Suppliers eye RFID data, search for potential uses

Computerworld - GRAPEVINE, Texas
More than 100 suppliers have started shipping RFID-tagged pallets and cases to Wal-Mart Stores Inc., CIO Linda Dillman said at the RFID World 2005 conference here last week. The suppliers are able to access data about their shipments on Wal-Mart's Retail Link extranet site within 30 minutes of the tags being read, she added.
Making use of the data generated by radio frequency identification devices is expected to become a key capability for some of those companies this year, said several users and analysts. It's seen as the next step for suppliers, which until now have primarily focused on trying to ensure that tags, readers and other RFID products work.
"It really is about taking that data and re-engineering your business processes," said Mike O'Shea, director of corporate Auto-ID/RFID strategies and technology at Kimberly-Clark Corp. in Irving, Texas. "It's not about the technology."
O'Shea said that Kimberly-Clark this year plans to examine five business processes and test re-engineered approaches that are driven by RFID data. He declined to provide specifics, but he noted that the consumer goods maker is looking into "electronic proof of delivery" and ways to use "demand signals" in product replenishment.
Tip of the Iceberg
Suppliers won't be the only ones plotting business process changes. Dillman said Wal-Mart has "just barely touched the tip of the iceberg" with RFID. Initial process changes include creating automated and prioritized pick lists for store employees to use when stock is low on shelves and products are available in the back room, plus exception reporting capabilities for when that isn't the case, she said.
Jeff Woods, a Gartner Inc. analyst, said early-adopter retailers are being aggressive in trying to use RFID-generated data to improve their business processes. Woods added that such efforts have been more spotty among suppliers, most of which have taken a "slap-and-ship" approach -- a strategy that works for them, since RFID won't help to improve their internal warehouse processes, he said.
Many suppliers have done RFID-related systems integration work, but most don't know what to do with the data at this point, said IDC analyst Richard Dean. "They're using it, but not very effectively at the moment," he said.
Kimberly-Clark receives RFID data from both Wal-Mart and Target Corp., which has set a June deadline for its top 100 suppliers to start using RFID. O'Shea said that over the past two months, the two retailers have been seeking Kimberly-Clark's opinion on "meaningful formats" for the data. He added that some retailers and suppliers are workingwith EPCglobal Inc. to define parameters for exchanging RFID data electronically.
Drug maker Purdue Pharma LP began using RFID technology last year to comply with a Wal-Mart directive to tag Class 2 narcotics. Sajan Idicula, a senior systems analyst at Purdue, said the Stamford, Conn.-based company sent its first RFID-tagged shipments to the retailer in November.
Instead of just taking a slap-and-ship approach, Purdue brought in SAP AG and Fort Wayne, Ind.-based Northern Apex Corp. to help hook into its systems the RFID data it collects internally. Purdue now feeds the data into SAP's supply chain event management module. Plans call for the data to eventually be tied to SAP's R/3 ERP software, Idicula said.