ALBERTSONS CREDITS SUPPLIERS FOR RFID EXPANSION

LYNNE RICHARDSON

IRVING, Texas -- Albertsons attributed the growth of its radio frequency identification program in this market and in Pennsylvania to close collaboration with suppliers who are participating in the program.

"To succeed with RFID, we can't move forward alone," said Judith Watson, group vice president, strategic procurement and replenishment for Boise, Idaho-based Albertsons. Collaboration, she added, "begins with our membership in EPCglobal and the partnerships that we have created within the supplier community." EPCglobal, Brussels, Belgium, is responsible for commercialization of RFID technology based on the EPC, or electronic product code, a digital product identification system.

Watson made her comments at a packed session at the RFID Link 2005 conference, held Nov. 8 to 9 in this Dallas suburb at the Four Seasons Las Colinas Resort and Club, not far from the major U.S. supply chain implementations of RFID. Besides Albertsons, Target and Wal-Mart Stores are pursuing RFID programs in the Dallas marketplace.

To date, Wal-Mart has been the most visible and outspoken retailer on the subject of RFID, making presentations at virtually every RFID-related conference over the past two years. More recently, other retailers engaged in RFID projects, such as Albertsons and Hannaford Bros., Scarborough, Maine, have begun speaking about their experiences. Albertsons began its pilot project in the Dallas market in January with a core group of seven suppliers, who collectively shipped RFID-tagged pallets and cases of about 21 stockkeeping units into Albertsons' RFID-enabled Dallas-Fort Worth distribution center. The DC ships those products to a number of RFID-equipped stores in the Dallas-Fort Worth marketplace. Today, 76 suppliers are RFID-enabled for 90 SKUs.

Based on what Albertsons sees as the success of the Dallas-Fort Worth RFID experience, the retailer has expanded the program to the Northeast, where the company's Acme division has stores in New Jersey, Pennsylvania, Maryland and Delaware. "We expect our Lancaster, Pa., distribution center to be RFID-enabled in December, with five to 15 stores enabled and RFID shipments to begin early next year," Wilson said. The remainder of Acme's stores will be RFID-enabled in 2006, said Larry Johnston, Albertsons' chief executive officer, in a conference call in September.

Starting with the base of suppliers already RFID-enabled for Texas, Albertsons hopes to "work collaboratively with our suppliers to help as many as possible get on board and realize the benefits of RFID as soon as possible" Watson said.

The benefits Albertsons expects from RFID include "reduction of out-of-stocks for the customer, improved freshness, speed to market, stronger promotions and reduction in excess inventory," she said.

Albertson's is "pleased with our RFID experience so far," according to Wilson, with a goal of still further expanding the program, "to provide visibility and insight into opportunities to enhance or supply chain." Albertsons' RFID program thus does not appear to be slowed by recent moves to sell the company.

Watson credited the initial seven RFID suppliers. "This group not only helped us initiate the program, but have been true partners in the development of the program and invited other suppliers to join our effort," she said. "Their input has been integral to the program's development and expansion." Among Albertsons' current RFID-enabled suppliers are Kraft Foods, Proctor & Gamble, Smuckers, Kimberly-Clark and Fresh Express.