P&G Takes Lead In RFID

Procter & Gamble Co. is on the fast track to beating Wal-Mart Stores Inc.'s demand that its top 100 suppliers put radio-frequency identification tags on every case and pallet of goods they deliver to the retail chain's stores by January 2005.

P&G expects to begin using RFID with Wal-Mart in major markets by next spring, says director of supply-network innovation Larry Kellam, who writes about the consumer-products manufacturer's RFID initiative in the October issue of Optimize magazine, InformationWeek's sister publication. Kellam says P&G will spend the next quarter "figuring out what we need to do to prepare for our lead-market execution in 2004, negotiating with hardware and software companies, finishing the business case to make sure we get value, and having discussions with Wal-Mart to ensure we have alignment on the products and applications to get started in the lead market."

Both P&G and Wal-Mart will use RFID tags that meet the electronic-product code (EPC) standards set by the Auto-ID Center, of which both are original corporate sponsors and on whose board of overseers Kellam sits. Their goal is to use the tags to track goods throughout the supply chain, from the time they're boxed at a P&G manufacturing plant until consumers buy them.

Kellam's article notes that the internal business case he used to sell the EPC initiative at P&G was based on three factors: EPC will increase revenue by keeping Wal-Mart shelves stocked with Pepto-Bismol, Pert Plus, and Pringles; it will produce cost reductions, since manual processes like counting inventory should go away; and it will reduce inventory and, therefore, expenses, while improving customer service. "We believe EPC is a transforming technology," he says. "If it helps improve service to the consumer and takes cost out of the system, everyone should win."

Lead contenders for P&G's EPC-tag order are Alien Technology, Matrix Technology, and Philips, Kellam says, though he'd like "to have all the major semiconductor and tag manufacturers make EPC-standard ones."