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Wal-Mart Pushing Suppliers For RFID
Posted by
Soulskill
on Sun Jan 20, 2008 09:32 AM
from the their-way-or-the-highway dept.
from the their-way-or-the-highway dept.
Weather Storm brings us an InformationWeek article about Wal-Mart's push for suppliers to RFID tag their product shipments. Wal-Mart seems to have lost patience in waiting for its suppliers to adopt the inventory tracking initiative. From InformationWeek:
"The retailer says that beginning Jan. 30, it will charge suppliers a $2 fee for each pallet they ship to its Sam's Club distribution center in Texas that doesn't have an RFID tag. The charge is to cover Sam's Club's cost to affix tags on each pallet, says a Wal-Mart spokesman. The retailer hasn't taken such a strong-arm approach yet with the more than 15,000 suppliers that still haven't complied with its request to tag pallets and cases headed for its Wal-Mart stores. Instead, it seems focused on turning its 700-store Sam's Club warehouse-outlet division into an example of RFID supply chain technology in action, down to requiring item-level RFID in 22 distribution centers by 2010."
Related Stories
[+]
Your Rights Online: Walmart to Push RFID 497 comments
bravehamster writes "According to this article over at MSNBC, Walmart is going to push its suppliers to start using RFID to track inventory by 2005. The article goes on to mention how it was Walmart who helped jumpstart widespread adoption of barcodes. The report also points out some of the barriers in the way of RFID acceptance, but never once mentions consumer privacy concerns. Guess that kind of stuff just isn't important anymore."
[+]
Technology: Wal-Mart's Faltering RFID Initiative 130 comments
itphobe writes "Baseline magazine has up an in-depth look at Wal-Mart's years-old RFID initiative. Things apparently haven't gone so well for the retail giant. 'The lack of any obvious concrete gains has raised questions as to whether Wal-Mart should delay or freeze its RFID plans. For now, however, Wal-Mart says it will stay the course ... By January 2006 the company hoped to have as many as 12 of its roughly 130 distribution centers fully outfitted with RFID. That effort stalled at just five distribution centers. Instead, the company is now focusing on implementing RFID in stores fed by those five distribution centers so it can gain a bigger window into its supply chain.' Overall the article focuses on the original intentions of the RFID project vs. their implementation. It also discusses several of the technical elements required to adapt RFID for the US juggernaut."
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Can you charge a supplier $2? (Score:2, Funny)
Re:Can you charge a supplier $2? (Score:5, Funny)
The question of the day is, does Kong get his bananas for $2 less? For extra credit, can you explain why reverse would not be true, if you attempted to demand a $2 on Kong's security services he's providing you?
~Rebecca
Parent
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Re:Can you charge a supplier $2? (Score:4, Insightful)
Qualifying questions:
If I give Kong a discount, am I still going to be able to eat? Or am I going to die slow? Can I feed my bananas to another monkey and have them grow while Kong shrinks? Do I enjoy my life enough that I wouldn't just tell Kong to fuck off out of spite?
Wal-Mart are a short ways from collapse at all times, it's a consequence of their "Keep no back stock" policy. They run everything at the edge, and at some point, it's going to bite them hard.
In the end, didn't King Kong get killed when everyone united against them?
Parent
Re:Can you charge a supplier $2? (Score:4, Insightful)
So your first question is unfortunately irrelevant. Your second, is however, as the only winning move in this situation is not to play with King Kong at all, and attack him instead of yourselves as he demand. How to get that to happen is a topic for another day, under another revolution thread; as the Kong you'd have to defeat here has help this time.
~Rebecca
Parent
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Snapper Lawnmowers [fastcompany.com] on the other hand put their foot down and said No. Walmart asked for that $5 discount and Snapper came back and said No and pulled there mowers.
Some companies still have a bit of integrity.
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Here locally, I can tell you that the small mom & pop hardware store, the kind of place Snapper wants to sell through (higher markup, more money per unit sold for Snapper) is now out of business and the building is in the process of being converted into a strip mall.
So let's see some links to a follow-up story, not that same tired old link. How is Snapper doing a year or so later?
Re:Can you charge a supplier $2? (Score:4, Insightful)
Love em or hate em, Walmart has the clout to do so.
Parent
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Re:Can you charge a supplier $2? (Score:5, Insightful)
Cost of employee to tag at 1 per min= $0.30
Cost of labour training=0
Cost of payroll tax, HR management=0
Cost of chip = $0.20
Cost of ordering the chips = 0
Cost of receiving the chips = 0
Cost of storage of the chips = 0
Cost of restocking the chips = 0
Cost of quality control = 0
Cost of equipment to affix the chip=0
Cost of insurance=0
Cost of billing the suppliers and paperwork involved =0
Interest on capital employed for the above=0
Yep, your math works out. You should start your own business instead of posting here on slashdot.
