Wal-Mart Pushing Suppliers For RFID

Weather Storm brings us an InformationWeek article about Wal-Mart's push for suppliers to RFID tag their product shipments. Wal-Mart seems to have lost patience in waiting for its suppliers to adopt the inventory tracking initiative. From InformationWeek: "The retailer says that beginning Jan. 30, it will charge suppliers a $2 fee for each pallet they ship to its Sam's Club distribution center in Texas that doesn't have an RFID tag. The charge is to cover Sam's Club's cost to affix tags on each pallet, says a Wal-Mart spokesman. The retailer hasn't taken such a strong-arm approach yet with the more than 15,000 suppliers that still haven't complied with its request to tag pallets and cases headed for its Wal-Mart stores. Instead, it seems focused on turning its 700-store Sam's Club warehouse-outlet division into an example of RFID supply chain technology in action, down to requiring item-level RFID in 22 distribution centers by 2010."

Comments

Can you charge a supplier $2?

[JimboFBX]

So in other words, Sams Club is going to try to give themselves a $2 discount? I think I tried that with my cell phone bill because the service wasn't as good as I wanted. It didn't work out very well.

Re:Can you charge a supplier $2?

[rkcallaghan]

JimboFBX wrote:

So in other words, Sams Club is going to try to give themselves a $2 discount? I think I tried that with my cell phone bill because the service wasn't as good as I wanted. It didn't work out very well. Imagine you were, well you, and you were standing under King Kong's foot. If he steps on you, the obvious happens. Kong demands "a $2 discount" from you, even though you are his banana supplier.

The question of the day is, does Kong get his bananas for $2 less? For extra credit, can you explain why reverse would not be true, if you attempted to demand a $2 on Kong's security services he's providing you?

~Rebecca

Re:Can you charge a supplier $2?

[gatkinso]

It would have if you were responsible for a large fraction of global celluar activity.

Love em or hate em, Walmart has the clout to do so.

Re:Can you charge a supplier $2?

[Anonymous Coward]

I'm not sure I understand; could you phrase it as a car analogy for me?

Re:Can you charge a supplier $2?

[kenh]

No, Wal-Mart is charging for a required service the Mfg./Supplier isn't complying with. Two dollars per Pallet is a fair price (IMHO) as they have to tag, inventory, and verify each non-RFID pallet that enters this one facility. That is an important point, BTW - this only impacts one Sam's Club distribution center. This is a reasonable business decision, much more reasonable than their previous position that untagged pallets wouldn't be allowed in their facility after a certain date (with no accommodation like the one reported being made).

IMHO, this will cause many smaller suppliers to simply abandon their RFID efforts and pay the $2/pallet fee - it will be much cheaper than an in-house effort.

And finally, let me be the first to link to proof, I say PROOF, that RFID is evil and will bring about the end of western civilization: Spy Chips, the book - seen to be a major motion picture from Tin Foil Hat Productions! Check out their other titles and press reports here.

Re:Can you charge a supplier $2?

[Aladrin]

So you think it's fair to charge $2 to slap a $.20 RFID tag on a pallet? As far as I can tell, this is not 1 RFID per item, it's 1 per pallet. It is -only- used to track shipments, not individual products.

Also bear in mind that just because the RFID says there's 200 widgets on that pallet doesn't mean there actually is. Walmart still has to verify that.

Let's say a warehouse employee makes $18/hr. (They make less, I'm sure, but it makes the math easy.) $.20 goes to the cost of the tag, and $1.80 goes to the cost of putting the tag on. This means that it takes 6 minutes (1/10th of an hour) to tag a pallet? If it took 3 minutes, I'd be very surprised. That employee should be able to tag 1 pallet per minute, easily. Remember, he doesn't have to actually COUNT the product, since even the tagged ones still need to be counted. He just needs to read the manifest and enter it into the computer, and slap the RFID tag on.

And yes, this is only the 1 warehouse... For now. If you really think they won't do this to the others soon, and then the Walmart ones, you've got another think coming. TFA even says they've mandated it by 2010.

Re:Can you charge a supplier $2?

[homer_s]

Let's say a warehouse employee makes $18/hr. (They make less, I'm sure, but it makes the math easy.) $.20 goes to the cost of the tag, and $1.80 goes to the cost of putting the tag on. This means that it takes 6 minutes (1/10th of an hour) to tag a pallet? If it took 3 minutes, I'd be very surprised. That employee should be able to tag 1 pallet per minute, easily. Remember, he doesn't have to actually COUNT the product, since even the tagged ones still need to be counted. He just needs to read the manifest and enter it into the computer, and slap the RFID tag on.

Cost of employee to tag at 1 per min= $0.30
Cost of labour training=0
Cost of payroll tax, HR management=0
Cost of chip = $0.20
Cost of ordering the chips = 0
Cost of receiving the chips = 0
Cost of storage of the chips = 0
Cost of restocking the chips = 0
Cost of quality control = 0
Cost of equipment to affix the chip=0
Cost of insurance=0
Cost of billing the suppliers and paperwork involved =0
Interest on capital employed for the above=0

Yep, your math works out. You should start your own business instead of posting here on slashdot.

Re:Can you charge a supplier $2?

[Casualposter]

No it's not reasonable. Inventory has been done for thousands of years without a discount for well, COUNTING the stuff as it comes in. Just because walmart was to automate it's systems does not mean that this is efficient, reasonable, or cost effective for anyone else. With Walmart squeezing the suppliers on price, and the rising cost of shipping, how is this effective thing for Walmart help the supplier?

Walmart may be the big gorrilla, but as of late customer satisfaction has been decreasing. The stores have begun to look more and more like K-mart in it's final years: dingy dirty and filled with unhelpful dour employees.

Re:Can you charge a supplier $2?

[nip1024]

Buy $348 Billion more in cell phone services and try it again.

nip1024

Re:Can you charge a supplier $2?

[ShieldW0lf]

Imagine you were, well you, and you were standing under King Kong's foot. If he steps on you, the obvious happens. Kong demands "a $2 discount" from you, even though you are his banana supplier. The question of the day is, does Kong get his bananas for $2 less? For extra credit, can you explain why reverse would not be true, if you attempted to demand a $2 on Kong's security services he's providing you?

Qualifying questions:

If I give Kong a discount, am I still going to be able to eat? Or am I going to die slow? Can I feed my bananas to another monkey and have them grow while Kong shrinks? Do I enjoy my life enough that I wouldn't just tell Kong to fuck off out of spite?

Wal-Mart are a short ways from collapse at all times, it's a consequence of their "Keep no back stock" policy. They run everything at the edge, and at some point, it's going to bite them hard.

In the end, didn't King Kong get killed when everyone united against them?

Re:Can you charge a supplier $2?

[kenh]

Your analogy is asinine - let me explain...

Wal-Mart has set the bar and said that they require RFID tags by some day in the future to do business with Wal-Mart - suppliers that do not meet that requirement will not be able to sell their goods to Wal-Mart. Wal-Mart is offering an accomodation to suppliers that want to sell at Wal-Mart but either can not or will not be able to include RFID tags on their pallets to this one distribution center (and yes, it will creep into their entire supply chain).

