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Tagging Sellable Units

Sam's Club has spelled out an aggressive timetable for item-level tracking. Help is at hand, so suppliers can successfully tag a wide variety of products and achieve internal benefits.
By Mark Roberti
Aug 11, 2008I've been thinking a lot about sellable units lately. I know what you're thinking: Roberti needs to get a life. Hey, a big part of my life is spent helping people use radio frequency identification technologies to improve the way they do business. The main reason I've been thinking about sellable units is that several Sam's Club suppliers have contacted me asking whether I think it's feasible for all of that retailer's suppliers to be tagging every sellable unit by Oct. 31, 2010.

Before I answer that question, let me provide a little background. In January, Sam's Club sent a letter to suppliers informing them of its requirements for tagging pallets and individual shipments with RFID (see Sam's Club Tells Suppliers to Tag or Pay and Sam's Club Letter Shakes Things Up). In the letter, Sam's indicated it would charge suppliers that did not tag pallets by the end of that month a $2 fee per pallet, to cover the cost of Sam's doing the tagging itself.

The fee got everyone's attention, but the bigger news was that suppliers would be required to tag all individual items on a pallet being shipped to Sam's Club's DeSoto, Texas, distribution center—or directly to stores serviced by that DC—by Oct. 31, 2009. Suppliers must tag items shipped to the company's Kansas City, Dayton, Searcy and Villa Rica DCs by Jan. 30, 2010, and to all 22 DCs by Oct. 31, 2010. For Sam's, a sellable unit is an individually packaged product, such as a DVD player or swimming pool—or, since Sam's is a wholesaler that sells products in bulk, a sellable unit could be a case of bottled water, canned soup or beer.

I've been spending some time at my local Sam's Club examining the various types of units the store sells. There is a very wide variety—much wider than I realized, in fact. Here's a small, random sample from the retailer's Long Island locatoin: fresh flowers, bags of frozen shrimp, ceramic bowls, shirts, computer mice, blenders, tubs of margarine, barrels of oil, bags of bananas, bottles of wine, bags of potato chips, steaks and boxes of diapers. That's a big assortment—and it's just the tip of the iceberg.

To tag all of these sellable units, companies are going to need to figure out where to place a tag on each type of product. But that's only the beginning. They'll also need to evaluate and choose Electronic Product Code (EPC) tags, interrogators and middleware. They'll need to determine how to tag at high speeds without slowing their production line. They'll need to integrate the tagging operation with their back end so the proper EPC is associated with the right product automatically. And instead of taking a slap-and-ship approach to tagging, they should ascertain how they could benefit internally, which would help offset the cost of applying tags to each item sold.

That's a lot to accomplish within a year or two, so I think it will be tough for Sam's Club and its suppliers to track every single sellable unit shipped to Sam's by the Oct. 31, 2010 deadline. I would not be surprised if Sam's opts, based on feedback from suppliers and its own deployment experiences, to relax the deadline somewhat, or to initially require only a group of top suppliers to begin tagging sellable units. (I can already see the articles misconstruing natural project adjustments as "Sam's Backing Off RFID Mandate.")

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