Big Issue Still RFID

Big Issue Still RFID

The automotive industry spends nearly a billion dollars every year replacing reusable pallets and containers.

For our January online reader poll (www.mhmonline.com), we asked what you saw as the big issue for 2008. I was a bit surprised at the results, or at least the thing that surfaced as number one. It was RFID.

I know RFID is still out there; however, it seems to have taken a back seat to other things, like green issues and the economy. Turns out, the tagging of pallets remains a big issue with Wal-Mart and—guess what— the prices for non-compliance are not getting any lower. In fact, the cost of non-compliance is going up.

Here’s what I found out. Sam’s Club’s (which accounts for about $41 billion of Wal- Mart’s $345 billion annual revenue) suppliers are going to use RFID tags on pallets or pay a $2 fee, per pallet.

It’s been about three years since Wal-Mart put out the mandate for tagging at the pallet level and launched the pilot studies. It has invested a lot of money in RFID technology, and now it wants some payback, apparently.

The deal, which began for suppliers at the end of January, is tag the pallet or pay $2 for loads going into the Sam’s distribution center in Texas. And, if the supplier does not tag the pallet, folks at the distribution center will do it for them and send them the bill to cover what the suppliers should be doing as part of having Wal-Mart for a customer.

I guess one of the reasons I had not expected to see RFID and pallets in the same sentence in 2008 was because I thought the issue had been resolved—more or less. More than a year ago, I paid a visit to the folks from CHEP down in Orlando, Fla. They showed me all the things they’ve been doing in applying RFID tags to their rental fleet. It seemed like the best possible solution—RFID on leased pallets. They’ve been working on the RFID/pallet challenge for 10 years.

The latest experiment gave CHEP’s customers the ability to write information to a protected tag wrapped around the center block of the pallet. The tag serves as a permanent license plate for that pallet.

Still, I’ve always thought the RFID/pallet match-up that would be the killer application (Do we still use that term?) would be plastic pallets with RFID tags embedded. And, they’re here. iGPS, also

Clyde Witt has been reporting on transport packaging issues and trends for more than 20 years.

from Orlando, is offering just such a product that is making headway, particularly in the food industry.

Plastic pallets are an expensive asset that should be tracked. The challenge has always been keeping a human around to do the tracking and accounting. One of those statistics I’ve read but can’t confirm is that the automotive industry spends nearly a billion dollars every year replacing reusable pallets and containers. Seems that a little RFID might go a long way in the industry that was a pioneer in reusable pallets and containers some 20 years ago.

An argument I hear regarding RFID tagging is that it’s not the cost of the tag that hurts (although it does hurt when you’re dealing in small margins and thousands of products); it’s the cost of all the infrastructure required, such as portal scanners, and ways to collect the data.

I’ve drifted a bit from the initial discussion here—Wal-Mart and RFID. The big smiley face is only interested in tracking products, not assets. However, moving to a reusable pallet and container program, and using RFID, could provide data for both programs. Sounds like a win-win proposition. And, it could be the big story in transport packaging in 2008.

Clyde E. Witt
Editor-in-Chief
cwitt@MHMonline.com

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