Retailers tell suppliers: Start RFID projects now

Giant retailers like Wal-Mart are ready for RFID. Now it's the turn for suppliers to get into the act.

The overwhelming message from the world's biggest retailers and RFID-fans to their suppliers is--don't wait to be told to use RFID, start your projects now. The only problem seems to be that suppliers are less than clued-up when it comes to the supply chain chips.

In a recent conference organised by not-for-profit RFID standards organisation EPCglobal in UK, both Wal-Mart and (UK retailer) Tesco were encouraging their suppliers to adopt the tracking technology now.

Colin Cobain, UK IT director for Tesco, advised suppliers to get involved and take a considered view of the new technology. "Some manufacturers are going down the route of slap-and-ship - I urge you not to do that... If you start of slapping-and-shipping, you'll get a bad name in your organisation." He added that the question about RFID was not "whether or not it will make a huge difference in the world: the question is, will you be ready?"

Simon Langford, manager of RFID strategy for Wal-Mart and Asda, said "start engaging in RFID today... don't sit back and wait for it to happen." Wal-Mart, remember, were so enthusiastic about the technology that they issued a mandate telling their top suppliers to get the tags in their supply chain by 1 January, 2005, or else.

Langford revealed that retailers weren't the only ones falling over themselves to get on the RFID bandwagon. Since the Wal-Mart diktat was issued, 37 smaller suppliers not affected by the mandate had contacted the chain store and asked to join in with the technology.

While Tesco is planning its own rollout and trialling the technology on DVDs and other homes entertainment products in two UK stores, it isn't discounting the possibility of issuing a similar declaration.

Tesco's Cobain said that in the event of it requesting 100 per cent manufacturer adoption of RFID, the company would give its suppliers at least six months to get on board.

One Tesco supplier, however, wasn't entirely convinced that the time would be sufficient, saying: "There are many hundreds of suppliers that aren't aware [of RFID] and could be caught be napping," and added that six months was a long enough lead time only if suppliers started their own research and pilots now.

The issue of cost was also playing on suppliers' minds, with one not-as-yet RFID-enabled supplier posing the question of whether the retailers paid for the technology they want suppliers to have.

Both Tesco and Wal-Mart replied in the negative but both are keen to stress that adopting RFID isn't money for nothing. Cobain added that it was in retailers' interest to make the proposition win-win for them and their suppliers.

And while the thought of spending around 10p a tag and £1,000 for an RFID reader might loom large, the benefits are there to be had, the retailers insist.

One such benefit is that RFID means better supply chain visibility and that means less out of stock items - which Wal-Mart estimate as comprising about 8.3 per cent of items worldwide.