Retail News Update

Wal-Mart Stores Inc. is looking to accelerate its RFID rollout, and once again the Dallas area is at the heart of the effort.

The company is requiring all suppliers shipping products to its Sam Club’s distribution center in DeSoto to start applying the radio tags to their pallets starting today.

If they don’t, Wal-Mart will charge the suppliers $2 per pallet to do it for them, the company informed them in a letter earlier this month.

“I think everyone recognizes that it’s the future of how products are going to move through the supply chain, and not just at Wal-Mart, but everywhere,” said Wal-Mart spokesman John Simley.

Wal-Mart and radio frequency identification vendors say the new timeline – with additional distribution centers around the country coming online later this year – highlights the fact that the wireless technology is working as intended, cutting down on out-of-stock problems and boosting sales.

And it’s another sign that the Dallas area is one of the major centers of RFID development and implementation.

Dean Frew is president and chief executive of Carrollton-based Xterprise Inc., which helps other companies, including many Wal-Mart and Sam’s Club suppliers, implement RFID systems.

Mr. Frew said the new timeline for shipping RFID-tagged pallets to the Sam’s Club distribution center will definitely help Wal-Mart, although the payoff for the suppliers themselves might be a bit further off.

“There’s clearly a benefit for the suppliers,” he said. “Is it as immediate as they would like to see? No, probably not.

“But you can’t ignore the fact that if they’re able to keep the shelf stocked more efficiently, in the end suppliers are going to benefit as well.”

RFID technology includes a paper-thin tag with a tiny chip and antenna. When in range of a wireless scanner – at a loading dock in a warehouse, for example – the chip is activated and transmits a small burst of data about the product it’s attached to.

The goal is an automatic electronic inventory system that can track when products come in the warehouse, when they get shipped to stores, and, eventually, when they get sold off the shelf.

After the DeSoto distribution center ramps up, suppliers will have to add four more Sam’s Club distribution centers – including one in Dayton, Texas – to their list by the end of October, and then 17 more by the end of January 2009.

The DeSoto facility will also be the first Sam’s Club distribution center in the country where suppliers will be required to tag every case on a pallet (Oct. 31, 2008) and then every single item that makes it on to store shelves (Oct. 31, 2009).

The timelines should remove any confusion that suppliers have about what they need to do, Mr. Simley said.

“A lot of suppliers of Sam’s were asking for some clarity,” he said. “What do you want us to do and when do you want us to do it by?”

Making DeSoto the launching pad for that effort makes sense.

The Dallas area’s reputation as a top spot for RFID technology can be traced to a variety of sources, from technical work done by researchers at Dallas-based Texas Instruments Inc. to Wal-Mart’s own RFID pilot program, which started in the region.

The area is home to scores of RFID-focused start-up firms, while the Metroplex Technology Business Council is trying to brand the Dallas-Fort Worth region as the “RFID Hub.”

The annual RFID World convention has been held in Grapevine for several years, although the 2008 event is being held in Las Vegas

Source : VICTOR GODINEZ / The Dallas Morning News / January 30, 2008