WAL-MART EXEC REPORTS ON RFID WORK AT DCS

BOBBIE KATZ

LAS VEGAS -- Wal-Mart Stores, which has set various deadlines for its suppliers to implement RFID (radio frequency identification) systems, is making progress with the technology in its own facilities.

For example, by the end of this month, the Bentonville, Ark., chain expects to be fully implemented in a specialty distribution center where 500 tags have been scanned with two suppliers since last October, according to Simon Langford, Wal-Mart's manager of RFID strategy.

Langford described Wal-Mart's RFID rollout at Logicon 2004, which took place here at the Mandalay Bay on March 8 to 10.

In April, Wal-Mart plans to start a pilot with eight suppliers at a DC in Dallas, Langford said. "We have also been working very closely with the Department of Defense since the agency's announcement in September 2003 to adopt RFID, making sure that we're doing things at the same time," he said.

Wal-Mart announced its original RFID strategy last June at the Retail Systems conference in Chicago, when Linda Dillman, its chief information officer, said the company's top 100 suppliers would be expected to apply RFID tags to pallets and cases by January 2005. Wal-Mart has since set a December 2006 deadline for RFID compliance by all suppliers. Wal-Mart is installing readers and other systems at its DCs and stores to read the tags.

The RFID tags that Wal-Mart suppliers will be using contain a microchip with a 96-bit identifier called the Electronic Product Code (EPC), along with an antenna that transmits the information when it is "woken up" by a nearby reader.

Through this system, retailers and suppliers will be able to identify and track individual products, cases and pallets throughout the supply chain in an automated fashion, rather than using employees to scan traditional bar codes.

EPC standards are being developed by EPCglobal, a joint initiative of the Uniform Code Council and EAN International.

Langford noted that Wal-Mart's current RFID focus is on its top 100 suppliers (they are also looking for 36 volunteer companies) and on the case and pallet level first,

He reiterated that the benefits of RFID would ultimately include reduced out-of-stocks, theft prevention, accurate and reduced inventory, inventory visibility, improved replenishment of stock, automated checkout, and even applications in the home.

In June, Wal-Mart will hold two RFID symposiums, one for its top 100 suppliers and one for the next wave of suppliers that will include a technology fair, Langford said.

After the January 2005 milestone, he said there will be continued domestic expansion and specialized item implementation, including tires, electronics, pharmacy, high-theft items, high-ticket items and case items. That will be followed by an expansion of item-level implementation, as well as a move into the international market, with the United Kingdom and Canada possibly being next.

"Wal-Mart, the Department of Defense, Target, CVS, Metro and other companies are in the process of adopting RFID," said Langford. "As a result, the cost of tags and readers is coming down, there have been technology breakthroughs, standards are being established, and reader functionality is improving.

"What you need to do," Langford told a packed Logicon audience of mainly manufacturers, "is to start working on case and pallet today. Form an internal RFID team. Identify your internal ROI. Create a road map for deployment. Get involved with EPCglobal and work together -- that's really what EPCglobal is all about. But the biggest message is to start early. You may be one of those 36 companies who call me next week and say, 'We see the benefits of RFID. We want to start now."'