To build an analogy for your cell phone purchase, you would have to communicate to the Cell Phone stores in your area that you were interested in getting a cell phone and offer them the chance to bid on your business. You would also have to explain to them before they reply to your RFP that your purchase is contingent on have the phone unwrapped and ready for use immediately upon delivery. Then, when none of the local stores respond to your RFP, you can tell them that if the "ready to use" requirement was too onerous, you would be willing to take a packaged, not ready for use cell phone, but you would charge them some few dollars to accommodate your effort. Then, when they agree to offer you a phone you can act accordingly. That is what Wal-Mart is doing.

Re:Can you charge a supplier $2?

[__aaclcg7560]

If Windows was installed on your car, and it suddenly demands you pay $2 to avoid having it go blue screen during freeway traffic, would you pay it? Or you could call the Microsoft support line to complain about this and hope that your license to start the car isn't revoked wirelessly?

Re:Can you charge a supplier $2?

[Aladrin]

Even if you did calculate that, most of which will be pennies because we're talking about millions of pallets, not just hundreds, they're still way over-charging.

Re:Can you charge a supplier $2?

[rkcallaghan]

ShieldW0lf wrote:

If I give Kong a discount, am I still going to be able to eat? Or am I going to die slow? There's a web full of anti wal-mart sites out there that can show you just how many companies (Levi Jeans, Master Locks, Huffy Bikes, etc.) this has happened to.

So your first question is unfortunately irrelevant. Your second, is however, as the only winning move in this situation is not to play with King Kong at all, and attack him instead of yourselves as he demand. How to get that to happen is a topic for another day, under another revolution thread; as the Kong you'd have to defeat here has help this time.

~Rebecca

Re:Can you charge a supplier $2?

[schon]

Your analogy is asinine No, your defense of the indefensible is what's asinine.

Wal-Mart has set the bar and said that they require RFID tags by some day in the future to do business with Wal-Mart Yes, and I "set the bar" by saying that anyone who sells anything to me must handle disposal of the packaging.

It's really no different.

Re:Can you charge a supplier $2?

[Paradise Pete]

So you think it's fair to charge $2 to slap a $.20 RFID tag on a pallet?

If they charged their cost, then the supplier could, in effect, "hire" the Walmart guy to put the tags on. It's much simpler - no need to buy the tags or equipment, and no chance of error. Walmart's aim is not to get the $2, it's to get the supplier to put the tags on.

Re:Can you charge a supplier $2?

[aix tom]

RFID (or barcode identification of pallets as we do it) is great, because you don't have to count all the stuff that comes in, because the supplier has already counted it when it was loaded.

When you receive a truck with one bill of lading and ~30 pallets, it's much easier to scan each pallet, and confirm what is on there against the electronically supplied list than to try to check 30 pallets by running from pallet to pallet with the bill of lading.

And the supplier also has advantages.

For example, we often order things that are not currently available, and most suppliers are authorized to send replacement products. They now can simply slap them into the delivery with the electronic bill of lading without any additional paperwork to get their bills paid.

Of course we went the opposite way on the psychology and offered to "pay $x more" if the pallet is identifiable electronically than the other way around. ;-)

Re:Can you charge a supplier $2?

[DRJlaw]

Even if you did calculate that, most of which will be pennies because we're talking about millions of pallets, not just hundreds, they're still way over-charging.

You're suggesting that Wal-Mart is charging a premium to tag pallets of deliveries that they want to have tagged by the supplier rather than tagging it themselves?

Shocking. If only there were a way for suppliers to tag their own pallets for less...

Re:Can you charge a supplier $2?

[Otto]

No, the difference should be obvious. You're not buying thousands of cell phones. Wal-Mart is buying thousands of items from whoever they buy from.

It's a volume thing. When you buy in bulk, you pay a different price. Wal-Mart buys enough bulk merchandise to be able to demand special terms.

Re:Can you charge a supplier $2?

[definate]

Please.... oh please tell me that Spy Chips, the movie is being made by Uwe Boll.

Finally, we could put him to some good use.

My guess is this wouldn't happen, conspiracy theorists are too smart to fall for Uwe Boll's tricks.

Re:Can you charge a supplier $2?

[Anonymous Coward]

So how would overcharging for this be ANY different than any other 'cutting edge/new technology'? (Recouping cost of setting up... with possible future cost cuts) Wouldn't this give companies 2 choices: (presumably) over-pay for a service OR invest and save money in their 'own' RFID tags?

Most importantly: Why wouldn't Wal-mart want to make money off of this SERVICE they would be providing?

Re:Can you charge a supplier $2?

[Anonymous Coward]

Let's say a warehouse employee makes $18/hr. (They make less, I'm sure, but it makes the math easy.)

Even if they make less, employees cost more than their salary. Benefits, extra parking spaces, managing them and payroll, whatever.

Re:Can you charge a supplier $2?

[jjohnson]

And if no one sells to you, then you either go without, or drop the requirement. Yes, it's the same in kind, but different in circumstance. Walmart is the largest retailer in the world. Manufacturers fall all over themselves to *voluntarily* sign the purchase agreement mandating eventual adoption of RFID--for most, selling just one or two items in Walmart can double their revenue.

This is standard in North America: buyers have logistics requirements that sellers agree to; the contract stipulates penalties for non-compliance. Sellers who don't want to risk the penalties don't agree and don't sell. I worked for a worldwide manufacturer that turned down Walmart's invitation to become an A-list manufacturer for them because the logistics requirements were too onerous for us. We sold to Target instead. That's life.

Re:Can you charge a supplier $2?

[R2.0]

"There's a web full of anti Wal-mart sites out there that can show you just how many companies (Levi Jeans, Master Locks, Huffy Bikes, etc.) this has happened to."

I've never understood that. Last time I checked, Walmart doesn't employ armed forces to compel suppliers to sell to them. These companies agreed to sell to Walmart, because they thought it would be profitable for them, and it didn't work out. It's unfortunate when it happens, but why is it Walmart's fault? Are you seriously saying that the 3 companies you named didn't know what they were doing?

I worked for a large general contractor for many years, and I did have instances where subcontractors got in way over their heads. I helped them out as best I could, but in the end they have obligations they need to meet. A couple couldn't handle it and went belly up; some rose to the occasion and are now our "go-to" contractor for tough jobs. And I don't lose any sleep over how I handled the matter.

What you seem to be advocating is a regime where NO ONE gets to graduate to playing with the big boys, out of concern they will go under. And bigger players should have a gentleman's agreement that no one will suffer a loss or go out of business, even if they do something stupid? Welcome back to Detroit in the 70's, and Big Steel in the 80's - expensive, poor quality, wasteful crap.

There's a saying that goes "speed, quality, cost - pick any 2". But in an environment where failure is not a possibility, you get a situation where we don't get ANY of those options.

Re:Can you charge a supplier $2?

[schon]

No, the difference should be obvious. You're not buying thousands of cell phones. Wal-Mart is buying thousands of items from whoever they buy from. So what you're saying is that bullying is OK - that the larger party deserves concessions, and can do whatever the hell they want just because they're larger, and that this is perfectly acceptable.

