Wal-Mart, DoD Weigh In On RFID

Tracking products through the UPC bar code of old may go the way of the Dodo. That is if more companies follow the lead of retail magnate Wal-Mart .

The Bentonville, Ark.-based-company is meeting with their top 100 suppliers beginning Tuesday to set radio frequency identification (RFID) compliance standards. The company has mandated the use of the tracking technology by all of its suppliers by 2005. The move is similar to Wal-Mart’s precedence for bar coding in the 1980’s.

A spokesperson for Wal-Mart was not available for comment on the two-day meeting.

RFID technology allows manufacturers, retailers, logistics providers, and other organizations to “tag” physical goods with tiny radio transponders that can then be used to identify the goods without having to visually inspect them. Applications for the technology include automatic inventory management for retailers and manufacturers, improved supply chain efficiency for logistics companies and their customers, and better tracking of goods to reduce theft and loss.

This is especially important to the retail industry, with the recent push for top suppliers and manufacturers to place “EPC-compliant” RFID smart labels on cases and pallets by January 1, 2005.

Many see Wal-Mart’s adoption of RFID tags as validation of the technology. Industry analysts and major retailers have estimated that widespread adoption of RFID technology could save companies tens of billions of dollars annually. One analysis indicated that the world’s largest retailer alone could save as much as $8.35 billion per year – more than the total annual revenue of half the companies on the Fortune 500. Already Gillette and UK supermarket chain Tesco have tested embedding tags in packages of razor blades and using RFID tags to trigger a camera when a package was removed from the shelf.

“There has been a lot of excitement about RFID recently, with much focus on the tags, and the supporting electronics,” Apriso president and CEO Adam Bartkowski said. “But RFID is all about connectivity to real-time events that can immensely improve business operations and intelligence.

Bartkowski’s company Tuesday said International Paper is using its FlexNet software at an RFID-enabled warehouse in Texarkana, Texas. The first-of-its-kind system lets the company track the physical location of paper rolls and transmit routing instructions to forklift operators in real time using RFID tags.

Other companies are also looking to help with the transition. Zebra Technologies Monday said it has forged an alliance with Acsis, a provider of data collection and integration solutions for companies running SAP enterprise resource planning (ERP) systems. The companies say the alliance will help consumer packaged goods, retail and pharmaceutical industry organizations implement practical, cost-effective RFID technology in their supply chains.

The technology is not limited to the private sector. In a related decision, the US Department of Defense Monday established its official RFID policy, affecting suppliers of all goods inward, with the possible exception of liquids, gravels, and sand.

In its official statement, the DoD said it recognized that RFID technology can greatly improve the management of inventory by providing what it terms “hands-off processing”.

The new policy, effective from January 2005, requires all suppliers to put passive RFID tags on the lowest possible level of packaging, whether that be per part or item, per case, or per pallet.

The good news for DoD suppliers seeking help from the RFID community is that, recognizing the potentially massive impact on suppliers, the DoD has announced that it plans to host an RFID Summit for Industry in February 2004, and will finalize the specifications of its policy and implementation strategy by June 2004.

Meantime it should be noted that privacy advocates howled when they got wind of such tests and Tesco stores were beset by demonstrators. Earlier this year, a California Senate subcommittee held an initial hearing on privacy issues relating to RFID technology. This universal registry is just what they fear: It could give let manufacturers track their shopping habits even better than they do now, and even let third parties find out purchase information.

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