US retailer Wal-Mart has admitted that its suppliers missed its first key target for RFID tagging of incoming products.
The company, which has mandated that its top 100 suppliers attach RFID tags to products heading for its stores by 2005, had wanted suppliers of the most tightly controlled prescription drugs to tag shipments to an RFID-enabled warehouse by the end of March.
However, only a handful of companies have begun sending RFID tagged drugs to the warehouse in Arkansas, leading Wal-Mart to extend the deadline to June, the company revealed last week.
The extension highlights growing fears among manufacturers that retailers are pushing the use of RFID too quickly because of the benefits they will gain, leaving suppliers to pick up the bill.
Research from analyst firm Sorean, released last week, estimated that at current tag prices, retailers can expect a return on investment of up to 187% within a year by using RFID, but that suppliers could only recoup 37% of their investment over three years.
The major stumbling block for suppliers is that they currently pay the full cost of RFID transmission transponders (about 33p each), the Sorean report said.
Last week, a senior IT executive at Nestl' UK told Computer Weekly that mandates from retailers such as Wal-Mart, Tesco and Metro are likely to leave manufacturers out of pocket.
"The biggest issue for us is the business case," he said. "If we can drive benefits fully across the supply chain, we will implement RFID. But we cannot see it yet - it is all 'jam tomorrow'."
- Oracle last week launched a product to capture, manage, analyse, and respond to data from RFID sensors. Oracle Sensor-Based Services link into the company's Database 10g, Application Server 10g, Oracle Enterprise Manager 10g and E-Business Suite 11i. The company is also rolling out an RFID pilot kit for prototype testing. It will allow businesses to analyse their RFID processes, Oracle said.