Wal-Mart May Issue $2 to $3 Non-Tagged Pallet Fines As Of February
Written by Evan SchumanJanuary 11th, 2008
Wal-Mart is threatening Sam’s Club suppliers with a $2 to $3 fine for each non-tagged pallet as of Jan. 31, according to this intriguing RFID Update story.
The story reported that Wal-Mart has “discussed the possibility of allowing suppliers to raise prices to help offset tagging costs.”
-Marc
January 12th, 2008 at 8:53 am
The “RFID Update” story contains the sentence “Suppliers who ship pallets loaded with a single product reportedly can apply tags at the pallet level, while mixed-pallet suppliers must tag individual cases.â€
I find this to be a very curious development. About five years ago Wal-Mart embarked on a program to tag items, cases, and pallets. The vision was that RFID would be used track individual items as they traveled from supplier, to the distribution center, to the store back room, to the store shelf, and to the Point of Sale (POS) counter. First to be abandoned was item level tagging and shelf readers in favor of concentrating on the easier task of case level and pallet level tagging. We were told the store back room was chaotic and the solution was to track cases moving from the back room to the sales floor.
By, apparently, abandoning the requirement for case level tagging except for mixed pallet loads, has Wal-Mart given up on tracking cases between the back room and the sales floor? I fail to see how tagging just at the pallet level will help resolve the chaotic back room problem which has been a focus point for Wal-Mart’s RFID initiative.
January 18th, 2008 at 11:12 am
Great comment by Chris. It is also interesting that global data synchronization is left out here (at least the details are).
The one thing that can help out with Chris’s comment may be an internal process in Walmart where they “pass thur” the data from the pallets when they cross dock.
January 18th, 2008 at 2:24 pm
They are only using the RFID technology to replace the old bar code receiving tags initiated years ago. The products hit the dock and are read as received. The outstanding PO’s and store inventory are marked as being fullfilled for that quantity along with their logistic systems.
Since the problems existed with getting the costs down on item level RFID tagging by Avery and a number of other companies, that phase will be in the waiting stage for a while. So at best I can see why they are going to put the fines on the RFID-less pallets. It will cover the costs of the manual entry of their staff at the receiving dock. This is no different than what we in the Auto-ID industry saw with the shipping bar code tags 10-15 years ago. Just a different technology in place.
I do not think it will eliminate the chaotic back-room activity. Wal-Mart’s initiative for the RFID project, was with good intent several years ago. But, was too aggressive for the rest of the distribution channel to swallow.
January 19th, 2008 at 8:27 am
Since Wal-Mart apparently will not share their know-how with the rest of us, we have no way of knowing what they intend to do in this case. But, let me hazard my best guess.
First they are not replacing the old barcode label with the RFID tag. The current practice is to add the RFID tag to the present barcode label, encoded with identical data, and call it a “Smart Labelâ€. Since the data in both labels is identical, why is it any smarter?
At the dock, the pallets will be picked up by an RFID equipped forklift. Pallets with an RFID tag will be directed to a warehouse put-away location and be automatically received, using the ASN data for acceptance of all the contents of the pallet (Look for future fines for inaccurate ASNs). Pallets with mixed product will be directed to a station with an RFID tunnel reader where the individual cases can be identified and sorted. All others will be directed to the already existing manual receiving station.
Even with 100% compliance, the anticipated read rate will be less then 80%. The need for manning the manual receiving station will never disappear. The ROI for this system will never turn positive. When you take into account that you can accomplish the same thing with the use of a hand-held barcode scanner to read the pallet barcode, which is all that is accomplished by the RFID reader on the forklift, the extra cost of using RFID for this application can not be justified.