarchies to be passed on to Sam's? Are the EPC numbers required to be associated with any other product data?

A: Hierarchy data is not required at this time.

* * *

Q: First aid and automotive emergency kits—are there EPC advantages?

A: It's difficult to say. You need to examine how often the item is out of stock, and other factors, to determine that.

* * *

Q: What is cost per pallet that the company will charge you if you are not tagging your products after the deadline?

A: The charge starts at $2 and raises to $3.

* * *

Q: We have tested various tags on one of our metal aerosol packages with a low-profile PP cap, and we have not seen good results. If we have an item that is just not tag-able, what do we do?

A: I suggest you talk to Sam's and explain the problem. Wal-Mart has a lab where they can test products and perhaps suggest a solution. You can also go to independent labs that offer testing.

* * *

Q: Are there any companies that provide services of optimizing tagging position at the case and pallet level for food companies?

A: Yes, there are several labs that offer tag testing, and they will do the testing for food and other companies.

* * *

Q: What is the approximate budget for slap and ship application?

A: That depends on the number of tagging stations you need, the number of tags you require and so forth. But you might spend $30,000 to $50,000 for a base level solution.

* * *

Q: Sam's Club sells products in bulk—is item-level tagging really important to them?

A: The fact that Sam's sells in bulk makes it easier to tag at the sellable unit, because the items tend to be easier to tag, and because they are higher value. Sam's clearly feels there is a lot of value in tagging sellable units.

* * *

Q: You mention that there are different approaches for "high-volume" SKUs. What is your definition of high volume?

A: It really depends on your operations. Some companies might be able to tag 10,000 items per month manually. For others, the number might be lower.

* * *

Q: For SKU tagging, has Sam's Club determined the charge-back to the supplier if the items come in un-tagged?

A: They have not stated that they will charge suppliers, but my view is that they likely will charge something.

* * *

Q: Are there any other retailers in the nation to mandate similar RFID tagging in addition to Sam's Club, now or in the future?

A: Not currently.

* * *

Q: What challenges do you see with tagging clothing?

A: Clothing is relatively easy to tag, but you will need to work with a supplier, such as Avery Dennison, that can integrate an RFID tag into the hangtag.

* * *

Q: How can we get a copy of the guide?

A: Attend EPC Connection! We will also sell the guide after it is published at the event. But you will be able to attend the event and get the guide for less than it will cost to buy it alone after the conference, so EPC Connection is a great deal.

* * *

Q: How reliable are the tags embedded in corrugate? What do you do when you get a bad tag in corrugate?

A: It is reliable, once a functioning tag is applied. If the tag is bad, you must either discard the corrugate or apply an RFID label.

* * *

Q: Can you elaborate on the roll-out plan? How do you know if you have a low-volume shipment to Sam's Club?

A: It really depends on your operations, and what you can handle. Is there space in your shipping area to separate Sam's inventory so it can be tagged? If so, you might be able to manually tag more units than a company that has no space available.

* * *

Q: What do you mean when you say "minimal back and front end" integration?

A: By this, I mean batch transfers between systems, either automatically or manually. You are not creating tightly integrated links between the systems.

* * *

Q: We are a new vendor to Sam's Club and not currently shipping to the DCs. We have 10 products. Nine of our products, blister-packed, are manufactured in one factory, while the other, in corrugated box, is made in another factory. The nine blister-packed products will be packaged 10 units to a box. Estimated units per month of each is 10,000 to 15,000.

A: There are many additional factors to consider, all of which are explained in our Guide to Tagging. But generally speaking, blister packs have foil, so you will nee to do some testing to determine the right location to place the tag (place it on the site away from the foil). You will need to work out the processes involved with manufacturing and packaging these items to determine the best time to tag. With volumes of 15, 000 per month, you will want an inline or offline automated approach.

* * *

Q: What is the average cost of a basic RFID tag?

A: It depends on the volume purchased, and whether the tag is embedded in a thermo transfer label. At high volumes, labels cost about 15 cents each. A tag with no label might cost half that.

