RFID Tests Wal-Mart Suppliers

Computerworld - Wal-Mart Stores Inc. last week confirmed that some of its 18 pharmaceutical suppliers didn't meet a March 31 deadline to put radio frequency identification tags on warehouse packs of Class II narcotics.
Wal-Mart said it now expects all the companies to comply by June 30. But the missed deadline highlights the challenges that all suppliers face as they try to adopt RFID technology. And the compliance delays may not be the only ones Wal-Mart encounters as its leading suppliers strive to fully meet the RFID directives it set last year, predicted analysts at Forrester Research Inc., Gartner Inc. and five other market-research and consulting firms (see story).
A Wal-Mart spokesman confirmed that the retailer is requiring its top 100 consumer goods suppliers to ensure 100% readability of the RFID tags that they're being asked to affix to all pallets and cases shipped to its three distribution centers in the Dallas/Fort Worth area by January. Forrester estimated that only 25% of the suppliers will be able to fully comply with the requirements on time.
Wal-Mart continues to maintain that the deadline is realistic. In a message posted last week on the company's RetailLink extranet site for suppliers, CIO Linda Dillman stated that Wal-Mart is "on track to have in excess of 100 suppliers tagging cases and pallets by January. ... The response from our suppliers is exceeding our expectations and demonstrates how compelling RFID can be within one's own supply chain."
But at an RFID conference in Chicago, some of Wal-Mart's top-tier suppliers said that they are confronting technical hurdles in pilot projects and that they are struggling to find a return on investment, at least in the near term.
Tom Torre, associate director of business-to-business supply chain innovation at Procter & Gamble Co. in Cincinnati, said executives at P&G will work over the next four months to "understand what the value proposition is." He pointed to the ability to capture tag data from retailers as a key potential benefit, saying it could give P&G better insight about sales.
But Torre said the high cost of RFID tags is a problem. He noted that tags are nowhere near the 5 cent target set by Wal-Mart. Volume prices can range from 18 cents to 40 cents apiece, according to industry sources.
"You're not going to get ROI immediately," said Mark Engle, director of IT at Campbell Soup Co. in Camden, N.J. He added that Campbell views the incorporation of RFID technology as "tactical in nature" to meet the requirements of major customers