No wonder the American economy is in the toilet.

Re:Can you charge a supplier $2?

[dissy]

I think you are free to do that actually, however without a contract (which im sure walmart has at least one of per distributer) you would have a hard time enforcing it.

And even with a contract, you'll be hard pressed to find someone to sell you something that when asked to sign it didnt laugh you out of the store.. but even assuming you meant a higher level of buying (IE the same way walmart does, in bulk from distrubters) where you might have a contract as standard practice, then you too could get away with this.

Re:Can you charge a supplier $2?

[iminplaya]

If you had Wal-Mart's clout, you can bet it sure would work out very well for you. I happen to think that Wal-Mart has too much clout in that a supplier could be put into bankruptcy because it depends on Wal-Mart as a client too heavily.

Re:Can you charge a supplier $2?

[tomhudson]

If the supplier thinks WalMart is overcharging, and that the tag should only cost 20 cents, they can always do it themselves.

If, on the other hand, their cost to do it would be $5.00, why not let WalMart ding them for $2.00?

Look, WallyWorld is not my favourite store, since I'm pretty much boycotting the crap that comes out of China nowadays, and I still insist on standing in line at the grocery store to talk to a HUMAN rather than use the self-checkout machines, but rfid tags on palettes makes sense, if only from a worker safety point of view. No more need to get a jigger and move a palette to find the bill under layers of stretch-wrap, dig it out, re-wrap it, and put it back where it was. If you;re in a hurry (and who isn't) you tend to take short-cuts. Squeeze into a tight spot. Sit on the battery pack and ride the jigger around instead of walking behind it (fun to do, but taking the corners too fast is a bit of a bitch, and n00bs always end up running into something - usually a palette of something breakable or another worker).

Re:Can you charge a supplier $2?

[shark72]

"So you think it's fair to charge $2 to slap a $.20 RFID tag on a pallet? As far as I can tell, this is not 1 RFID per item, it's 1 per pallet. It is -only- used to track shipments, not individual products."

I suppose we can add channel management, supply chain management and logistics to the areas of knowledge that Slashdotters know everything about.

Distribution centers have rules about receiving products. These rules are necessary to keep the inventory flowing and to keep costs down. Retail DCs (owned by Best Buy, Target and the like) have them, as do distributors, like Ingram and D&H.

The missing RFID tag is a McGuffin -- it could be anything. Missing RFID? Low pallet count? High pallet count? Pallet packed with unexpected dimensions? Unannounced change in the case pack quantity or outer box pack quantity? The product doesn't conform, so it needs to be segregated to another part of the warehouse, and people need to be assigned to rework the product. In the meantime, it's dead inventory that can't be sold.

As has already been mentioned, your estimate of the rework cost is low, but that's not the point -- Wal-Mart, Best Buy, Ingram et al aren't trying to build a profit center out of RFID tag reworks or any sort of rework! They pass the cost of the rework along to the supplier, and the goal is to have it not happen again. Product that's delayed in the warehouse or the DC means missed sales, and if it's a load-in for a holiday weekend or a scheduled promotion, lots of money is lost.

Re:Can you charge a supplier $2?

[whatrevolution]

He just needs to read the manifest and enter it into the computer, and slap the RFID tag on.

Not even that. The manifest is in the network at least since the order invoice, and the worker is carrying a WIFI device with a barcode reader, which queries the network for the manifest. The worker only verifies that the palette contains boxes with the expected model number(s), and then (maybe) counts them.

Re:Can you charge a supplier $2?

[shark72]

Good points. I can add:

• Overhead costs for warehousing the non-nettable inventory: zero
• Lost sales due to inability to ship: zero

I think more Slashdotters should go into the retail business. God knows we have the music business already figured out. Too bad we're all too busy playing WoW to change the world.

Re:Can you charge a supplier $2?

[0100010001010011]

In Levi's case, they just run a separate production line. Less thread count, less stitches, cheaper materials. If you get a pair of Levis from walmart and compare them to a pair of Levis from another store, you may very well get a completely separate pair of pants.

Snapper Lawnmowers on the other hand put their foot down and said No. Walmart asked for that $5 discount and Snapper came back and said No and pulled there mowers.

Some companies still have a bit of integrity.

Re:Can you charge a supplier $2?

[shark72]

"So what you're saying is that bullying is OK - that the larger party deserves concessions, and can do whatever the hell they want just because they're larger, and that this is perfectly acceptable."

This is hardly something that Wal-Mart invented -- all distributors and major retailers assess charges to rework product that doesn't arrive in the expected form. RFID tags are just the latest technological item (which is why this warrants discussion on Slashdot), but if you tell a distributor or major retailer that you're going to ship your product in ten-packs, then ship it in five-packs, you'll be charged to have it reworked. While I grant that this might be surprising news to many Slashdotters, people in the retail industry will react to this story with a collective yawn.

Things like this happen in every industry, in lots of scales. No doubt you've been involved in a contract (such as a rental agreement for an apartment) which states that a late fee is charged if an invoice is not paid by the expected date. Call it "bullying," but it's rather pedestrian.

Re:Can you charge a supplier $2?

[Gewalt]

"So what you're saying is that bullying is OK - that the larger party deserves concessions, and can do whatever the hell they want just because they're larger, and that this is perfectly acceptable."

That, right there, is damn near the DEFINITION of a free market.

Re:Can you charge a supplier $2?

[Jesus_666]

Hmm... What would happen if the suppliers reacted by simply raising their prices across the board? For every product sold at Sam's Wal-Mart takes two dollars and gives two dollars. For every product sold at a regular Wal-Mart Wal-Mart gives two dollars.

If they want to make it less obvious, they'll calculate how much of their stuff goes to Sam's as opposed to other Wal-Mart stores and adjust the price in such a way that they still don't lose any money.

Re:Can you charge a supplier $2?

[that this is not und]

And somebody needs to investigate how well Snapper is doing as a result of that move. You never hear a follow-up.

Here locally, I can tell you that the small mom & pop hardware store, the kind of place Snapper wants to sell through (higher markup, more money per unit sold for Snapper) is now out of business and the building is in the process of being converted into a strip mall.

So let's see some links to a follow-up story, not that same tired old link. How is Snapper doing a year or so later?

Re:Can you charge a supplier $2?

[that this is not und]

Walmart may be the big gorrilla, but as of late customer satisfaction has been decreasing. The stores have begun to look more and more like K-mart in it's final years: dingy dirty and filled with unhelpful dour employees.

I am not seeing this. Are you sure you didn't just cut-and-paste that out of an email your Union Boss forwarded to you?

Re:Can you charge a supplier $2?

[Descalzo]

If you are correct, then what's going to happen is that people will stop doing business with Wal-Mart and they'll crash.

Re:Can you charge a supplier $2?

