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P&G-Gillette Merger Could Lend Voice to Suppliers

The combined P&G-Gillette could become a strong leader of CPG manufacturers struggling to exercise more control against the ever increasing tide of retailer mandates.
Jan 31, 2005This article was originally published by RFID Update.

January 31, 2005—This week's mammoth $57 billion merger between Procter & Gamble and Gillette may have some implications for the RFID space. In the first place, as noted by ExtremeTech, the combined company will have more leverage against Wal-Mart. Historically, Wal-Mart has been able to make heavy demands of its suppliers because, as the source of a substantial percentage of their sales, it can threaten to take its business elsewhere if suppliers don't comply. The RFID mandate was a shining example of this; suppliers had to comply. But with a company as large as the combined P&G-Gillette, whose portfolio of brands have to be included on Wal-Mart's shelves for it to be a viable consumer retailer, the balance of power has shifted somewhat in P&G-Gillette's favor. If P&G-Gillette were to refuse the RFID or other Wal-Mart mandates, therefore, it could single-handedly stunt nascent technologies.

This point may be moot in the case of RFID, however. Gillette has been arguably the most active CPG (consumer packaged goods) manufacturer in RFID. It became a founding member of MIT's Auto-ID Center (predecessor to EPCglobal) in 1999, and its November 2002 announcement of a half-billion tag purchase from Morgan City, California's Alien Technologies represented one of the validating milestones in the history of RFID adoption. Today, Richard Cantwell, Gillette's VP of Marketing Services, holds a post on EPCglobal's Board of Governors. As does Proctor & Gamble's Chief Information Officer and Business-to-Business Officer.

Perhaps, then, the merger's effects will have nothing to do with a balance of power shift between Wal-Mart and an important supplier. Instead, it might be that the combined P&G-Gillette will carry more leverage with respect to mandates, standards, and other facets of RFID, possibly becoming a strong voice for CPG manufacturers struggling to exercise more control against the ever-increasing demands of RFID adoption.

More here on possible IT effects of the merger
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