Retail giant Wal-Mart Stores Inc. (www.walmart.com) is dead set on implementing radio frequency identification (RFID) technology at the case and pallet level, and is insistent that its top suppliers follow suit. However, Wal-Mart faces as many, if not more, challenges as its vendors. First, how does it expect its top suppliers to be compliant by January 2005, which is an almost-impossible-to-meet timeframe to have all of its 180 distribution centers and thousands of stores set up to receive RFID tags?
Last November, in a meeting with key suppliers, Wal-Mart clarified its expectations somewhat. The retailer will run a pilot project in 2004 with three of its DCs, supplying 150 stores — primarily throughout the Southwest, but also selected stores on the East Coast and in other parts of the country. Each of the three DCs represents a different piece of Wal-Mart's empire — the traditional big-box Wal-Mart stores, the Sam's Club membership stores, and a new venture, Neighborhood Grocer.
“For the suppliers, that still leaves the problem of figuring out which products they're shipping to those DCs and which cases and pallets going to those DCs will need to be compliant with Wal-Mart,” notes Paul Crist, VP of global sales and marketing for warehouse management systems (WMS) supplier Provia Software (www.provia.com). RFID standards are still an open question, he observes, even with the work that the Uniform Code Council has done on the Electronic Product Code (EPC). Provia is marketing a bolt-on solution to help companies become RFID-compliant.
“The EPC Global initiative is not part of Wal-Mart's requirement,” Crist explains. “Wal-Mart's expectation is point-to-point communication, so as you ship them a case or pallet with an RFID tag, you will still need to send that information electronically directly to Wal-Mart with the associated EPC numbers and contents of the cases and pallets. Communication will be in two forms: EDI advance ship notice (ASN), or EDI over the Internet. It will be that way until the day the EPC network is set up and established.”
“The standards have only recently been published,” points out Stan Chew, director of international operations for WMS vendor HighJump Software (www.highjump.com). “The challenge is that proprietary tags are still coming out. Retailers must tell their suppliers what they want as well as the kind of standards they're going to manage to. On the supplier side, they're dealing with a variety of retailers who are foisting upon them different standards for compliance. At some point the cost of that becomes too great to bear.” Like Provia, HighJump is selling RFID-enhanced solutions for WMS users.
Don't expect the solution vendors to come up with all the answers, though. “Companies often lean a little too much on the vendor or equipment supplier but don't have the proper plan for executing on their own responsibility,” observes John Sidell, principal of consulting firm Esync (www.esync.com). “You need a roadmap that spells out the final plan and resource commitments, not only from the vendors you're working with, but also internal resources so there aren't missed expectations.”
Tom Andel is chief editor of Logistics Today's sister publication, Material Handling Management.