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Annin Puts ROI on Hold

Although its RFID system can do more than merely satisfy Wal-Mart's requirements, the flag maker says wider use will have to wait. In the meantime, the company has learned some valuable lessons.
By Rhea Wessel
Aug 01, 2007The world's largest flag manufacturer, New Jersey-based Annin & Co., is using RFID to track the cases and pallets it ships to three RFID-enabled Wal-Mart distribution centers in Texas.

Annin began implementing the RFID system in 2005, says David Smith, Annin's corporate manager of logistics and special projects, officially launching it in February 2006. Smith says Annin's system could be used for additional purposes, such as reconciling and confirming orders, but that the company is holding off on further investment and wider deployment of RFID until the technology is more widely requested by Wal-Mart and other retailers.

The RFID conveyor line at Annin's factory.

"We will continue to collaborate with Wal-Mart," Smith says, "and ultimately wait until Wal-Mart expands [RFID-]enabled warehouses through the country." At the time Annin launched its system, Wal-Mart was operating five RFID-enabled warehouses. Now, he says, it has three RFID-enabled distribution centers.

According to Smith, Annin would be willing to tag cases of goods directly after manufacturing them, rather than after picking and packing, if Wal-Mart were accepting RFID-tagged goods at a majority of its stores. "Right now, tagging after manufacture is not cost-effective," he says.

"We decided for a slap-and-ship approach after looking at the total cost of tagging at the manufacture level," says Smith, explaining that Wal-Mart buys cases of flags from Annin rather than individual flags. Were Annin to tag cases directly after manufacture, he says, it would have to tag all cases, not just those destined for RFID-enabled Wal-Mart locations.

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