Wal-Mart takes 'tough love' approach to RFID

Wal-Mart Stores is taking a "tough love" approach to the use of RFID tags with its top 100 suppliers, which are being asked to...

Wal-Mart Stores is taking a "tough love" approach to the use of RFID tags with its top 100 suppliers, which are being asked to ship pallets and cases to its distribution centres using the technology by next January.

Lee Scott, president and chief executive officer, said at the National Retail Federation annual conference in New York, that there is pressure to move the suppliers to radio frequency ID technology. 

Only Wal-Mart's top 100 suppliers face a January 2005 deadline the retailer set for compliance, but the rest have been asked to follow suit by the start of 2006. Wal-Mart late last year informed its top suppliers that the RFID rollout will start at its three Texas distribution centres, which service about 150 stores and continue incrementally across the country. 

Plans call for the time frame for the remainder of the 108 distribution centres and 3,000 stores to be shared later, on a rolling basis, with suppliers through Wal-Mart's RetailLink extranet site. 

Scott said that the time frame is realistic, "but if it isn't, we'll back off". He said he met last week with suppliers, and "they were very positive in what they were doing". 

Scott told the attendees that RFID is "a very important innovation", and the benefits will be seen over the long term, but not in 2004.

He said RFID ultimately will allow retailers and suppliers to drive costs out of the business and do a better job of keeping items in stock. They, in turn, will be able to pass cost savings on to consumers. 

SAP also announced at the show that it is rolling out an integrated application suite to automate the process of extracting and exploiting data generated by RFID tags through the company's supply chain management systems. 

The ERP software maker announced a set of Java-based RFID enhancements to its applications which it claims, will help retailers and consumer product manufacturers improve things such as tracking processes through the supply chain. 

The SAP software will support the management of the RFID tags, along with bar codes and sensors.

The system requires SAP's new Auto-ID Infrastructure software, along with the existing supply chain Event Management and Enterprise Portal products. It also requires the company's Web Application Server for integration with both SAP and third-party or homegrown applications. Using connectors, the software will work with existing systems built on SAP R/3 4.6c and higher. 

The company also promised that it and partners will deliver services to customise these systems for a customer's specific needs. 

The applications are available in pilot now and will be more generally distributed by mid-2004.

Carol Sliwa writes for Computerworld

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