[Bhalash]

Inventorying an incoming pallet simply isn't as easy as reading the manifest. You have to physically check that the contents of the pallet match what is on the manifest or you will have stock loss (and lost money!). One major area of stock loss for many companies is transit. Either the company who shipped the goods didn't manifest them correctly, or they accidentally shipped the wrong goods, or stock was misplaced or stolen while in transit. When you receive an order you need to count what is actually on the pallet against what is on the manifest and then have another person verify this. Depending on the goods, this can take time. Big jugs of milk - easy. Clothing, small domestic appliances - not so easy. Items like small TVs, mobile phones, laptops, game consoles, MP3 players and cameras are all high-value, low-profile, and easy steal goods that need to be physically counted at easy stage of transit. After this you still need to have someone (usually a clerk dedicated to this task) add the goods to the electronic inventory of the receiving company, raise discrepancy issues, etc. I've spent ten years working in inventory, and I'm currently the inventory specialist for a national company. RFID tagging is an excellent idea for tracking stock movement and Wal-mart's initiative into this is ahead of it's time. RFID will be way that all stock control will go in the next decade, but it will never replace the need to physically inventory goods. Their charge for the both tag and labour on Wal-mart's part is actually pretty reasonable, but it only tracks pallets and not the goods on them, which is what is important for companies.

Re:Can you charge a supplier $2?

[suraklin]

Two dollars per pallet is not really fair. I work for a logistics company that handles the warehousing for a major cheese company. On a given week we normally send 7-10 trailers to that distribution center. Each trailer usually has between 30 and 50 pallets, so that is $60-$100 per truckload that our customer would lose. So at the high end they stand to lose $52000 per year with this initiative.

On the other hand if we were to adopt RFID tech in the warehouse we would have to run TWO systems, one for the barcode system we and all of our other retailers use and another for the RFID.

So it is really not cost effective either way we go right now. If this were a bigger push by more than one retailer it would make sense. But this is just the 800lb gorilla throwing its weight around again.

Re:Can you charge a supplier $2?

[Anonymous Coward]

The most cost effective way: Don't ship to Wal-Mart. Get everyone in your industry to not ship to Wal-Mart. Watch them lose an entire type of product in their 'super store'

Re:Can you charge a supplier $2?

[plaxion]

They're also large enough to be able to afford the $4 processing fee I charge to cut them that check.

Re:Can you charge a supplier $2?

[symbolic]

It's a little bit different with Walmart. Yes, they buy in bulk, but the fact that Walmart has such a huge portion of the market makes it a bittersweet pill for suppliers. If the suppliers deny the discounts, it's not that they will probably lose Walmart's business, but they lose what could easily be their primary sales channel.

Re:Can you charge a supplier $2?

[rebelcan]

Funny, I worked at a warehouse for several months. They taught us to ride on the electric pallet jacks, because walking down the isles behind the pallet jack would increase the amount of time spent picking one order would increase greatly, and in a warehouse that shipped upwards of 17,000 pieces of frozen food (can't remember how much dry storage stuff they shipped in a day), order picking time is what the supervisors care about most. If you had a lot of stuff to pick in one isle, then you'd walk in front and to the left ( or right ) of the pallet jack, because you want to get to the items before the pallet jack, so that you have time to grab one, turn around and be ready to place it on your pallet and know where your next item is before the pallet jack gets to you.

We also used a computer controlled picking system, each one of us had a radio where the other end was connected to a computer. We didn't need to have sheets of paper with our picking lists, because the computer took care of all of that for us. On the occasion where something got screwed up and we did have to pick from a sheet of paper ( a very rare occurrence ), I know that the picking time for that order was horrible ( upwards of thirty minutes compared to less than ten minutes for a regular order ).

Re:Can you charge a supplier $2?

[bepo]

When I did IT at a logistics center a few years ago the barrier to RFID wasn't the cost of the tags or the time to apply them. The tag cost was minimal and employees were already tagging them with barcodes. The solutions we were looking at only required using a new label that had the RFID chip implanted. The total amount of time to apply a standard label versus an RFID label was exactly 0. The reason we didn't do it at the time was because of the software. The software company wanted $12,000 upfront and an increased maintenance fee to add the RFID module. When we approached the client with the increased costs they declined. This was a low end warehouse management application on top of that, later they were looking at changing applications, the costs were astronomical, $150,000 to $300,000 for a basic inventory system, if you used automation of any sort you just keep adding.

Re:Can you charge a supplier $2?

[Anonymous Coward]

WHO IS JOHN GALT?

Re:Can you charge a supplier $2?

[rebelcan]

I'm fairly sure that sometime in the near future, a company will create a barcode printer that has RFID tags embedded in the stickers it prints out. That way, scanning the barcode OR the RFID tag will enter both into one database used by both systems. That way, the distribution company doesn't have to worry about needing two systems in order to ship to all their customers.

Just a thought.

Re:Can you charge a supplier $2?

[Anonymous Coward]

Your wish is granted:

http://www.reuters.com/article/pressRelease/idUS145287+08-Jan-2008+PRN20080108

Re:Can you charge a supplier $2?

[ciggieposeur]

I've never understood that. Last time I checked, Walmart doesn't employ armed forces to compel suppliers to sell to them.

Walmart doesn't use "armed forces", instead it offers use of its position as the #1 distribution channel as a stick against its suppliers. If Walmart wants to stock an item that is produced by an American company, it offers the company a stark choice: be able to offer the item at a particular price, or we will purchase from an overseas (usually Chinese) company. Since the monetary exchange rate automatically favors the Chinese competitor, Walmart is essentially offering the American company the choice to lower its profit margins and sell through Walmart, or keep its profit but sell elsewhere. The Chinese company OTOH can both sell through Walmart AND retain its local profit margins.

Some companies have adapted by staying away from Walmart and tried to link the Walmart brand with crappy quality. Others have been "forced" to comply with Walmart's demands because the loss of the entire distribution channel in one fell swoop would be too great a blow to survive.

Re:Can you charge a supplier $2?

[Anonymous Coward]

Walmart has the clout

Really? Never shopped there. Never will. Walmart is significantly less relevant to me than the black hairy goo that accumulates on the friction pads on the bottom of my optical mouse that I occasionally have to scrape off.

The next time you are scraping the goo off the bottom of your mouse, pause and reflect "Wow, this goo accumulation has more power over me than walmart does."

Re:Can you charge a supplier $2?

[llefler]

RFID (or barcode identification of pallets as we do it) is great, because you don't have to count all the stuff that comes in, because the supplier has already counted it when it was loaded.

RFID on pallets has absolutely no effect on who counts stuff. The supplier is going to count every time they build a pallet, regardless of what Walmart does. Walmart OTOH, does vendor rating. And I would assume that like other businesses, that vendor rating has a metric for shipment accuracy. Once a supplier reaches a set level, you either stop verifying quantity or skip lot (check 1 out of x number of pallets). You can also verify by pallet weight, if you have accurate information on item weight and dimensions.

When you receive a truck with one bill of lading and ~30 pallets, it's much easier to scan each pallet, and confirm what is on there against the electronically supplied list than to try to check 30 pallets by running from pallet to pallet with the bill of lading.