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You're suggesting that Wal-Mart is charging a premium to tag pallets of deliveries that they want to have tagged by the supplier rather than tagging it themselves?
Shocking. If only there were a way for suppliers to tag their own pallets for less...
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If the supplier thinks WalMart is overcharging, and that the tag should only cost 20 cents, they can always do it themselves.
If, on the other hand, their cost to do it would be $5.00, why not let WalMart ding them for $2.00?
Look, WallyWorld is not my favourite store, since I'm pretty much boycotting the crap that comes out of China nowadays, and I still insist on standing in line at the grocery store to talk to a HUMAN rather than use the self-checkout machines, but rfid tags on palettes makes sense, i
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Good points. I can add:
I think more Slashdotters should go into the retail business. God knows we have the music business already figured out. Too bad we're all too busy playing WoW to change the world.
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If they charged their cost, then the supplier could, in effect, "hire" the Walmart guy to put the tags on. It's much simpler - no need to buy the tags or equipment, and no chance of error. Walmart's aim is not to get the $2, it's to get the supplier to put the tags on.
Re:Can you charge a supplier $2? (Score:4, Insightful)
"So you think it's fair to charge $2 to slap a $.20 RFID tag on a pallet? As far as I can tell, this is not 1 RFID per item, it's 1 per pallet. It is -only- used to track shipments, not individual products."
I suppose we can add channel management, supply chain management and logistics to the areas of knowledge that Slashdotters know everything about.
Distribution centers have rules about receiving products. These rules are necessary to keep the inventory flowing and to keep costs down. Retail DCs (owned by Best Buy, Target and the like) have them, as do distributors, like Ingram and D&H.
The missing RFID tag is a McGuffin -- it could be anything. Missing RFID? Low pallet count? High pallet count? Pallet packed with unexpected dimensions? Unannounced change in the case pack quantity or outer box pack quantity? The product doesn't conform, so it needs to be segregated to another part of the warehouse, and people need to be assigned to rework the product. In the meantime, it's dead inventory that can't be sold.
As has already been mentioned, your estimate of the rework cost is low, but that's not the point -- Wal-Mart, Best Buy, Ingram et al aren't trying to build a profit center out of RFID tag reworks or any sort of rework! They pass the cost of the rework along to the supplier, and the goal is to have it not happen again. Product that's delayed in the warehouse or the DC means missed sales, and if it's a load-in for a holiday weekend or a scheduled promotion, lots of money is lost.
Parent
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Wal-Mart has set the bar and said that they require RFID tags by some day in the future to do business with Wal-Mart - suppliers that do not meet that requirement will not be able to sell their goods to Wal-Mart. Wal-Mart is offering an accomodation to suppliers that want to sell at Wal-Mart but either can not or will not be able to include RFID tags on their pallets to this one distribution center (and yes, it will creep into their entire supply chain).
To build an
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It's a volume thing. When you buy in bulk, you pay a different price. Wal-Mart buys enough bulk merchandise to be able to demand special terms.
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"So what you're saying is that bullying is OK - that the larger party deserves concessions, and can do whatever the hell they want just because they're larger, and that this is perfectly acceptable."
This is hardly something that Wal-Mart invented -- all distributors and major retailers assess charges to rework product that doesn't arrive in the expected form. RFID tags are just the latest technological item (which is why this warrants discussion on Slashdot), but if you tell a distributor or major retai
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This is standard in North America: buyers have logistics requirements that sellers agree to; the contract stipulates penalties
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And even with a contract, you'll be hard pressed to find someone to sell you something that when asked to sign it didnt laugh you out of the store.. but even assuming you meant a higher level of buying (IE the same way walmart does, in bulk from distrubters) where you might have a contract as standard practice, then you too could get away w
Isn't this a good use for RFID? (Score:5, Insightful)
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RFID and Walmart and more (Score:5, Informative)
Let me act as a karma whore (not that I care about virtual karma). Last May [rfidjournal.com] Walmart was announcing their embrace of the RFID tech, underlining the "green" component of this tech. Then,
Other RFID stories that I find pertinent: a successful implementation of RFID tags [ornl.gov] at the Oak Ridge National Laboratory's Washington Navy Yard. Don't forget we discussed over
Parent
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Sounds like Apple (Score:2, Informative)
demanding free service (Score:3, Insightful)
But this has a non-trivial adoption cost to the manufacturers. Walmart isn't incentivising this; no offers of cost sharing. Just a flat demand. It's not illegal AFAIK but it is abusive.
