RFID and mandates.When Wal-Mart announced it was requiring its top suppliers to tag cases and pallets with RFID (Radio Frequency IDentification) A data collection technology that uses electronic tags for storing data. The tag, also known as an "electronic label," "transponder" or "code plate," is made up of an RFID chip attached to an antenna. by January 2005, it sent the RFID world spinning. RFID was relatively untested, the cost of implementation was high, and the RFID industry was still very small.
But some argue that it was the kick the industry was looking for Looking for
In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. .
"Although it's causing the industry a lot of stress, I honestly don't think there would have been a better time. Before Wal-Mart came along, the industry was just kind of hanging in suspension with a good technology idea, but nowhere to go, apart for a few limited applications," says Mike Cove, senior marketing manager, Thermal and Advanced Technical Product Business for Appleton, located in Appleton, WI.
According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. Wal-Mart, its plan is on track so far. The mandate included 100 top suppliers, as well as more than 30 other suppliers who volunteered to comply. By January 14, tagged shipments had been received from 57 suppliers. These suppliers are not tagging all of their products, only a few SKUs. The rollout will continue throughout the year and into 2006 and beyond.
"We plan to expand geographically to be in up to 600 stores and 12 distribution centers by October 2005. Additionally, some suppliers will be tagging additional SKUs as we progress through the year. By the end of the year, our next 200 top suppliers will need to be tagging cases and pallets destined des·tine
tr.v. des·tined, des·tin·ing, des·tines
1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic.
2. for our distribution centers by January 2006," says Christi Gallagher, spokesperson for Wal-Mart, based in Bentonville, AR. "We will have all domestic suppliers involved in the initiative by the end of that year, beginning with the initial planning stages."
Wal-Mart's business case for RFID in its supply chain is strong. Gallagher says that the company will see improved productivity, less checking time and less freight handling, which will give associates more time for customer service and re-stocking shelves. "Down the road, we can see benefits related to returns, recalls, warranties and battling counterfeit To falsify, deceive, or defraud. A copy or imitation of something that is intended to be taken as authentic and genuine in order to deceive another.
A counterfeit coin is one that may pass for a genuine coin and may include a lower denomination coin altered so that it may products, including pharmaceuticals," she adds.
Some industry observers say that the benefits to Wal-Mart's suppliers are not necessarily clear cut. For companies involved in Wal-Mart's mandate, the investment was substantial, even at the lowest levels. Wal-Mart's suppliers spent on average between $1 million and $3 million each to implement RFID, according to Kara Kara (kär`ə), river, c.140 mi (230 km) long, NE European and NW Siberian Russia. It flows N from the N Urals into the Kara Sea, forming part of the traditional border between European and Asian Russia. It is navigable in its lower course. Romanow, research director for AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12. Research in Boston, MA.
"The $1 to $3 million is pretty much for whatever they needed to comply, but at the bare minimum. It did include all the hardware and software, as well as the tags and readers, but they did it only for a few products and only in one limited geography in most cases," she says. What most suppliers did not do, she adds, is integrate the entire supply chain, or set up methods for capturing and analyzing the tremendous amount of data that RFID would provide.
Romanow published her findings in RFID Fast Followers followers
see dairy herd. Take Heed Verb 1. take heed - listen and pay attention; "Listen to your father"; "We must hear the expert before we make a decision"
focus, pore, rivet, center, centre, concentrate - direct one's attention on something; "Please focus on your studies and : Suppliers Spent $250 Million in Round One. She writes: "Suppliers haven't embraced the technology and made these more substantial investments. Why? Because in many cases there were too many hurdles to overcome in too short a period to consider revolutionary ways to use the technology and the data that will eventually become available."
"Slap and ship," as it's commonly called by industry pundits, was the easiest way for suppliers to comply. It includes hand application of labels and only the most essential of equipment. Some say the lack of bells and whistles A slang English term for exceptional features in some product. In the computer field, it typically refers to functions in software that may be greatly appreciated by some users, even though they may not be necessary most of the time. makes it an extra cost instead of a valuable tool.
"Slap and ship is basically this: I print the label with an RFID enabled printer, then I take it and slap it on the carton or pallet," says Dan Williams Daniel Lawrence "Dan" Williams (born on September 3, 1966 in San Gabriel, California) is a former professional baseball player and the current bullpen catcher for the Cleveland Indians. He has been a player or coach in the Indians system since 1988. , marketing manager for Avery Dennison Avery Dennison Corporation (NYSE: AVY) produces pressure-sensitive materials (such as self-adhesive labels), office products, and various paper products. R. Stanton Avery founded Avery in 1935. Avery Dennison Corporation was created in 1990 by merger of Avery and Dennison. Printer Systems America in Philadelphia, PA. "It's only a cost because there is no feedback into the system telling you I shipped this, I have X number of units going to X number of places. It's the equivalent of an extra label."
Not all suppliers to Wal-Mart have chosen to go this route, however. The Procter & Gamble Company is among the top 100 suppliers of Wal-Mart and has begun shipping RFID-tagged cases and pallets to the retailer.
