WAL-MART TO VENDORS: PUT TAGS ON PALLETS

Michael Garry

CHICAGO -- Wal-Mart Stores has informed all of its vendors that it expects pallets and cases shipped to Wal-Mart distribution centers to come with RFID (radio frequency identification) tags beginning in 2005, sources told SN.

At the Food Marketing Institute Show at McCormick Place here earlier this month, technology vendors told SN that Wal-Mart, Bentonville, Ark., has given this directive to its suppliers over the past few months. According to Peter Abell, research director, retail, AMR Research, Boston, a Wal-Mart executive made this statement at the International Mass Retail Association (IMRA) Logistics conference in Orlando, Fla., in February.

Christopher Sellers, global leader, solutions consulting, consumer industries and retail, EDS, Chicago, told SN at the FMI Show that a Procter & Gamble executive said at the Grocery Manufacturers of America's IS/LD conference last month that Wal-Mart had given this directive to its suppliers.

Contacted by SN, Tom Williams, a spokesman for Wal-Mart, neither confirmed nor denied that a directive had been made. He did say that Wal-Mart, which has tested RFID-tagged pallets at facilities in Oklahoma, considers the tags "extremely helpful" on pallets in food distribution centers, especially in tracking products through the "cold chain." Wal-Mart has given directives to suppliers in recent months on compliance with electronic communications and Web-based EDI.

Linda Dillman, Wal-Mart's chief information officer, is scheduled to discuss the company's "official plans to utilize RFID technology in its global supply chain" in a presentation on June 10 at the Retail Systems 2003/VICS Collaborative Commerce show at McCormick Place here, according to MoonWatch Media, Newton Upper Falls, Mass., producer of the show.

At the FMI Show, a new booth was devoted to demonstrating RFID-based technology developed by the Auto-ID Center at MIT, Cambridge, Mass. The center has developed a new-breed tag, consisting of a 96-bit EPC (electronic product code) microchip containing product identification information, which is transmitted from the tag via a tiny RFID antenna to nearby readers, and then sent via the Internet to back-room databases.

The Auto-ID Center booth, located at the far end of the South exhibit hall at McCormick Place , featured demonstrations by four corporate sponsors, Checkpoint Systems, ADT, Matrics and Accenture. The demonstrations showed how Auto-ID technology could be used at the shelf and checkout in stores (the item level) as well as at distribution centers (the pallet and case level).

The Auto-ID Center plans to formally launch EPC technology at the EPC Executive Symposium, Sept. 15-17, also at McCormick Place.

The FMI demonstration sponsored by Checkpoint, Thorofare, N.J., at the Auto-ID booth focused in part on what is called a "smart shelf," which is being tested with other systems at a new Metro Extra store in Rheinberg, Germany. At the FMI demo, as products were removed from the shelf, inventory levels were decremented on a monitor displayed above the shelf. Store associates could be alerted on a PDA when out-of-stock conditions approached.

In addition, a small digital video camera (from Mirasys Communications, San Francisco), positioned above the shelf in the FMI demo, captured images of unusual events, such as when large amounts of a product were removed at once, suggesting theft. Those images could then be transmitted to a store manager's PDA.

Checkpoint, in concert with PSC, Eugene, Ore., also demonstrated a multi-function point-of-sale bar code scanner that incorporates current electronic article surveillance (EAS) deactivation capability, along with EPC reader technology. The scanner can thus read a bar code, deactivate an EAS tag and read an EPC tag. "There's a lot of hype that the bar code is going away tomorrow and be replaced by EPC tags," said David Latimer, vice president, product marketing, PSC. "But all three technologies will co-exist over time. Legacy systems can be valid for many years."

In the checkout application, the RFID tag featured a lock/unlock feature. As a tagged item was read and became "unlocked," an icon changed on a monitor. If that item was returned, an associate reading the tag would see that it was unlocked and therefore paid for. A returned item with a still-locked tag and without a paper receipt may have been stolen.

The FMI booth demo sponsored by Matrics, Columbia, Md., showed how 120 totes and items, each equipped with a Matrics 915-megahertz, two-antenna UHF tag, could be read simultaneously at a distribution center as the pallet carrying them passed under a reader. An image of the multiple cases being read appeared on a computer monitor.

Tom Coyle, vice president, supply chain solutions for Matrics, said the two-antenna tags could be read from between 15 and 30 feet from any orientation. He said that the tags costs were generally no less than 50 cents apiece but in volumes of about 1 billion could come down to under 20 cents.