RFID Packaging For Wal-Mart

Do you do business with Wal-Mart?

Soon, all suppliers to Wal-Mart will be required to affix special radio frequency identification, or RFID tags onto all cases and pallets.

Many of the top suppliers are still trying to figure out all this out. How will these new tagging requirements affect them, as well as the effort necessary to meet the goal? Several leading suppliers acknowledge it will be a huge effort.

Once again contract packagers across the national may be called upon to assist in this tagging challenge. As these new scope of work requirements are really no different than changes in the marketplace during the 1980’s when Sol Price opened the first Price Club warehouse stores. Clients are asking for something a little different and until they can find or develop manufacturing systems to handle the problem contract packagers may have the least cost, most effective, and quickest solution to manage the opportunity.

Wal-Mart has identified several key advantages to having these RFID tags used…

Better tracking and moving of inventory
Faster receiving and shipping
Improved quality inspection
Fewer out-of-stock items resulting in improved shopper satisfaction
Greater predictability in product demand
Better value for shoppers as efficiencies occur
The right products, in the right stores, at the right prices

The RFID tags are not without problems today and Wal-Mart has advised their 20,000 suppliers that they will work with them to address and potential problems:

Tags cost thirty cents today and Wal-Mart hopes that the price will be driven down to the $0.10 range as more and more suppliers purchase them
Lack of agreed upon industry standard
Smart Tag technology is far from perfect, as about 20% of today’s tags do not function properly
Physical limitations of tags still exist, as tags can not be read through liquids or metals
Nylon conveyor belts and other radio frequencies can disrupt the tags transmissions in warehouses

Wal-Mart is pushing the envelope of today’s tag technology before this technology is mature. Suppliers too are challenged by the equipping of warehouses and trucks with devices to read data from the tags. These devices will have to have integrated readers that can return real-time information to corporate computer networks. This means that there will be additional costs related to hiring tech consultants and additional hardware.

Wal-Mart is asking nothing more creative than Sol Price did when he started selling multi-packs of product or larger size containers. These companies have pushed the edge of the envelope out for the whole industry.

Contract packagers were there providing special handling and multi-pack services for warehouse club stores then, and many within our industry will be there this year for Wal-Mart’s RFID tags special handling services as well. Finding solutions for uncharted new packaging technology is what many contract packagers, including Aaron Thomas Company, do best.

CNBC reported through MSN Money recently wrote, “Do you speak RFID? Get used to it. This is the tech acronym most likely to get big media play in 2004. It stands fro Radio Frequency Identification Tracking, and with Wal-Mart, the Pentagon, Visa, and American Express behind it, the technology will generate a lot of excitement.” Sounds a lot like what we read about Y2K a few years back.

Four public companies were identified to watch: Zebra Technologies and Printronix as they are both bar-code printer makers that are expanding into RFID printing, Checkpoint Systems a maker of integrated systems for retail security systems, and Symbol Technology a maker of the wireless networks needed to collect data from RFID tags.