* * *

Q: Can we have a soft copy of the free Sam's tagging guide in case we cannot come to the conference? How can we get it?

A: We will make it available for sale on our Web site: www.rfidjournal.com/store.

* * *

Q: How can I tailor-fit Retail Link to trace and track my EPC-enabled pallet to the DC and store level?

A: Data provided by Wal-Mart and Sam's Club is in a format that shows when and where the tags are read. Companies sell software that takes this information and shows where products are in the supply in retail. Reports show you where they were, how long they sat at different points and so forth.

* * *

Q: Where is the lab of Sam's and Wal-Mart? Who is the point person to collaborate or ask queries?

A: The lab is in Bentonville. You should have your sales rep who deals with Sam's Club introduce you to the folks in the lab.

* * *

Q: All timelines that I have seen for Sam's DC have only been for a dry DC. Is there a schedule for frozen foods and frozen DCs?

A: Sam's has not broken out frozen food from other products. The timeline sent originally to 750 suppliers serving the DeSoto, Texas, DC is on Retail Link.

* * *

Q: What information will I get back from Sam's Club when I tag, other than the fact that the product has reached the club?

A: You get quite a lot of valuable data about where tags where read, when, where and the business step involved. Companies sell software that takes this information and shows where products are in the supply in retail. Reports show you where they were, how long they sat at different points and so forth. This can help you improve replenishment, reduce out-of-stocks and better manage promotions. If you attend the event, you will hear all about this.

* * *

Q: I am an integrator. Do you have any suggestions on how to reach the suppliers of Sam's?

A: The best way would be to exhibit at our events. {grin} There is actually no list, so exhibiting is a good way to meet suppliers eager to connect with SIs.

* * *

Q: We have Manhattan's WM system. We tag at the pallet and carton now. Manhattan does not have an each/sellable unit solution. What are other firms using to generate tags and store the data at the sellable unit level?

A: Companies are using a wide variety of applications from vendors such as OATSystems, as well as EPC compliance software that runs on a tagging station PC?

* * *

Q: Will the guide to RFID for Sam's be available to people who cannot attend the EPC 2008 event?

A: Yes, it will be available for purchase at rfidjournal.com/store, but as stated above, it would be cheaper to attend the event and get it for free.

* * *

Q: Just to follow up on an earlier question: Is Sam's requiring that the same EPC number encoded on the tag also be printed on the package or label in human-readable format, or in a bar code—i.e, backup? Or is just the encoded RFID tag sufficient?

A: You need to encode the EPC on the RFID tag and have the same bar-code information on the product that you have today. You do not need to have the EPC on the bar-code label.

* * *

Q: How can we integrate the Global Data Synchronization Network under 1Sync to RFID?

A: Great question. Unfortunately, I don't have a great answer. I suggest you contact EPCglobal and see if they have a best practices document you can follow.

* * *

Q: I heard Best Buy was going RFID?

A: Best Buy has been considering EPC, but has not yet mandated that its suppliers use it.

* * *

Q: Is it the expectation that all 12 tags in a case (of 12) be able to be read as that case passes through a portal, or is it only readable as an individual item (1 of the 12) at checkout?

A: I suggest you confirm with Sam's Club, but my understanding is that Sam's will mainly use the pallet tag to confirm the location of products as they move to the store floor, and the individual tags do not need to be read on a conveyor or at a dock door.

* * *

Q: Do we have any published benefits (for suppliers) from the most recent pallet tagging to Desoto DC?

A: I have not seen any data from Wal-Mart, but I think we might see some in the spring of next year, when more forklifts are outfitted with readers.

* * *

Q: We sell shoes. Will Sam's require that the tag be attached to the shoe box, the shoe, or to each shoe in a pair?

A: My guess is that it will ask for the tag on the shoe box, but I think you should discuss that with Sam's Club.

* * *

Q: If we are not a current supplier to Sam's, but are in the process of becoming one, can we still attend the Sam's portion of the conference?

A: Yes, you can definitely attend the Sam's portion of the conference, even though you are not yet a supplier. It is open to one and all.

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