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The ARC Advisory Group has conducted an ''RFID Deployment Best Practices'' study in which the group spoke to 24 companies that were actively investing in EPC RFID, and concluded that public reporting on the status of Wal-Mart''s RFID efforts has been "highly misleading".
"The impression conveyed to the public by many pundits is that all Wal-Mart SKUs bound for 3 of the retailer''s Texas distribution centres from the top 100 suppliers will be RFID tagged starting January 1st," explained Steve Banker, service director for supply chain management at the ARC Advisory Group. "This is incorrect. In fact, there were a set of negotiations between Wal-Mart''s top 100 suppliers and the retail giant. In these negotiations, Wal-Mart has shown more flexibility than many anticipated."
Wal-Mart originally mandated that by January 2005 its top 100 suppliers must apply passive RFID tags based on EPC-global standards to cases and pallets headed for three specific Distribution Centres (DCs) in Texas. Almost all manufacturers of consumer goods will eventually be impacted by this because Wal-Mart''s moves in RFID are being copied by other retailers. 116.30.147.133 This article is copyright 2004 UsingRFID.com.
Deadlines vary
But ARC found that different suppliers have negotiated a wide range of agreements. One large supplier will be shipping over 700 SKUs (stock keeping units) starting on January 1st 2005. But many other companies, even very large ones, will be shipping less than a dozen by that time.
Furthermore, January 1st 2005 does not always seem to be the mandated deadline. There have been some extenuating circumstances that led Wal-Mart to grant deferments. One company ARC contacted had a good reason for not starting on January 1st, and so they will not start RFID tagging until mid-2005. The top 8 suppliers began shipping a limited number umber of SKUs to Wal-Mart in 2004. Once companies have begun, they are expected to keep shipping those SKUs. These early RFID shippers may begin shipping even more SKUs starting on January 1st 2005.
Ongoing pressure
According to ARC, companies believe they will meet the commitments they have made to Wal-Mart, and public discussion of the status of this particular RFID project has been "misleading". However, the commitments suppliers are meeting are usually far less than applying RFID tags to all SKUs that they ship to Wal-Mart''s 3 RFID-enabled DCs in Texas. Meetings between suppliers and Wal-Mart will occur on an ongoing basis and, even if a supplier in initial negotiations was able to commit to only a small number of SKUs, they know that in upcoming meetings Wal-Mart will press for an expanded list of SKUs for tagging.
"The focus right now is on Wal-Mart and the question people are asking is ''What is the status of your effort?''" said Banker. "But the more interesting questions should be directed at Wal-Mart''s suppliers - questions like ''How successful were you in your negotiations with Wal-Mart?'' and ''What does it take to do well in those negotiations?''."
Full study published
ARC Advisory Group has now published the results and analysis of its study in the report ''RFID Deployment Best Practices'' which covers topics including:
The status of the Wal-Mart mandate and advice on how to prepare for mandate meetings with retailers;
An analysis of how companies are changing their processes to meet these mandates and the strengths and weaknesses of the various process choices;
An analysis of the three critical inflection processes when it makes sense to move from handling RFID in a certain way to doing it differently;
An analysis of the reliability of RFID technology as well as companies'' satisfaction with various RFID solution providers;
The costs of preparing the RFID infrastructure;
The benefits of RFID and what will be necessary to reap those benefits;
13 cost-saving recommendations for those companies that have to implement RFID to meet a mandate.
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