I know a lot of people are confused about this, but a Bill of Lading is NOT a customer document. It's sole purpose is to tell the carrier what they are transporting. A packing slip is a customer document. If the pallets are properly labeled (RFID or barcode), you can compare them automatically to the ASN (advance ship notice). But again, the container ID on that pallet only tells you what the supplier thinks they put on it. So again you fall back to vendor rating to determine your receiving processes.

They now can simply slap them into the delivery with the electronic bill of lading without any additional paperwork to get their bills paid.

I think you are confused about what an electronic bill of lading is.

As far as the Walmart issue is concerned, I would say that the $2 a pallet charge is exceptionally reasonable. I have seen customers charge $50 for a missing container ID or missing/late ASN. For some smaller suppliers it might be more cost effective to pay the $2 a pallet charge rather than spend the money on RFID. I don't remember the cost of printers, but I do remember that last year when we looked into it, it was going to cost $10k per dock door to get set up to receive by RFIDs.

From the supplier's perspective, they are going to need RFIDs (generally labels), and they won't be able to buy with Walmart's volume discounts. If they require tags that contain more than a simple container ID, then the customer will need a tag programmer (usually a barcode printer) and access to a verifier.

Re:Can you charge a supplier $2?

[llefler]

I'm fairly sure that sometime in the near future, a company will create a barcode printer that has RFID tags embedded in the stickers it prints out.

Intermec and Zebra have both had this technology available for several years. We've been keeping our eye on RFIDs since aroudn '98 or '99.

That way, the distribution company doesn't have to worry about needing two systems in order to ship to all their customers.

With current tag prices, I doubt many companies are going to put RFIDs on shipments that don't require it. Maybe at the pallet level, but not any lower than that. In many industries it's not uncommon for customer specific label anyway, so you'd just add an RFID printer next to your cheaper barcode printer anyway. We have places were we install multiple barcode printers just so there is no wasted time changing label stock to print a different size customer label.

Re:Can you charge a supplier $2?

[thegrassyknowl]

No, Wal-Mart is charging for a required service the Mfg./Supplier isn't complying with

So Wal-Mart is buying off a supplier who never RFID tagged anything, and probably never agreed to. Now Wal-Mart is going to charge the people who it's buying off a fee for tagging their stuff. This seems to me nothing more than a devious attempt by Wal-Mart to start shafting both ends of their business chain!

Re:Can you charge a supplier $2?

[ShieldW0lf]

I took a job as a peddler for a year few years back, just so I could get out of the office and be sociable after I split with my ex, and I can attest to the fact that they regularly strong arm their suppliers into changing their product. They need something new if they're going to advertise that there is something new, so they force the supplier to change their product in small, meaningless ways to facilitate this.

Half the merchandise I carried was bought for pennies on the dollar, far less than cost, and it was available at that price because when Wal-Mart forced them to change things, all their existing stock became an unsellable liability that they had no means to divest themselves of.

Wal-Mart are shit to deal with for everyone involved.

Re:Can you charge a supplier $2?

[Anonymous Coward]

A FICTIONAL CHARACTER.

Anyway, Walmart's brand of capitalism is exactly what Ayn Rand would be proud of.

Re:Can you charge a supplier $2?

[milsoRgen]

I don't think Levi maintains separate lines. They are just down in quality across the board. I like a loose fit, so I buy a size or two bigger. But the last 4-5 pair I've bought are damaged within weeks, degraded to "work pants" status. After that it's just a week or so before they are in the garbage with broken belt loops, torn asses, or rips up the legs. However, I have a pair of American star, or some shitty brand I bought at Wal-mart 4 years ago I still rock, the denim is nearly twice as thick as current levi's... Sure they got a whole in the knee, but sometimes I like to crank up Nirvana and laugh at the emo kids.

So I dunno, maybe I shouldn't buy my Levi's from Macy's? Target? I mean come on, if I can't get a decent pair at those stores. Then I'm moving to a different brand.

Re:Can you charge a supplier $2?

[pyite]

So I dunno, maybe I shouldn't buy my Levi's from Macy's? Target? I mean come on, if I can't get a decent pair at those stores. Then I'm moving to a different brand.

Target has a different Levi line as well. It's obvious if you just look at them. Even the label is different.

Re:Can you charge a supplier $2?

[rah1420]

I work for a company that is -- or was -- piloting RFID with Wal-Mart. The issue that we faced wasn't the RFID tags, nor was it the software - it was the horrible hit rate we were getting on the pallet license plates through the RFID portals.

This was a couple years ago, so I don't know if we are in any better shape with the hardware now - but it really, really sucked in late '05, badly enough that we didn't make much headway with the Wal-Mart initiative.

We're still messing around with RFID, AFAIK, but on a much more scaled back initiative.

Re:Can you charge a supplier $2?

[rah1420]

Two dollars per Pallet is a fair price (IMHO) as they have to tag, inventory, and verify each non-RFID pallet that enters this one facility.

I believe that turns out not to be the case. (So much nicer than saying "Bullshit," isn't it?)

My guess is that they receive an ASN - an Advance Ship Notice - for any supplier that they're contemplating hitting with this $2 surcharge (They do from us - I'm trying to remember what hierarchical levels we send, I believe we send Shipment, Order, Tare, Pack and Item level data - called an SOTPI ASN.)

And also from direct knowledge, they get pallet labels - UCC128 format bar code labels - on delivered pallets. So if they really, really wanted to tag these nonconforming pallets with RFID tags, they would only need to key in the BOL number from the truck driver, scan the pallet's license plate, and assign an RFID tag based on the LPN. Inventories of the pack level data is afforded by an occasional audit when they strip unloaded the trailer to keep suppliers honest.

Now, RFID has some benefits, don't get me wrong. No strip unloads, so Sam's can use their staging area for additional warehouse space when they convert the entire warehouse to RFID. However, accuracy - as always - will be dependent on the supplier's DC getting the info right on the ship confirmation. Without that information, the rest of it is just so much garbage. We won't see that until the entire system is converted to RFID at the case level. And I'm not even going to go near the privacy concerns around that, but they are far fewer than RFID at the item level - and it's far cheaper too.

Re:Can you charge a supplier $2?

[Xman73x]

What really is going on with Wal-Mart? And I still don't know why they dropped Layaway?.The funny part is K-mart has Layaway? But not Wal-Mart which to me doesn't make any sense? Since K-Mart by the way is laughing up the cash because people do like there prices and plans. But Wal-Mart has a bad Consumer Relations when it comes down to there telephone Tech support as well as there email services and there Checkout line is absolutely Ridiculous!..How long do they think this will last?.BRING BACK YOUR YOUR LAYAWAY!..Also the RFID CHIP is way to track down people etc..That to me is the beginning of Mark Of The Beast Read Revelations 14:17..Yeah..Its all coming together as its claimed in the Bible..thank you God for telling us all this..

Re:Can you charge a supplier $2?

[aix tom]

>I think you are confused about what an electronic bill of lading is. Maybe. I'm sure that what I was talking about is used in the way I was talking about it in Germany, and is called "Lieferschein". If that is not the "Bill of lading" in English, then my dictionary is wrong.

Re:Can you charge a supplier $2?

[aix tom]

Yep. Checked another dictionary.

