Don't Wait, Anticipate
Companies won't realize the full benefits of integrating RFID with their WMS until they start tagging goods at the point of manufacture and receiving tagged pallets and cases in their warehouse or DC. "Until you're tagging a significant percentage of goods and sending them to a large geography, I don't know that you need to integrate," says Simon Ellis, supply chain futurist at Unilever, one of Wal-Mart's top suppliers.

Steve Banker, supply chain practice service director at Boston-based ARC Advisory Group, says suppliers should move tagging back to the point of manufacture when they begin tagging 40 percent to 60 percent of the goods they ship. "Once suppliers move tagging back to the point of manufacturing," says Banker, "the DCs will realize benefits of RFID that they would not otherwise because they can automate receiving."

An IBM study found that RFID could reduce picking errors and labor costs by 36 percent.

RFID read rates are another factor that can determine when companies integrate RFID into their WMS processes. Ellis says the EPC Generation 1 tags that Unilever is using are not providing the types of read rates he thinks the company would need to proceed with any significant integration between the WMS platform the company uses—RedPrairie's DLx Warehouse—and its slap-and-ship RFID tagging system. "Based on my experience with Gen 1, integrating is madness for a large company," he says.

Unilever is currently testing Gen 2 tags, and Ellis says the results of these tests will help determine if and when the company begins tagging cases before they reach Unilever DCs, which, in turn, will affect its decision to upgrade its WMS.

But other companies don't see integrating RFID with their WMS as an all-or-nothing proposition, and they are taking baby steps toward integration. For example, Deluxe Media, a third-party logistics provider that replicates and distributes DVDs for Sony, Paramount and Universal, has linked Manhattan Associates' RFID Integration Engine with its WMS to flag DVD orders headed for Wal-Mart that require RFID tags.

While most companies may not be ready to start tagging pallets and cases at the point of manufacture, those that have to tag some SKUs now to comply with retailer tagging mandates could start to integrate RFID into their WMS processes. This would enable them to recoup some of the RFID infrastructure costs, through increased operational efficiencies. At the same time, they could work to improve read rates. That way they'd be ready when it was time to fully integrate RFID with their WMS. And meanwhile, they could realize some of the warehouse improvements that Gillette is currently enjoying with its tagged pallets and cases of Venus razors.

Illustration by Gordon Studer.