Given An RFID Inch, Will Sam’s Club Suppliers Try Taking A Mile?
Written by Fred J. AunJanuary 27th, 2009
Sam's Club, which wants suppliers to apply EPC/RFID tags on all pallets they ship to its stores and warehouses by next year, is significantly reducing the fee it will charge those who don't comply, from about $3 per tag to 12 cents per tag. Some suppliers will simply opt to pay the fee, potentially risking the wrath of Sam's Club—and its owner, Wal-Mart.
"Why would you want to invest in technology, training, software and people when Wal-Mart can do it for you for 12 cents?" asked Louis Bianchin, senior RFID analyst and program manager at VDC Research. "The risk there is that they (Sam's Club) could have sent the wrong message to the supplier community. That is not the message the supplier community needs to get."
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2 Comments | Read Given An RFID Inch, Will Sam’s Club Suppliers Try Taking A Mile?
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January 29th, 2009 at 9:33 am
If they are dropping the cost that much is Sam’s saying there isn’t as much value in tagging as they thought? And if the tagging is really for use internally at Sam’s, then this supports the research that has shown closed loop environments are the best ways to get value out of RFID. Once something hits Sam’s dock, it is essentially in a closed loop. In many ways it might be more effective for Sam’s to do the labeling themselves rather than risk errors in what’s delivered by suppliers. At least Sam’s has total control at that point.
If the tags are wrong when they come in from suppliers, will Sam’s know it right away? If they do, they are auditing the products anyways and adding their own tag will require little effort. If they don’t know it is wrong, they’ll figure it out some time later and that will cause significant problems for Sam’s – that would warrant much costlier fines rather than lower ones. I’m guessing Sam’s is auditing all pallets anyhow, so they’re prepared to relabel anything that is bad.
If the labeling then is for their own closed loop purposes, I can see many suppliers paying the 12 cents. There is little incentive to do otherwise until many, many more retailers demand the same functionality from them.
February 16th, 2009 at 3:07 pm
There are a lot of possible answers here, but the obvious one is that Sam’s Club has realized a lot of benefit from pallet labeling and that having RFID tags on every pallet is worth it even if they have to apply them themselves. All their handling procedures can be developed with the premise that every pallet has a tag and they don’t have to support multiple procedures.