"We are not just doing 'slap and ship'. We see tremendous potential value in the EPC (1) (Entertainment PC) See HTPC.
(2) (Electronic Product Code) A standard code for RFID tags administered by EPCglobal Inc. (www.epcglobalinc.org). [electronic product code] system, so we are evaluating how best to create systems to get the most out of the information we're able to collect via the system. We are still in a test-and-learn mode right now. This means that we are focused on doing small pilots with interested retail partners," says Jeannie Tharrington, Procter & Gamble Media Relations, headquartered in Cincinnati, OH.
Like Procter & Gamble, many suppliers are starting implementation on a small scale, but they recognize the long-term benefits of RFID and the need for further investments.
R4 Global Solutions is a systems integrator working with 15 percent of Wal-Mart's top suppliers. "Manual application tags is what the vast majority of the folks we work with are using," says Charles Rice, VP of technology for the San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , CA based company.
While that is the current reality, Rice says that these same suppliers are serious about integrating RFID into their operations. "They are investing in infrastructure, in terms of the tags, readers, the middleware Software that functions as a conversion or translation layer. It is also a consolidator and integrator. Custom-programmed middleware solutions have been developed for decades to enable one application to communicate with another that either runs on a different platform or comes from a , integration, and to their ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. systems, and spending more time on the business process of how this will become a part of their standard operations."
Rice says his company is hearing feedback from suppliers on both sides of the fence, but that the benefits to suppliers are numerous. "For those who have expensive products--products with high margin, products with high shrink, products where there's a lot of counterfeit and diversion--there are some obvious, immediate benefits. With some of our other suppliers, the insight into inventory, the insight into the supply chain and the movement of the products through that chain, especially when it's a perishable per·ish·a·ble
Subject to decay, spoilage, or destruction.
Something, especially foodstuff, subject to decay or spoilage. Often used in the plural. item, have resulted in increased sales," he says.
Wal-Mart and the label converter (1) A device that changes one set of codes, modes, sequences or frequencies to a different set. See A/D converter.
(2) A device that changes current from 60Hz to 50Hz and vice versa.
The good news for label converters is that Wal-Mart cases and pallets are tagged with RFID labels. These labels vary in size--generally 4" X 2" or 4" X 6" --and are most often passive thermal transfer See thermal wax transfer printer and direct thermal printer. labels.
Label converters are generally supplying blank labels for the initiative. The end use manufacturer then prints variable information themselves, such as destination information or bar codes, using an RFID-equipped printer.
According to Williams, new generation RFID printers A thermal printer that prints RFID smart labels. RFID printers encode the chip in the RFID inlay at the same time they print bar codes and alphanumeric, human-readable characters. Most RFID printers handle 4" wide labels, while some can support labels up to 6" wide. prevent damage by "jumping the bump". "These printers accommodate RFID labels with chips in any label location; users simply alert the printer to chip location during setup. During operation, the print head senses the chip location and jumps over it," he says.
If the Wal-Mart mandate continues to go as planned, the need for blank RFID labels will soar SOAR - 1. State, Operator And Result. A general problem-solving production system architecture, intended as a model of human intelligence. Developed by A. Newell in the early 1980s. SOAR was originally implemented in Lisp and OPS5 and is currently implemented in Common Lisp. . But is this an excellent opportunity for label converters? That's debatable de·bat·a·ble
1. Being such that formal argument or discussion is possible.
2. Open to dispute; questionable.
3. In dispute, as land or territory claimed by more than one country. .
"In the first few years as RFID usage kicks in, label converters such as ourselves who already have equipment in place to do the conversion will be able to provide that conversion," says Jim Agney, president of Argent ar·gent
1. Heraldry The metal silver, represented by the color white.
2. Archaic Silver or something resembling it. Tape & Label in Troy, MI.
In the long term, however, Agney sees smaller label converters involved elsewhere, adding that there are plenty of larger companies that are geared to deal with high volume orders for logistics. "The large high volume producers will take care of the Wal-Marts of the world," Agney says.
There is also a question of return on investment. "I think most label converters are going after the Wal-Mart pallet and case label. We are hearing more and more about applications in the airline industry, but today, most are obsessed ob·sess
v. ob·sessed, ob·sess·ing, ob·sess·es
To preoccupy the mind of excessively.
v.intr. with the 4" X 6" label," says Max Golter, VP of sales for bielomatik-jagenberg in Windsor, CT.
"The converter who is solely going after fulfilling the Wal-Mart mandate will find it difficult to recapture recapture n. in income tax, the requirement that the taxpayer pay the amount of tax savings from past years due to accelerated depreciation or deferred capital gains upon sale of property. (See: income tax)
RECAPTURE, war. the investment, because this is a company that has stated from the start that it is not willing to pay anything extra for the advantages that it brings. There are plenty of applications out there that are not so cost sensitive," Golter observes.
"As RFID moves forward, more and more super stores will move to it. It makes sense. The technology makes a lot of sense, but boy, is it hard to get going," says Appleton's Mike Cove.
