WAL-MART GIVES SUPPLIERS SPECIFICS ABOUT RFID TAGS 2003-11-10 (2)

MICHAEL GARRY

SPRINGDALE, Ark. -- At a widely anticipated meeting at a Holiday Inn here last week, Wal-Mart Stores gave its top 100 suppliers specific direction on the type of RFID tags it expects them to attach to their pallets and cases by the company's mandated deadline of Jan. 1, 2005.

By describing the parameters it wants the tags to have, Wal-Mart is putting its considerable stamp on how global standards for the tags ultimately develop.

Wal-Mart, based in nearby Bentonville, issued the deadline to its top 100 suppliers in June and has since said that it wants all suppliers to ship pallets and cases with RFID (radio frequency identification) tags by Jan. 1, 2006. There has been considerable concern in the supplier community about companies' ability to meet these deadlines, according to several reports.

The RFID tags will contain the newly developed EPC (electronic product code), a 96-bit identification code housed in a microchip. Formally released in September at the EPC Symposium in Chicago, the EPC is being developed as a standard that could one day supplement, and even replace, the UPC bar code. Tags are read by readers using radio frequency signals.

Standards development for the EPC is being guided by EPCglobal, a division of the Uniform Code Council, Lawrenceville, N.J. Final standards are not expected for 12 to 18 months.

While EPC-based RFID tags can be attached to individual products, Wal-Mart's initial focus is on pallets and cases.

"The key message [at the meeting] was that we are pushing hard on this, that it's the future," Tom Williams, Wal-Mart spokesman, told SN. "And we stressed the advantages of RFID to suppliers -- visibility and better in-stock conditions."

Williams said RFID technology can improve in-stock levels at Wal-Mart from their current point, about 99.4%. "Between 99% and 100% there can be $1 billion in sales," he said. "Selling more items is good for us and good for our suppliers."

Specifically, Wal-Mart officials told suppliers that tags can be either Class O (factory programmable) or Class 1 (end users can write to it), though Wal-Mart is driving toward the Class 1, version 2 tag once it is established as a standard. In addition, Wal-Mart wants the tags to operate under UHF frequency (868 to 956 MHz).

"They're trying to work within the industry -- -it's not a cowboy action on their own," said Peter Abell, senior partner, The ePC Group, Boston.

Williams said the absence of formal industry standards "does not mean deployment needs to be delayed." Tag readers, he noted, can be upgraded if necessary to accommodate "next-generation tags."

While it expects its top 100 suppliers to be ready with tags on Jan. 1, 2005, Wal-Mart itself plans to phase in installation of tag readers at its 108 distribution centers and 3,000 stores in the U.S. over the course of 2005, Williams said.

Williams said he thought that by attending the meeting, suppliers gained "a great deal of reassurance" about meeting Wal-Mart's tag deadline. Wal-Mart, he added, plans to work individually with suppliers on compliance. "They're not going to be alone," he said.