Product tracking, inventory systems & distribution centers

4.2.1.1. USA

Perhaps the only nation where both the United States Government and the huge private sector are taking equal interest and making investment in the adoption of RFID tag. For example, the United States Department of Defense (DoD) as well as large retail leaders in the US such as Albertsons, Target, Best Buy, Wal-Mart and Sam’s Club (which is owned by Wal-Mart) are attempting to become 100% RFID compliant for case and pallet tagging by their suppliers.

“Wal-Mart wants to be able to read 100 percent of the pallet tags coming through its dock doors (RFID Journal, 2003).” As of April of 2008 “over a third of Wal-Mart’s approximately 3,600 stores have implemented the technology (RFID News, 2008).”

RFID has played a huge role in phenomenal success of Wal-Mart. It can be comprehended from the fact that Wal-Mart’s top 600 suppliers, which count for over 70% of its product, now affix RFID smart tags to all shipped pallets and cases. Wal-Mart has been so much impressed by the technology that according to RFID News (2008) Wal-Mart will now require RFID tagging on all shipments from its Chinese suppliers as of January 2009. The standards will affect all of Wal-Mart’s more than 1,000 Chinese suppliers with the rules becoming much stricter in early 2010. All suppliers that fail to meet the new information standards will be dropped from Wal-Mart’s supply chain. Another good example is Sam’s Club which will

charge fee from suppliers for non-tagging. The fees start at $2 and escalate based on how long the supplier is out of compliance, capping at $3 according to CIO Magazine (2008).

Recognition of technology became visible in July of 2004, when the United States

Department of Defense (DoD) issued a policy requiring passive RFID tagging at the case, pallet and item packaging level. The only excluded items were sand, concrete, wood, liquids, and coal. Munitions and explosives were also excluded until electromagnetic testing can be completed to ensure that the scanning will not cause an explosion of any kind.

4.2.1.2. Europe

While the big US chains have been focusing on pallet and case tagging the Europeans have been leading efforts to use item level tagging. Also, European companies have chosen to concentrate on tagging products where the theft rate is high in relation to the product value.

Simultaneously they also have been generally more successful in educating consumers about any concerns over information data privacy

Metro, the world’s fifth-largest retailer and Germany’s largest retailer, has clearly articulated a mandate that is very similar to Wal-Mart’s for RFID but at item level. According to

Trebilcock (2007), it is launching, what is the first of its kind, end to end RFID-UHF item level shopping experience. The focus is not on pallets and cases, but on individual items in a retail store, not just high-value items but all items in the store. In addition, METRO has installed smart shelves with built in RFID readers that monitor the merchandise on the shelves. Bill Colleran, President and CEO of Impinj Corporation, the company that is providing the Gen 2 tags that will be used, gave an useful insight, “in certain areas of the men’s department, there’s a flat panel screen that will tell you everything that’s on that

shelf…that way, you don’t have to sort through everything only to find out the size you’re looking for isn’t there”.

The METRO store chain is equipping two hundred of its prime locations with RFID technology. It has mandated to 650 of its biggest suppliers to start shipping RFID tagged product. The suppliers will be expected to tag their goods, failing which they will be charged a fee for non-compliance. Further Metro has stated that it will pass on the additional handling cost of an untagged pallet to suppliers that do not comply (Smith, 2007).

Other companies that have come forward are Marks & Spencer, the fourth-largest retailer in the United Kingdom, and Tesco, another large retailer in the U.K. Marks & Spencer, is already using item level RFID apparel tracking at 42 of its stores. This was incorporated after the successful trial using RFID in tracking men's apparel.

Tesco has been using item level tagging, to instantaneously check stock availability and preventing theft of DVDs, electronic games and cosmetics. Tesco has a different strategy for using RFID. It has not focused on tagging cartons and containers, rather it puts a passive RFID tag on reusable roll cages. According to Trebilcock (2007) containers are loaded onto the cages, which are then rolled through the store, as inventory is put away on shelves. The RFID tag on the roll cage acts like an electronic license plate, which identifies each specific roll cage. The system is designed for the cage to know the destination store it is going to. If the wrong cage is loaded onto the wrong truck, the RFID system will catch it at which time a display system alerts a warehouse operator who can then fix the problem and ensure the product goes to the right place.

4.2.1.3. Canada

In Canada, the implementation and usage is different from that in the US. For example, Staples Business Depot has implemented a tagging strategy where they tag and track

thousands of items in real-time, at long range. The tagging and hence tracking starts as early as entering the item in the store inventory, to the store shelves, and continuing through to the completion of the sale. Addressing privacy and cost concerns, the RFID tags are not hidden on the items and are re-usable by the store as they are physically detached from the product at the checkout when the item is sold to the customer.

4.2.1.4. Australia

In Australia, the usage of RFID technology is on similar lines as in the UK, that is for item level tagging. Leading Australian companies like Capilano Honey, P&G, ACCO and MasterFoods have been using a pallet counting program similar to what is being used in the UK at Tesco. Each pallet has a unique number encoded into it with RFID, so that each pallet can be accounted for individually. When put in use, each pallet of product passes a fixed RFID reader, its tag information is sent to an Adaptive Asset Manager (AAM). This information is then relayed via general packet radio service (GPRS) to the driver's personal digital assistant (PDA). At this point, an indicator light on the PDA shows that the pallets are being read for that particular order. Once all the pallets have been read, the PDA indicator turns to green. Then the driver departs to deliver the pallets to the customer (Bacheldor, 2007).

Fixed RFID readers put at the customer sites read the tagged pallets as they are unloaded. By this mechanism the system confirms individual pallets for the store. Once again, the AAM system passes on the information to the driver's PDA. Once all pallet tags have been read, the

PDA indicator turns to green. The driver can then close the order as it has been confirmed.

This process allows for any discrepancy to be resolve immediately, rather than waiting for the long and time consuming reconciliation process. As stated by Bacheldor (2007), “with

accurate reads showing 100 percent of the time, the system has been able to show successful electronic proof of deliveries (ePODs).”

4.2.1.5. Asia and India

Asian retail in general has been slower at adopting the use of RFID than its western

counterparts. India has also shown slow growth in the technology. Prasad (2007) notes “in the world's second most populous nation, RFID continues to be a concept--waiting to be put to practice.” That being said however, there has been some trying the technology. In 2005, one of Japan's largest electrical and electronic stores, Yodobashi, asked its suppliers to use UHF EPC tags on their products at the item level. A major Chinese retailer named Gome, which sells appliances and consumer electronics, opened the first RFID based trial store in China in 2004.

4.2.1.6. Latin America

The technology is still to take roots there, though few of the retail sector giants have started the vogue. One of the largest department stores in Latin America, Falabella, did a pilot

project investigating how using RFID might improve its tracking of products at the item level, yielding an inventory accuracy of 98.4 percent and a 25 percent reduction in out-of-stocks (O'Connor, 2004). Thus the technology was embraced as a part of the store. Over the time more stores followed the lead. But the adoption is not as rapid as USA or Europe.