The correct English term would be bill of delivery or bill of sale.

Re:Can you charge a supplier $2?

[plague3106]

Some companies have adapted by staying away from Walmart and tried to link the Walmart brand with crappy quality.

No, companies that don't deal with Walmart have no need to try and link Walmark with low quality. That happens as soon as you purchase something from them; say a shirt that falls apart on its inital wash, or a lawn mower that dies after one summer. Or flea mediciation that has a high rate of mortality due to alergic reactions.

I didn't need anyone to tell me that Walmart sells cheap garbage, I learnt that all on my own. Hence why I only advise people to buy diapers there... who cares about quality when the product will be shit into once and thrown away. That's about all their other products are good for as well.

Re:Can you charge a supplier $2?

[plague3106]

I buy Levis from Macy's all the time, and they holding up just fine. I actually got rid of some because I'm no longer a 36" but they had no holes. Gap jeans on the other hand...

Maybe you should figure out the difference between a 505 and a 550 before you bash them..

Re:Can you charge a supplier $2?

[syphax]

Fair point.

Why not answer your own question by doing some homework?

In fairness, the linked article is lighter on details than it should be...

Re:Can you charge a supplier $2?

[siriuskase]

It costs less for a worker to attach a tag to an empty pallet than to a loaded one. But, without the $2 fee, it costs the supplier less not to attach a tag at all, so Walmarts fee simply shifts the task to the supplier by making it worthwhile to tag. Sure, Walmart could tag the pallets after they are unloaded, but then the suppliers still have no incentive to use tagged pallets for future Walmart shipments. And it is a onetime expense, once tagged, the pallets stay tagged until either the tag or the pallet wears out. So, Although Walmart, at least initially, is the benificiary of the tags, the $2 fee provides an incentive for the lower cost tagger to do the tagging. Seems reasonable to me.

Re:Can you charge a supplier $2?

[Paradise Pete]

the $2 fee provides an incentive for the lower cost tagger to do the tagging. Seems reasonable to me.

Seems reasonable to me, too. Isn't that what I said?

Re:Can you charge a supplier $2?

[Otto]

So what you're saying is that bullying is OK - that the larger party deserves concessions, and can do whatever the hell they want just because they're larger, and that this is perfectly acceptable. a) Yes, that's exactly correct.
b) Characterizing it as "bullying" instead of as "demanding discounts due to high volume purchases" kinda shoots your whole argument down. They can demand special terms because they buy a hell of a lot of stuff. If they don't get those terms, they simply stop buying from people who don't meet their terms. Nobody is forced to sell at their terms. Unless they want to do so because of all the money they're making.

Isn't this a good use for RFID?

[morbiuswilters]

It's not being implanted in anyone, it's not being used to track personal information, it's just for inventory control. Maybe I'm missing something here, but this seems like the kind of application we should be supporting. Complaining about it seems almost as bad as the people who fought against barcodes because they contain the "mark of the Beast".

Re:Isn't this a good use for RFID?

[Anonymous Coward]

Seems reasonable to me. Wal-Mart has a lot of "stuff" to track. The better they can track it, the better they can move it to where it's needed, avoid waste, and (it is to be hoped) offer lower prices to consumers.

Re:Isn't this a good use for RFID?

[Serenissima]

Well, it's obviously NOT a good idea because it's in the "Your Rights Online" category. That has to mean there are some rights being infringed up, right? It's not like they would put in the YRO category just to make a sensationalist headline to get hits rather than actually inform people... right?

Re:Isn't this a good use for RFID?

[homer_s]

Just curious, why should "we" feel anything regarding this (unless you are a Walmart shareholder or a supplier)?

Re:Isn't this a good use for RFID?

[that this is not und]

I am coming to believe that YRO stands for 'rants against The Man' in some foreign language that most of us don't speak.

Re:Isn't this a good use for RFID?

[Anonymous Coward]

Absolutely, the criminals in the UK have already used it to identify the most valuable cargoes and steal them (So much more efficient to steal a lorry load of Plasma and LCD televisions than a lot of nappies.) Shouldn't the US Homeland Security people get involved now, think of the potential damage to the economy!

Here a couple of activities for disaffected staff/loonies...

a) Scatter millions of cheap RFID chips over the depot. Watch as staff load pallets with Deodorant thinking it's soft drink..

b) Hit a Walmart depot with a zapper that kills all the RFID chips.. Remember loonies (or even disaffected staff they layoff) don't have to reprogram the chips, just wipe them out and cause chaos. No physical presence is required and nothing is left behind to track the perpetrator.

Putting it simply, you need to make sure that the "improvements" don't have a downside for everyone that's bigger than the upside for Walmart.

Re:Isn't this a good use for RFID?

[MagusSlurpy]

Yes, it actually IS one of the few good uses for RFID, one of the things that it was actually designed for - tracking of pallets in a warehouse environment. Having worked in a warehouse in my undergrad years, I can say quite easily that our "pallet tracking system" (i.e., writing the SKU on it and putting it up somewhere in our 150,000 sq ft) needed some improvement.

I am all for legitimate uses of RFID. When Wallyworld starts demanding that individual items be tagged, then I will be upset.

Re:Isn't this a good use for RFID?

[siriuskase]

RFID tags are passive devices, they are not reprogramable. They aren't the packing list, just a pointer to the records in a database. The same pallet used for ipods this week might be used for deoderant next week, so it isn't as useful to thieves as UPC codes.

Modifying the RFID would be about as difficult as modifiying bar codes, so it doesn't make the job easer for the loonies. I don't mean the UPC code on the product, but the bar codes on the packet load. The main advantage of RFID vs those bor codes is that the orientation of the reader isn't as important, plus it can be a little further away. Not a big deal, but saving minutes per pallet equates to saving hours per day and weeks per year, so the $2 is quickly recovered.

Sounds like Apple

[cbart387]

Apple takes a similar approach by forcing change, ie floppy drives, the recent Mac Air no optical drive etc. Even though Apple takes a more extreme approach (my-way-or-the-highway versus my-way-or-you-pay-extra) this being slashdot it's because Walmart is EVIL.

Re:Sounds like Apple

[foniksonik]

Ummm I know it's not your point but Apple has always provided an option (and there've always been 3rd party providers as well). There was an external floppy available via USB connect... the same is true of the Air... external optical drive || hook up via external PC and 'borrow' it's drive

Re:Sounds like Apple

[cbart387]

external optical drive || hook up via external PC and 'borrow' it's drive '||' instead of 'or' ... programming too much? ;)

Re:Sounds like Apple

[kindbud]

Moderator dudes, this guy is employing irony, so he should be moderated Funny, not Interesting, you morons.

demanding free service

[James McP]

Walmart wants the RFID b/c it will lower their operational costs. RFID has one advantage over barcodes; they can be read and counted at a distance and ignore dirt. If a sticker gets dirty, the barcode is unreadable, while if the pallet invoice is facing the wall it's inaccessible. RFID will still work.

But this has a non-trivial adoption cost to the manufacturers. Walmart isn't incentivising this; no offers of cost sharing. Just a flat demand. It's not illegal AFAIK but it is abusive.

