Wal-Mart's intention to use RFID tags on products from its
top 100 suppliers by 2005 is too aggressive and will lead to major
problems for supply chain partners, analyst firm Meta Group said
last week.
Although Meta said the electronic tagging technology offers
"potentially significant advantages" in supply chain management, it
warned of a number of obstacles that must be overcome before it
will work smoothly.
"Wal-Mart's time-frame in attempting to get such a system up and
running in less than two years is very aggressive," said Jack Gold,
analyst for infrastructure strategies at Meta.
"Wal-Mart is shifting the implementation burden to its product
suppliers and we believe that many suppliers do not have the
necessary expertise to pull this off without major problems."
For example, Gold said, many packaging issues remain. "While
pallet-level RFID presents minimal problems in most cases, tags on
certain packages will be nearly impossible to read reliably."
The lack of available RFID tags and the eventual disposal of tagged
goods could also prove problematic, Gold said.
"For Wal-Mart to meet its need, we estimate it to require one
billion RFID chips every year, and many times that if other large
retailers require RFID," he said.
"Furthermore, the additional assembly required - flexible circuits
with built-in aerials - must also be manufactured. This causes
problems, such as disposing of copper in landfill sites or
recycling."
Wal-Mart and its suppliers will also have to consider the
integration of RFID with supply chain systems, such as ERP and
purchasing, as well as the complex process of implementing RFID
reading equipment, Gold said.
"Suppliers of equipment will produce a variety of doorway and
shelf-installed equipment, requiring a significant amount of
installation at every site," he said.