A number of challenges were encountered during piloting and initial implementation by Wal-Mart's suppliers. Here are a few:
* Orientation: Where the label is placed on the box or pallet can make a big difference in whether or not it works. "The reality is that the antennae have to be in a certain orientation relative to the scanner, and they have to be placed away from certain materials, like metals and liquids," says Cove.
* One size does not fit all: "One of the biggest awakenings for our suppliers has been that a single type of tag (antenna design) does not necessarily fit all of their products," says Gallagher.
* Data: RFID systems produce an extraordinary amount of data. "Right now, I'm not sure the manufacturers know what to do with that data, the volume, or how to make sense of it. A lot of the suppliers didn't build big data warehouses to capture that data, to put analysts on top of it to figure out what to do with it, and then integrate it back into your supply chain," says Romanow.
This is not a complete list. The cost remains a challenge for many suppliers, the yield can still be an issue, and there are questions about label application in the future when suppliers will go from tagging a few SKUs manually to automating the process with the entire product line. But despite the challenges, experts are quick to say that RFID is not going away.
"RFID is going to happen. It's going to happen alongside bar code and human readable labeling for a period of time, but it is a fact of life. And developing a strategy to address it would be a vital part of their future business," says Steve Ludmerer, president of Parelec in Rocky Hill Rocky Hill, town (1990 pop. 16,554), Hartford co., central Conn., a suburb of Hartford, on the Connecticut River; settled c.1650, inc. 1843. Chemical coatings and synthetic textiles are made there. Rocky Hill was an important river port from 1700 to 1820. , NJ.
Wal-Mart isn't the only retailer ...
RFID in retail will not begin and end with Wal-Mart, nor will it end with logistics. According to Technology Briefing #021, written by Charles Rice of R4 Global Solutions and published in January, "Every one of the top 15 US retailers has begun some type of effort around RFID technology."
Several companies are mentioned specifically. In logistics, the briefing reports that Target is in the early pilot stages of its RFID effort. "The program is live at 10 Texas area stores with 19 suppliers," it says. Albertsons is anticipating an August 2005 live date for its top 100 suppliers. A current pilot includes seven top companies, among them Gillette, The Procter & Gamble Company and SC Johnson.
Best Buy's RFID mandate was announced in August of last year. "The initial mandate covers a supplier encompassing approximately 80 percent of the company's store inventory. Pallet and case use of RFID is scheduled for an August 2005 pilot with a potential further expansion to item level in 2006 and beyond," states the report.
In Europe, Metro Group is working on a pallet-level RFID pilot, and has installed RFID readers A transmitter/receiver that reads the contents of RFID tags in the vicinity. Also called an "RFID interrogator." The maximum distance between the reader's antenna and the tag vary, depending on application. and tags at its largest distribution center in Unna, Germany. Tesco has announced a major expansion of its "Secure Supply Chain" RFID program, and has also announced expansion of its item-level DVD DVD: see digital versatile disc.
in full digital video disc or digital versatile disc
Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. pilot from two UK stores to 10.
While Gallagher from Wal-Mart says that her company doesn't "anticipate tagging at item level for 10 to 15 years," it is worth noting that not all retailers are focused so specifically on supply chain management. RFID can do more than trace packages.
"Retailers are not all going to do the same thing that Wal-Mart is doing. Wal-Mart is focusing on supply chain excellence, inventory visibility, out-of-stock reduction, all that good stuff," says Romanow of AMR Research. "A lot of other retailers can't compete with Wal-Mart on price, so what they do is compete with Wal-Mart on things like store experience. RFID is one of those technologies where you can do some innovative things in the store."
RELATED ARTICLE: The U.S. Government and RFID
RFID mandates and recommendations are being issued by the government. Here's a quick look at three:
Department of Defense: On July 30, 2004, a memorandum concerning the use of RFID within the DoD was signed. The policy required RFID implementation starting in January 2005. Several news outlets reported in November, however, that the DoD was pushing back its implementation dates. Web address: www.acq.osd.mil/log/rfid/index.htm.
Food & Drug Administration: In November 2004, the FDA FDA
Food and Drug Administration
n.pr See Food and Drug Administration.
n.pr the abbreviation for the Food and Drug Administration. published the Compliance Policy Guide, which champions the use of RFID tagging within the pharmaceutical supply chain. The organization also announced the setup of a workgroup charged with studying RFID and its implications for the pharmaceutical supply chain. Web address: www.fda.gov/bbs/topics/news/2004/NEW01133.html.
Department of Homeland Security Noun 1. Department of Homeland Security - the federal department that administers all matters relating to homeland security
executive department - a federal department in the executive branch of the government of the United States : As part of its USVISIT USVISIT US Visitor and Immigration Status Indication Technology (DHS) initiative, the Department of Homeland Security announced in January 2005 that it is planning tests of RFID at US borders. Testing will begin in July 2005 in three states. Web address www.dhs.gov/dhspublic/display?content=4308.