Re:demanding free service

[Gordonjcp]

The problem is that if you've got a big stack of pallets, it can be hard to work out which one has the RFID tag you want. You either need to be reading from barcode distance, or not that bothered about which of the presumably identical pallets of boxes of breakfast cereal you're looking at.

Re:demanding free service

[Casualposter]

"walmart isn't incentivising this."

Exactly. For some operations, RFID makes sense, but there isn't just ONE RFID system installed. Most of these companies also supply other big chain stores who may have other requirements. This was the whole reason for going with Barcodes. Barcodes are standardized. RFID systems are not, as far as I know. Walmart hammers it suppliers for price decreases, while the shipping costs rise due to higher petroleum. The supplier has a choice: make money or go out of business. Walmart can use its huge purchasing power to drive companies out of business, so perhaps the company looks at it business and says: losing a dime on ten million units is much worse than making 50 cents on a hundred thousand, and just decides to pass on the Walmart supply agreement. That might be why the selection has been diminishing in Walmart to the point that if I want to buy everything on my list, I have to go to other stores. The only reason that Walmart has been able to bully any suppliers is that the cost of the bullying is significantly less than the cost of the delivered product. Once that changes and the supplier is forced to improvise, the Walmart account might become a liability rather than a profit center.

Re:demanding free service

[jbengt]

It's not illegal AFAIK but it is abusive.

<sarcasm>What, Walmart abusive to its suppliers? Incredible.</sarcasm>

Re:demanding free service

[Lally Singh]

multiple antennas will get you a position.

Re:demanding free service

[goldspider]

Abusive? Please. It's the cost of doing business with Wal-Mart. Wal-Mart isn't forcing anyone to do business with them.

Re:demanding free service

[jhoger]

Actually, there are other advantages.

Here's one: you can scan an hundreds of items on a pallet wrapped in shrink wrap, *individually*.

This turns out to be an issue because of an A/R issue called "deductions." This is where the recipient of goods deducts from the invoice saying that they didn't receive everything you claim to have shipped them. With RFID, you can count all items in the pallet right before you ship it.

-- John.

Re:demanding free service

[Anonymous Coward]

I have worked at Slave Depot and let me tell you, every day I wish products were tagged with RFID so we could find hidden and lost stock with ease. Thank God I am not doing that anymore, but I do now believe all retail/warehouse stores should have such tech build into product management for everyone's sanity (drones, angry customers, pointy hair types, etc).

Re:demanding free service

[Anonymous Coward]

But this has a non-trivial adoption cost to the manufacturers. Walmart isn't incentivising this; no offers of cost sharing. Just a flat demand. It's not illegal AFAIK but it is abusive. What would you term that $2 WalMart is charging, then? That doesn't provide an incentive to tag the pallets?

WTF?

Re:demanding free service

[llefler]

What, Walmart abusive to its suppliers? Incredible.

I don't see how buying a supplier's product is abusive. But Walmart does appear to have shrewd purchasing agents. Walmart collects huge amounts of data on what sells and what the price points are, so they come into negotiations well prepared. From the various articles I have read about supplier problems with Walmart (Levis, Vlasic, Huffy), it appears that the suppliers have been rather naive about the contracts they signed. If you sign a contract saying you're willing to supply Walmart up to X amount of an item for $Y, you need to be able to produce that maximum amount if Walmart requests it. Don't agree to supply 10,000 when you can only profitably produce 5,000.

Re:demanding free service

[jhoger]

There exist standards for both EPC formats and reader protocols. See EPCGlobal's web site.

-- John.

Re:demanding free service

[James McP]

Buying products isn't abuse, it's how Walmart manages the relationship.

Year 1: BobCo normally sells 10,000 units/year of BobStuff. Walmart contracts for 2,000 units as a test. BobCo throws a party then ramps up staffing to cover the 20% increase.

Year 2: Walmart decides BobStuff is doing well and orders 10,000 units. BobCo does a major plant upgrade to meet the demand.

Year 3: Walmart asks for some additional "economy of scale" cost reduction in return for ordering 15,000 units but Walmart will only buy 15,000 units. BobCo takes a small per-unit profit hit and needs another plant upgrade but the overall revenue stream is great.

Year 4: Walmart pulls out the red hot needles and starts jabbing them under BobCo's finger nails. Walmart will buy BobStuff but only for a price that makes BobCo 1% profit after paying for the plant expansions. If BobCo does NOT take the contract then the debt from the plant expansions will bankrupt the company in under a year.

Year 5: Wallmart tells BobCo they need to spend anther $50,000 on an RFID tagging/implemenation system or we'll charge you $2 for every pallet of BobStuff you send us.

Walmart is an economic bully. Whatever Sam Walton may have intended the company to be, his kids have turned it into a world devouring behemoth. Their management plan is designed to minimize the benefit-earning staff and their sales policy is designed to drive competitors out of business. Their prices, beyond the first year or two of a store opening when they are in loss-leader mode, are only somewhat competitive on name brand items. Where the majority of consumer price savings comes in is on unknown brands (I.e. BobCo) that Walmart essentially owns.

The only way to have a successful contract with Walmart is to be successful before you sign a contract with Walmart.

Re:demanding free service

[llefler]

But every step of the way it is BobCo's choice to spend the money and maintain the relationship. If they didn't want to expand their sales, they wouldn't have contacted Walmart in the first place. And it's a well known fact that Walmart expects cost reductions from supply chain efficiency improvements. If a company is making multi-year commitments based solely on a one year agreement with a specific customer, it may well be that they deserve to be bankrupt.

Walmart isn't the only game around either. BobCo could make an agreement with with Target or Amazon. Or they might be able to market their wares as premium goods, a reputation they will not get distributing through Walmart.

Couple of thoughts....

[FooAtWFU]

1. Sam's Club is a good place to try it out for starters. They tend to have a lot of big pallets and since the chips aren't cheap yet it's a good way to get the most for their money as they prove technology.

2. I understand that to not-do-business with Walmart is to await death. To do business with Walmart, however, is to invite death. (Seriously, they will put so much price pressure on you... and are not at all concerned with running you, as a supplier, into the ground, since there are plenty of other suppliers out there...)

Re:Couple of thoughts....

[tepples]

(Seriously, they will put so much price pressure on you... and are not at all concerned with running you, as a supplier, into the ground, since there are plenty of other suppliers out there...) Even for patented or copyrighted goods?

Re:Couple of thoughts....

[Casualposter]

What does walmart sell in any large quantity that is patented to the point that there is nothing similar right next to it on the shelf? I really can't think of many things that might enjoy such a position, but that would be a unique situation and certainly not something the majority of suppliers would enjoy. I mean even though the Super soaker is patented, there are a lot of water pistols and such in the toy section competing with the Super Soaker.

Walmart's business model doesn't seem to invite the kind of pressure that a single patent holder can exert. Unless Acacia has a patent on making suppliers put RFiD tags on all incoming shipments.

Re:Couple of thoughts....

[tomhudson]

Board Games. Monopoly, Risk, Scrabble, etc. All trademark (not copyright) protected.

