Wal-Mart Stores has concluded its three-day RFID event
for suppliers this week with additional RFID product tag compliance
dates for first and second tier suppliers.
The original date of January 2005 for suppliers shipping
products to any of three specified distribution centres and 150
stores remain. By June 2005, three additional distribution centres
will be added and another 100 stores. By October 2005, 800 stores
receiving products from suppliers must have RFID tags in
place.
The next 200 suppliers, tier 2, will have until 1 January 2006,
to meet tier 1's October deadline, according to Steve Brown,
executive vice-president of business development at Acsis.
The big message from Wal-Mart to all of its suppliers was that
tagging products will not only benefit Wal-Mart but will have value
for them as well. Wal-Mart executives promised that they intended
to create a feedback mechanism to share data on the movement of
their products that was not available with simple bar code
reads.
RFID readers will now be deployed at the back door of its stores
so that suppliers will know when goods have arrived. In addition,
another RFID tag will be placed at the entrance to the sales floor
so a supplier can tell what is on the sales floor and what is left
in the backroom.
This type of information will give suppliers a good read on
their inventory and sales velocity and give them more demand
signals for forecasting.
However, Jeff Woods, principal analyst at Gartner Group, said
the additional data does not ensure that suppliers will do
replenishment any better than before.
"We already know how much inventory is in the store and what is
moving out. What's new is what is in the back and what is in the
front [of the store]. But we don’t know if that is really enough to
justify all these RFID tags. It is not clear," Woods said.
Wal-Mart has predicted a plummet in the cost of tags from a high
of 50 cents now to five cents by 2006. However, Gartner predicted a
far slower decline to 20 cents per tag within the next five
years.
Wal-Mart also promised that it would place RFID tags on point of
purchase displays usually used as end caps in stores during
promotions.
Merchandisers spend a lot effort on promotional end caps which
often become high-priced shelves in the back room rather than being
displayed in the store in a timely manner.
"Now with RFID you can track compliance with the promotion,"
Brown said.
Chris Easton, director of business development at ObjectStore, a
division of Progress Software, said that in order to share this
kind of data Wal-Mart will need to create a service-oriented
architecture to have the various suppliers systems interoperate
with Wal-Mart.
"Wal-Mart can make that available as a service for the suppliers
to query as required," Easton said.
However, while Wal-Mart plans to create an automated way to
extract information out of its supplier portal being put in place,
the industry still does not have any standards about handling data
and suppliers still need to build repositories to place the data
in, said Woods.
Suppliers are waiting to see the data that comes out of
Wal-Mart's Dallas trial to see if there is there will be a return
on their future investment, he said.
Ephraim Schwartz writes for Infoworld