Wal-Mart's RFID edict: look internally for ROI, say experts
Staff -- Manufacturing Business Technology, 12/1/2003 7:00:00 AM
In a new step toward RFID compliance, Wal-Mart invited 128 of its top suppliers down to Bentonville, Ark., in early November for a two-day meeting that outlined the details of the retailer's January 2005 deadline for top suppliers to tag pallets and cases with RFID technology.
Boston-based analyst firm AMR Research estimates RFID deployments typically will cost large suppliers from $13 million to $23 million. Some experts believe suppliers will recoup this expense if they use the technology internally. "RFID has more value [than bar codes]," says Sanjay Sarma, board member at RFID solutions vendor OATSystems, and a co-founder of MIT's Auto-ID Center, which led development behind the latest RFID-based standards. "The manufacturer gets the benefit of lower levels of inventory and a decrease in stock-outs."
Matt Ream, senior manager for RFID at bar-code printer vendor Zebra Technologies, agrees that manufacturers can benefit from RFID if they extend its use through their operations rather than just using it to tag goods going out the door. Printer vendors such as Zebra offer gear that can print RFID tags. "We've talked with companies that said we're not going to do it because Wal-Mart wants us to do it; we're doing it because we see it as a competitive advantage," says Ream.
Wal-Mart also revealed that three distribution centers and 150 stores in Texas will require RFID compliance by January 2005. Additional compliance territories will be added on a quarterly basis through 2005. The retailer will extend its RFID compliance initiative to include all of its suppliers by the end of 2006.
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