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Exactly. For some operations, RFID makes sense, but there isn't just ONE RFID system installed. Most of these companies also supply other big chain stores who may have other requirements. This was the whole reason for going with Barcodes. Barcodes are standardized. RFID systems are not, as far as I know. Walmart hammers it suppliers for price decreases, while the shipping costs rise due to higher petroleum. The supplier has a choice: make money or go out of busines
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Here's one: you can scan an hundreds of items on a pallet wrapped in shrink wrap, *individually*.
This turns out to be an issue because of an A/R issue called "deductions." This is where the recipient of goods deducts from the invoice saying that they didn't receive everything you claim to have shipped them. With RFID, you can count all items in the pallet right before you ship it.
-- John.
Couple of thoughts.... (Score:3, Informative)
2. I understand that to not-do-business with Walmart is to await death. To do business with Walmart, however, is to invite death. (Seriously, they will put so much price pressure on you... and are not at all concerned with running you, as a supplier, into the ground, since there are plenty of other suppliers out there...)
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Walmart's business model doesn't seem to invite the kind o
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Board Games. Monopoly, Risk, Scrabble, etc. All trademark (not copyright) protected.
Video Games. All protected by copyright and trademark
Books. Copyrighted.
All brand name products, from electronics to food to motor oil to running shoes.
None of these are fungible. Ask any parent whose kid insists on Nike or Captain Crunch. Or any car owner who insists on Valvoline. Or EVERYONE who wants a Wii.
Stack them (Score:4, Funny)
Problem solved. NEXT!
It's probably been in their Ts & Cs for years (Score:5, Interesting)
Imagine you run a monster distribution center. You order from a zillion vendors and pallets of merchandise appear. Some pallets have a nice list attached to them describing what is in them so you can route them to the store without unpacking them. Others just show up with a pile of boxes and you have to, at least partially, unpack and re-wrap them to confirm the contents.
1. Your next version of your terms and conditions require a packing list.
Then, you find that most of the lists have the PO number on them and list the items by part number, but a few just say something like "Here's 10 cases of green shirts." Most have the packing list printed on a label on the side of the wrapped pallet. Some have it inaccessible from the outside.
2. Your next revision of your terms and conditions require the list to be on the outside and dictate the format.
After a few rounds, you realize that these lists are very expensive to produce and to read and all of your suppliers have (or should have) computers anyway, so you have them electronically send you the packing list and specify a shipment number. That number goes on a bar-code label at a specific place on the shipment. On your receiving dock, you have someone dance around each pallet to scan it and then it disappears into your warehouse.
3. Your next Ts and Cs require the bar-code
You find that the bar-code requires stopping the flow of items in all sorts of places. You invest in RFID readers for your whole distribution line. You tag all the incoming shipments as they arrive, and you find that it works.
4. Your next Ts and Cs require RFID labels.
A grace period comes and goes. Tagged shipments fly right through your distribution center smoothly, but you have some suppliers who still don't comply with your agreements with them and you have to stop each of those shipments on your dock and slap an RFID label on them yourself. The industry gets to the point where labels with tags are down to 40 cents in tiny quantities and the equipment to program them is down to under a thousand. There are also companies that will sell tags preprogrammed for a dollar or two. Still, some of your suppliers who were eager to sell to you and signed the Ts and Cs the day they took the order, fail to follow through.
5. You start to either refuse to accept shipments that don't comply with the contract or you charge a fee to fix the sloppy shipments.
Now, a legitimate issue is where the power in the relationship is. WM is well known for holding all the power and that really can be viewed as being all about price and accepting the Ts and Cs in the first place. That's an issue that comes up anytime they meet with a supplier. If your Verizon service stinks, you cannot do anything about it because, when you "negotiated" your contract, you could either sign THEIR terms or you could go to one of a tiny number of serious competitors who seem to have conspired to have equally onerous terms. (This is exactly why legislators keep looking at things like "customer bill of rights" legislation... the individual customer doesn't have the ability to choose a better contract).
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Word of the Day... (Score:3, Insightful)
- RG>
Yawn (Score:2, Informative)
Will they sell (Score:2)
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Not the same technology. Those theft-deterrent tags are just a small piece of metal foil shaped/sized so it's resonant frequency falls at a particular RF frequency. Broadcast on that frequency near it and it "pings" back with a signal. Hit it with a strong enough signal, the heat generated melts the foil and the tag no longer reacts. Notice that there's no data at all here, the tag's just a reflector. The gates near the store doors transmit a low-power signal and sound an alarm if they hear an echo from a t
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