The Champion of RFID is ... Wal-Mart?
January 18, 2008 2:41 PM
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An example of an EPC RFID tag in use at Wal-Mart
Wal-Mart plans to strong-arm suppliers into using its RFID tagging system
RFID already has a
largely due to the unsavory prospects of
, possibly by
. There is a significant
public wariness to the technology
, which largely stems from these issues, which unfortunately causes people to often overlook its
practical business uses
By using RFID tags during shipping, pallets of goods can easily be located, identified and tracked as they move across the country. This can lead to great cost savings while enhancing the supply chain. Such devices operate in either the 433 MHz and 2.4 GHz frequency, and thus pose no more electromagnetic radiation concern to users than the myriad of
other wireless signals that surround us in our daily lives
adopted RFID early and has since pushed its suppliers to adopt the system, which it feels is revolutionizing its shipping processes. For three years now the company insisted its suppliers RFID tag shipping pallets for its Wal-Mart retail and Sam's Club warehouse stores.
Now Wal-Mart is using Sam's Club
as a proving ground for the new technology
, by economically forcing its suppliers to adopt the system. The new, more forceful, push will begin with Walmart's
DeSoto, Texas distribution center that distributes pallets to Sam's Club stores across the southwest. Starting January 30, all pallets entering the center must be RFID tagged or suppliers will face fines of $2 per untagged pallet.
An RFID tag costs about 20 cents to manufacturer.
Wal-Mart explains that the significantly larger fee is not designed to be punitive, but covers the costs of labor for Wal-Mart having to reprocess and tag the pallets themselves. The fee allows companies without existing RFID infrastructure to temporarily pay Wal-Mart to deal with this issue, giving the supplier time to adopt RFID logistics.
Sam's Clubs 700-stores accounted for $41.5 billion of Wal-Mart's $344.9 billion in revenues in 2007. The stores use fewer suppliers than the Wal-Mart retail chain, so the company sees them as an ideal proving ground for the technology.
The system and accompanying fines for non-comformers will be phased in at all 22 Wal-Mart distribution centers over the next three years.
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RE: Heck Yes
1/19/2008 12:30:15 PM
Currently on-pitch RFID tags cost firms purchasing them in the quantity of ~1MM about $0.08 - $0.12 each. However, an on-pitch RFID label is only useful if the company does not wish to embed it in existing barcode labels. The process to convert the RFID tag to a useable label in current supply chain processes adds another ~$0.05 - $0.07 to the label. Other costs include RFID printers (about $2K each), software upgrades and general over to manager installation of RFID into a supply chainn.
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