Delphi Division To Join Wal-Mart RFID Project

An executive from Delphi Products & Services Solutions will attend a meeting in Bentonville, Ark., on June 14, just two weeks after receiving an invitation from Wal-Mart Stores Inc. to participate in its radio-frequency identification program. Under the program, scheduled to begin at the start of 2005, suppliers will tag cases and pallets with RFID chips being shipped into the retailer's Sanger, Texas, distribution center. At the meeting, Wal-Mart's top 100-plus suppliers will hear an update on the eight-supplier pilot test under way in Texas and its plans to expand RFID efforts internationally, a spokesman for the retailer confirmed.

"We wanted to join the first phase a year ago because the technology has some interesting opportunities for us as a company," says Roger Finney, manager of North American Operations at Delphi Products & Services Solutions, a division of Delphi Corp. "Since we are new in the retail market for consumer electronics, the low volume into their stores might have seemed unattractive to them initially."

Although Wal-Mart makes up roughly 3% of Delphi Products & Services Solutions' sales in consumer electronics, the aftermarket division for the automotive industry subsystem maker is prepared to take the steps to make the RFID deployment happen. First on Delphi's agenda is to review processes and procedures to develop a business strategy, and examine what needs to occur to create a pilot. This means integrating RFID into bar-code reader technology already in use at its Indianapolis distribution center.

Finney told InformationWeek at this week's RFID day for the Executive Masters International Logistics program in Los Angeles hosted by Georgia Tech's School of Industrial and Systems Engineering, that the Delphi division plans to pull into the mix its electronic manufacturing partner Flextronics International. Flextronics handles much of its outsourced production, but the Delphi division "will not wait until the last quarter to start implementing the technology, so we may have to go with a temporary solution for now."

Until the business case is worked out and Finney has a chance to delve into possible return on investment opportunities for Delphi, phase two remains undefined. There are potentially huge efficiencies that can be gained, he says. Most components and systems used to build the satellite radios and other consumer goods are sourced from internal divisions. Initial capital investments are imminent, but the overall savings in labor and reduced cycle times is expected to payoff in the long-term. Finney says Delphi Products & Services Solutions has yet to hear from Target Corp. or others that also have mandated the use of RFID technology.