Wal-Mart Backs RFID Technology

Computerworld - Chicago—Wal-Mart Stores Inc. last week said it plans to require its top 100 suppliers to put radio-frequency identification tags on shipping crates and pallets by January 2005, a move that's likely to spur broader adoption of the technology because of Wal-Mart's market clout.

However, at the Retail Systems 2003/VICS Collaborative Commerce conference here, IT managers and technology vendors alike said that RFID devices still need to overcome major manufacturing, pricing and standardization hurdles before widespread usage can begin.

Wal-Mart's move is expected to result in the deployment of nearly 1 billion RFID tags with embedded electronic product codes (EPC) for tracking and identifying items at the individual crate and pallet level, said Pam Kohn, vice president of the Bentonville, Ark.-based retailer's global supply chain operations.

But even Wal-Mart's initial RFID effort will be narrowly focused. Although RFID tags can gather and track a variety of data related to products, materials and more, Kohn said Wal-Mart will concentrate at first on using the technology to improve inventory management in its supply chain.

"We're still determining all the benefits," Kohn said. "We don't want to overburden ourselves." She added, though, that even if Wal-Mart were to collect no new data with the RFID tags, the efficiency and accuracy with which items can be tracked would be huge benefits in and of themselves.

RFID uses low-powered radio transmitters to read data stored in tags that are embedded with tiny chips and antennas. Proponents of the technology say such "smart" tags can store more detailed information than conventional bar codes, enabling retailers and manufacturers to track items at the unit level.

RFID tags have been available for several years, but adoption has been slow because the tags are more expensive than bar coding and because standards are lacking to ensure interoperability between tags and data readers.

Gary Robertson, executive director of global infrastructure at Delphi Corp., a Troy, Mich.-based maker of automotive electronics systems that uses RFID devices in its manufacturing operations, said Wal-Mart's decision to deploy the technology "will legitimize it and push it into the mainstream."

"The fact that the largest company in the world is publicly adopting EPC open standards should give companies confidence that the day of a single, interoperable RFID system is close at hand," said Kevin Ashton, executive director of MIT's Auto-ID Center in Cambridge, Mass.

The Auto-ID Center is working with Uniform Code Council Inc. (UCC) in Lawrenceville, N.J., and EAN International in Brussels to develop a standardized EPC format for storing data on RFID tags. That effort got another boost last week when Microsoft Corp. said it will join AutoID Inc., a not-for-profit joint venture set up by UCC and EAN to oversee the still-evolving standards.