Some pharmaceutical suppliers won't meet Wal-Mart RFID deadline

The suppliers were supposed to be using RFID tags by tomorrow

Wal-Mart Stores Inc. confirmed yesterday that some of its pharmaceutical suppliers won't meet a March 31 deadline that it had set for them to affix radio frequency identification tags to packets they ship to its distribution centers.

Gus Whitcomb, a spokesman for the Bentonville, Ark.-based retailer, declined to identify which of Wal-Mart's 18 pharmaceutical suppliers will make the RFID deadline or say how many won't do so. But he said Wal-Mart expects noncompliant suppliers to meet its directive by the end of June.

Whitcomb declined to provide further details, citing a commitment to security that was made with the pharmaceutical suppliers.

The March 31 date marks the first in a series of deadlines facing Wal-Mart's suppliers. Wal-Mart has told its top 100 suppliers that it expects them to comply with a January 2005 deadline to affix RFID tags to pallets and cases they ship to its three distribution centers in Texas. The remainder of the suppliers are expected to comply by the start of 2006.

Next month, eight of the top 100 suppliers will begin a test involving selected products shipped to one of Wal-Mart's distribution centers in the Dallas-Fort Worth area, Whitcomb said. The test will ultimately expand to Wal-Mart's other two distribution centers in the Dallas-Fort Worth region, but Whitcomb said the timing will depend on how the first test goes.

Whitcomb emphasized that Wal-Mart views its RFID initiative as a partnership with suppliers. He said those having trouble meeting the deadlines are being urged to discuss their problems "early on" with Wal-Mart "so that we can see if we can work with them on a solution that gets them in target with the deadline."

H. Lee Scott, president and CEO of Wal-Mart, said earlier this year during a keynote address at a National Retail Federation conference that if suppliers can't comply, "it's not like we're going to quit doing business with them." Scott said pressure is being exerted in "tough love" fashion to move the suppliers to RFID technology, but there's "also an understanding that we're not trying to hurt 'em either."

Scott added that he considered the time frame that Wal-Mart had set to be realistic, "but if it isn't, we'll back off."

RFID tags can be used to track goods throughout the supply chain without need of manually operated line-of-sight scanners. The tags emit radio waves that are interpreted by readers and converted to a digital form that can be passed to computer systems.

Wal-Mart made waves last year when it issued its directive to suppliers about shipping pallets and cases with RFID tags, but other retailers have since followed suit. They include Target Corp., Albertson's Inc. and European retailers Metro Group and Tesco PLC.

Industry analysts have said they expect many suppliers to have difficulty meeting the deadlines and finding near-term benefits that make their efforts worthwhile financially.

Copyright © 2004 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon