Wal-Mart begins RFID trial in Texas

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April 30, 2004 (IDG News Service) -- Retail giant Wal-Mart Stores Inc. began testing the use of radio frequency identification tagging at seven stores and a regional distribution center in Texas today in anticipation of a wider rollout of the technology that the company hopes will eventually replace bar codes.
Eight manufacturers are participating in the trial. They have agreed to implement case- and pallet-level tagging on a total of 21 products delivered to Wal-Mart's Sanger,Texas, regional distribution center.
The much-anticipated test comes after Wal-Mart threw down the gauntlet to its top 100 suppliers last year, setting a January 2005 deadline for them to place RFID tags on all cases and pallets destined for its Wal-Mart and Sam's Club stores in the Dallas-Fort Worth, Texas, area.
The trial is intended to kick off the RFID tag migration in anticipation of that deadline, said Simon Langford, manager of RFID strategy at Wal-Mart. According to Langford, all of its top 100 suppliers except two are on track to meet the deadline, with many planning to join the trial earlier.
Wal-Mart has been on the front lines of a move by retailers to adopt Electronic Product Code technology in an effort to increase efficiency within the supply chain process. The new tags work by using passive RFID chips with small antennas that emit a unique product identifier code when passed near an RFID reader. That information is then transmitted to an inventory control system.
In the trial, tagged cases and pallets will be read by RFID readers installed on the distribution center's dock doors. Readings taken there will be sent to the store's operations and merchandising teams, as well as the suppliers, to tell them that the products have arrived. The process will be replicated at the seven trial stores, where readers at dock doors will confirm shipment of the goods, Wal-Mart said.
While Langford said many of its suppliers had questions at first about the functionality and cost of implementing the new technology, they now believe it will result in greater cost savings in the long run by improving the efficiency of the supply chain.
What's more, volume purchasing of RFID technology will drive down the costs even further, he said. "Just in the last year, we have seen the price of tags and readers drop by 50% on average," Langford said.

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