By Victoria Forlini, Contributing Editor, RFIDOperations
Sometimes, being second means actually being first. Being a second tier Wal-Mart supplier means there has been time to watch the first group and learn from the 2005 compliance deadline while preparing for the January 2006 deadline.
The result, says Patrick Sweeney, the president and CEO of ODIN Technologies, an RFID consulting and implementation firm, is a “better-educated customer.” The firm has worked with first-tier Wal-Mart suppliers, as well as the current group of companies preparing for RFID implementation. Many of the same companies are also grappling with this month’s Target compliance deadline.
“Wave Two suppliers are a lot smarter in understanding that RFID is first and foremost about the infrastructure,” he said. Nice-Pak Products, Inc., a global wet-wipe supplier of items from baby wipes to makeup removers, is one of the companies preparing for RFID implementation for both Wal-Mart and Target. It is focusing on a small-scale approach and keeping capital costs low as technology evolves.
“I have found that the start-up cost of RFID for our first location has turned out to be about half of what I was being told to expect at the RFID conferences that I have attended,” said packaging engineer Steve McCullough.
Part of the infrastructure changes at the company means bolting down new equipment like conveyors and readers for the RFID line, he says. The assembly work began in mid-May after the company used a testing line to find optimal placement of tags.
Wet products can present problems, but the tests “went through flawlessly” with the space between the interior product and exterior packaging providing a buffer. The company is tagging at the container level at its Morseville, Ind., facility.
The learning curve for implementation certainly involves trial and error, but communication is coming on all fronts, including from Wal-Mart, which in April held a series of workshops for the 200 suppliers with January mandates, said Christi Davis Gallagher, a Wal-Mart spokesperson. Some of the first 100 companies to begin using RFID were there to share information and ideas, as well.
Davis Gallagher said one of the biggest lessons Wal-Mart has witnessed is that a single type of tag doesn’t necessarily fit all a given company’s products. “However, we haven’t seen a product where we couldn’t find a tag that would deliver the read performance needed,” she said via email.
The need to experiment follows what Sweeney experienced. His company has used about 20 different types of tags and six or seven different readers to fit client needs. Sometimes, everything works out on the first try. When Nice-Pak began its line testing, McCullough was surprised that there weren’t problems with reading tags. The company chose Alien’s Class 1 “Squiggle” tags.
Of the companies currently using RFID with Wal-Mart, Davis Gallagher estimates that the average supplier is tagging about 65 percent of the items. “We have some suppliers tagging around 2 percent of their SKUs and others …that are tagging 100 percent of their SKUs,” she said.
McCullough says his company will only be tagging items that need to be tagged for compliance reasons. He estimates that’s about 26,000 cases over six months, a small amount of the company’s total shipping. The company eventually will need RFID compatibility on all lines, but that is a later phase of Nice-Pak’s program.
The current RFID line, Phase 1, is at the Indiana warehouse and is actually a repackaging line, he said. Finished goods already on pallets will be brought to the line, taken off pallets, tagged, rescanned to make sure the tag is reading, then routed through the conveyor to a stretch wrapper.
Phase 2 of Nice-Paks’s plan will begin in August and involves the Orangeburg, N.Y., facility. Phase 3, without a timeline, will involve full integration with automation for RFID use. McCullough hopes to use the benefits to track inventories and hopefully find a positive return on investment.
As for hitting deadlines, McCullough said the company has received a one-month grace period for the June compliance with Target because Nice-Pak has been implementing a new warehouse management system as it puts the RFID program into gear. He is confident the company will be ready for the January compliance for Wal-Mart.
This article originally appeared in the May 2005 issue of RFIDOperations.