Lucien Repellin, HP's manufacturing-industries RFID-services lead, says HP initially will ship the RFID-tagged cases and pallets to Wal-Mart's Texas distribution center, the mega-retailer's first RFID-ready center. By year's end, HP expects to stick tags on 80% to 85% of its products bound for retailers.
Wal-Mart has asked its top suppliers to have tags on cases and pallets by Jan. 1 so it can more efficiently track goods coming into its distribution centers and stores. RFID tags can transmit a code--called an electronic product code, or EPC--that contains information about the product, providing a more-automated means of capturing supply-chain data. Retailers Albertsons and Target and the Department of Defense also have asked suppliers to adopt RFID for goods shipped to them.
HP isn't a newcomer to RFID, having spent at least three years experimenting with it in the supply chain. Based on that experience, Repellin offers some lessons for others adopting the technology:
Data management is a challenge. HP uses RFID in two U.S. sites and one in Brazil, and together they generate 1 to 5 terabytes of data every day. Repellin says HP doesn't plan to archive all that data, but instead will collect and react only to the exceptions--data that suggests there's an error in what's being shipped. But Repellin says a slap-and-ship approach (just putting tags on to satisfy a retailer) is a pure expense. Companies should capture and use the data themselves.
Tag prices vary. HP is paying about 30 cents a tag, though it has seen prices from 15 to 50 cents, depending on the radio frequency used.
Accurate reading is difficult. HP has had to change how it puts pallets together to get faster and more-accurate read rates. Though it's not yet shipping item-level tags, HP has experimented with them. Readings on ink-jet cartridges were often inaccurate because a cartridge's liquid metal interfered. It solved that by putting an insulating material between the cartridge and the tag.
Yet RFID can deliver accurate results. Repellin says HP is getting 100% accurate read rates on case and pallet shipments, while its bar-code system delivers 92% to 97% accuracy.