Hey, Wal-Mart, A New Case Of Pampers Is On The Way - InformationWeek

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Hey, Wal-Mart, A New Case Of Pampers Is On The Way

Wal-Mart Stores Inc. is testing a way to bring even more automation and standardization to its supply chain. The company is sharing data from radio-frequency identification tags through automated EDI transmissions in a trial being conducted with a handful of suppliers and EPCglobal Inc., the standards group spearheading RFID adoption.

The plan is for RFID tags to trigger advance shipping notices through the EPC Information Service network each time a supplier ships products out its doors. But that process is about a year away, says Simon Langford, RFID global manager at the nation's largest retailer. Currently, advance shipping notices are sent from a supplier's ERP system, but they don't arrive in a standard format or in real time. By working with the centralized system being built by EPCglobal, Wal-Mart hopes to ensure that the data from its suppliers will arrive in a standard format in real time.

"We're just about to enter the next phase where those suppliers will push their information to us as they ship the products," Langford says. "With this process, we will have the capability to see product on the way to us."

Last year, Wal-Mart read more than 80 million electronic product codes, which are designed to uniquely identify specific items in the supply chain, as it continues to expand RFID efforts from Arkansas, Louisiana, and Texas into other states. The data is collected from RFID tags on cases and pallets of goods to automate more of the reordering process. This year, Wal-Mart will begin using handheld RFID scanners in back rooms to identify products it needs to restock shelves. A study by the University of Arkansas found the retailer reduced out-of-stocks by 16% through the use of RFID tagged cases and pallets.

The system soon will notify employees when promotional items and cardboard displays need to move onto the store floor from the stockroom. Tagging displays is a way for suppliers to step up the return they get from RFID, Langford says. "If the displays don't make it onto the floor in time, Wal-Mart hasn't maximized sales and is carrying too much stock at the end of the promotion," he says.

Some hoped-for RFID-enabled processes are on hold, waiting for technology to emerge. Take cold storage. Perishable products from fruits and vegetables to meats and dairy must be kept at a specific temperature while in transit from farms and processing facilities to distribution centers and stores. Tech vendors have been working on RFID applications that monitor temperature throughout the supply chain. "There's nothing out there that's exactly right for us to pilot," Langford says. "We would like to test something this year."

But new applications are on the way. Since Jan. 1, there have been nearly 30 patents granted for applications using RFID technology, including one for tracking food freshness and expiration dates.

Wal-Mart plans worldwide RFID adoption but has a long way to go. "We're in the planning stages with the United Kingdom and Canada," Langford says. Wal-Mart has more than 61,000 suppliers in the United States alone, and about 330 use RFID, with another 300 scheduled to join in January. By that time there will be 1,000 stores equipped to read and process RFID data, up from 500 stores today.

Data-integration applications similar to those Wal-Mart is working on should help. Suppliers want that data to feed into their ERP and warehouse-management systems. "Suppliers are still looking for the return on investment that will help them justify their projects," said Jeff Woods, a VP of research at Gartner. "That's what it will take before they feel comfortable about moving projects along and before we see widespread adoption."

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