Wal-Mart Tests RFID With Eight Suppliers

Mandate for tags marches forward, but companies still struggle with accuracy rates
Wal-Mart Stores Inc. and eight manufacturers last week began shipping and receiving a limited number of cases and pallets tagged with RFID labels, marking the first real-world implementation in Wal-Mart's RFID trials. It's a sign Wal-Mart isn't budging on its RFID deadlines even as companies wrestle with basic technology performance such as read-rate accuracy.

The trial--involving Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestlé Purina PetCare, Procter & Gamble, and Unilever--is a step toward Wal-Mart's requirement that top suppliers have RFID tags on cases and pallets by Jan. 1. It involves just 21 of more than 100,000 products carried in a typical Wal-Mart Supercenter. Tagged pallets are being delivered to Wal-Mart's Sanger, Texas, distribution center, where RFID readers at the dock doors scan tags and alert Wal-Mart teams and the suppliers that the shipments arrived. Then, tagged cases are put on conveyor belts also equipped with RFID readers.

Seven Wal-Mart stores in the Dallas/Fort Worth area are in the trial, with RFID readers at dock doors to scan shipments.

Though the Wal-Mart trial focuses on pallets and cases, there will be some individually tagged products. HP is tagging two HP Photosmart photo printer models and an HP Scanjet scanner on the outside packaging, which will have an EPC symbol to alert consumers of the RFID tags.

By the end of the year, HP expects to use RFID tags on 80% to 85% of its cases and pallets bound for retail sale, says Lucien Repellin, HP's manufacturing-industries RFID-services lead. HP has been testing the technology since October 2002, and it has learned some lessons along the way. For one, data management is a challenge. HP uses RFID in its facilities in Memphis, Tenn.; Chester, Va.; and Sao Paulo, Brazil. These sites generate 1 to 5 terabytes of data a day. HP plans to collect and initially react only to data suggesting an error in what's being shipped.

The computer maker also found that tag prices vary, depending on the quantity and radio frequency. Prices can range from 15 to 50 cents, Repellin says.

Perhaps the most pervasive challenge is reading tags accurately. "It seems like read rates [on average] are close to 70% or 75%," says Chris Boone, an IDC analyst.


Some individually tagged items will be included in the RFID trial Wal-Mart is conducting.

Photo by Bloomberg News/Landov
Wal-Mart is working to improve read rates, having run into problems with liquid and metal products, says Simon Langford, manager of its RFID strategy. "Getting to 100% read rates will take innovations being developed to bypass the laws of physics," he says. "But that's quite a few years away, so we're setting realistic expectations on how we change our systems and integrate the information and what we expect suppliers to do."

Repellin says HP gets 100% accurate reads on cases and pallets, but the company had to change how it puts pallets together to achieve that. Accuracy is more difficult when tagging individual items; readings on ink-jet cartridges were often inaccurate because the liquid inside absorbs RF signals and metal on the cartridges can short out RFID readers. HP solved that problem by putting a material between the cartridge and the tag.

Colorpoint LLC, a $7 million-a-year greenhouse that supplies Lowe's Cos. and Sam's Club, has 99.5% to 99.75% accuracy, up from 75% last year. "As you work your way through testing, some problems become smaller and disappear, while others begin to surface," says Leon Ingerson, shipping and fulfillment manager.

The company solved some problems by replacing shipping- and receiving-dock readers--eight times. It also needed new tuning equipment to define the radio frequencies. And still, challenges remain. Says Ingerson, "The multiple readers in the warehouse disrupt each other when two or more try to send a signal simultaneously."