Wal-Mart plugs into third phase of RFID test

Wal-Mart plugs into third phase of RFID test – News

BENTONVILLE, Ark.–Wal-Mart and several major consumer package good companies are moving into the third, highly significant phase of a test of a new electronic code technology that could cut supply chain costs by billions of dollars.

In addition, Wal-Mart and U.K.-based retailer Tesco are going to launch a second separate test in partnership with Gillette. Both tests are expected to start late this month or early next month, sources said.

In both tests, individual products will be encrypted with an electronic product code that provides a unique ID or serial number for each individual item. Antennae wired into the store’s shelves will be able to read the tags using radio frequency technology, making it possible for a store manager at any time to know exactly how many packages of a product, like Mach3 razors, are in the store and where those items are located.

The technology for EPC, which was developed by the Auto-ID Center at MIT, has the potential to significantly reduce shrink, speed up delivery times, improve forecasting accuracy and expedite product recalls for the return of damaged or non-salable goods. The item-level tests at Wal-Mart will determine whether the benefits of EPC significantly outweigh the cost of implementing the program.

Bill Wertz, a spokesman for Wal-Mart, Procter & Gamble’s Larry Kellam and Paul Fox at Gillette say the results from phases one and two of the Auto-ID Center tests are promising, but it is too soon to quantify cost/benefits. Wertz added that Wal-Mart sees “a lot of potential in this technology.”

Products being tested at the item level in phase three will include brands from Unilever, Johnson & Johnson, Coke and Pepsi, as well as P&G and Gillette. Wertz said P&G will be putting the tiny EPC tags on its most expensive lipstick brand, Max Factor Lipfinity. In the Wal-Mart and Tesco field tests, Gillette products Mach3 and Venus in the razor category will be tested.

In a move that may signal growing acceptance of the technology on a mass scale, Gillette last January placed what is to date the largest order ever for EPC tags–an order for 500 million tags.

Paul Fox, a spokesman for Gillette, said that order “is probably significantly more than all the total number of EPC tags now on the market.”

Fox declined to reveal how much Gillette is paying for the half a billion chips, but he did say that the cost is at or under 10 cents a chip, the point where the technology becomes affordable enough to be put on individual items with retails in the $10 vicinity. The manufacturer of the tags is Boston-based Alien Technologies, another Auto-ID Center member company.

The scientists at the Auto-ID Center, which is a consortium of leading retailers, consumer good companies and technology companies, created the UPC code more than 20 years a go. The op en standard EPC code, which can carry much more information than a UPC code, is considered the logical “next generation” replacement for the UPC code.

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