Video Games. All protected by copyright and trademark

Books. Copyrighted.

All brand name products, from electronics to food to motor oil to running shoes.

None of these are fungible. Ask any parent whose kid insists on Nike or Captain Crunch. Or any car owner who insists on Valvoline. Or EVERYONE who wants a Wii.

Re:Couple of thoughts....

[cdrguru]

The problem is with board games and the like, you either deal with the world's largest retailer (and therefore have access to the world's largest retail marketplace) or you go out of business. WalMart's doesn't really care. Consumers are not going to not shop at WalMart if they no longer carry Hasbro products, but Hasbro will certainly be out of business if their products are not sold at WalMart.

It is pretty simple for suppliers. You conform to the terms and stay in business or else.

WalMart has pretty much tied the US consumer market up like this, either with real or imagined savings. The consumer has little choice in the matter, and given WalMart's position, every other retailer is going to go down the same road sooner or later.

Re:Couple of thoughts....

[that this is not und]

Mostly with real savings. I priced a bottle of Rolaids yesterday. $2.99 at WalMart. $4.29 at CVS. And CVS is another large-scale retailer. I'd be afraid to ask what a similar quantity of Rolaids would cost at some crummy 'market-up' mom and pop store. We used to have a store like that down the block. Grumpy 'get off my lawn' proprietor and obscenely marked up prices. We affectionately called the place 'Market Up.' I would be pleased to see that grumpy bastard working as a greeter at WalMart.

Stack them

[Fuzzums]

If wallmart wants pallets with rfid, why don't they put the whole pallets of the supplyers on one of their pallets WITH rfids...

Problem solved. NEXT!

Re:Stack them

[Wesley Felter]

You should have patented that idea and licensed it to Wal-Mart for $1.99 per pallet.

Does this really help?

[vodevil]

Does this really help with controlling inventory? The RFID is not on the product, but on the pallet. So, they're going to be able to track how many wooden pallets they have, but not the product that is sitting on top. Until it's implemented in the product, I don't see how this will help them.

Re:Does this really help?

[Jeff DeMaagd]

I think the idea is that the stock comes in already strapped to a pallet such that it makes it easier to find a given pallet of stock. In the warehouse, the stock isn't removed from the pallet, the pallets aren't opened until the items are already placed in the area for sale to the customer. I think it might make it a lot easier to locate misplaced pallets. It might also be that the supplier electronically sends the tag ID and a bill of lading for that tag so it reduces paperwork. It might even greatly increase the scan speed vs. bar codes.

Re:Does this really help?

[toddhisattva]

Does this really help with controlling inventory? The RFID is not on the product, but on the pallet. So, they're going to be able to track how many wooden pallets they have, but not the product that is sitting on top. Until it's implemented in the product, I don't see how this will help them. This is as silly as requiring each line of code to have its own identifying number!

Re:Does this really help?

[jjohnson]

The idea is that the pallet tag is a unique number that can be matched with the electronic paperwork sent by the manufacturer. Scanning the pallet tag matches the physcial skid of product to a pending inventory transaction that lists all the product; after that, the products themselves are in the DC's system, and handled by logistics software.

Why the pallets???

[spiritraveller]

Wouldn't it make more sense to just have an rfid on each package?

Pallets are just a bunch of wood. That doesn't give you a direct indicator of your product. It just tells you that that pallet is sitting there. Someone could have removed half of the product from it already, but the rfid reader would indicate that the whole shipment is right there.

I'm looking forward to this so that I can shop at walmart again without having some annoying person ask to see my receipt as I leave. If it's embedded in the actual product, they can make sure that any item from their inventory going out the door has been paid for. That reduces shrinkage costs (aka theft losses), lets them reduce the number of employees dedicated to loss-prevention, and lets me leave without either being interrupted or telling someone to shove off.

Re:Why the pallets???

[jbengt]

Wouldn't it make more sense to just have an rfid on each package?

Even at $0.02 per tag, that would significantly impact the price or profit of a lot of small items, not even counting the initial cost of creating the infrastucture.

Re:Why the pallets???

[jjohnson]

Four years ago, when I was working for a manufacturer that was facing Walmart's first attempt to require RFID, the tags cost $0.60 apiece, and the equipment to print and program them was in the tens of thousands of dollars. They also failed to read up to 30% of the time. For a company already driving manufacturers out of business on price, adding that much to the cost of each package of product was impossible, even for Walmart.

Re:Why the pallets???

[spiritraveller]

not even counting the initial cost of creating the infrastucture. The infrastructure is already there. Many of their products already have rfids, and they already use them to deter theft.

Re:Why the pallets???

[Todd Knarr]

Not the same technology. Those theft-deterrent tags are just a small piece of metal foil shaped/sized so it's resonant frequency falls at a particular RF frequency. Broadcast on that frequency near it and it "pings" back with a signal. Hit it with a strong enough signal, the heat generated melts the foil and the tag no longer reacts. Notice that there's no data at all here, the tag's just a reflector. The gates near the store doors transmit a low-power signal and sound an alarm if they hear an echo from a theft-deterrent tag, while the pads at the registers transmit a higher-power short-range signal to disable the tags (the cashier runs the item across the pad after they've rung it up and before putting it in your bag).

The RFID tags Walmart wants aren't just a piece of foil, they've got an actual antenna, a few bytes of data storage and an RF transmitter inside. When presented with a radio signal they leech power from the RF field and transmit the data stored inside them for a receiver to pick up. This can be done fairly cheaply, but it's still much more expensive than the simple passive theft-deterrent tags. One tag per pallet is probably not too bad. One tag per item, though, even at a nickel per tag is probably in a lot of cases costing more than the distributor's profit margin on that item. Combine with the distributor's knowing that Walmart expects the distributor's prices to go down year-over-year and some distributors are undoubtably going to decide they can't afford to do business with Walmart anymore. It may be better to make a penny an item on a million items than a dime on a thousand, but it's not better to lose a penny an item on that million.

Re:Why the pallets???

[spiritraveller]

I stand corrected. Thank you for the informative response.

RFID and Walmart and more

[Lord Satri]

Maybe I'm missing something here, but this seems like the kind of application we should be supporting. I agree, without much analysis, to me it seems Walmart is pushing their partners in the right direction: enhanced efficiency for everyone.

Let me act as a karma whore (not that I care about virtual karma). Last May Walmart was announcing their embrace of the RFID tech, underlining the "green" component of this tech. Then, /. discussed in October Walmart's faltering RFID initiative. (Flash map of Walmart stores) And today, great news, Walmart is deep into RFID. Technology itself is neutral, it is what we do with it that makes it good or bad.

Other RFID stories that I find pertinent: a successful implementation of RFID tags at the Oak Ridge National Laboratory's Washington Navy Yard. Don't forget we discussed over /. the use by Microsoft of RFID for marketing in groceries. If Microsoft is using it, it must have great potential? ;-) I won't lie that I'm amazed at passive RFID chips being as small as 0.15mm x 0.15mm x 0.0075mm (Hitachi), enabling rather conspiracy-theory applications of the tech. India and China seems are seriously looking at RFID. Well, you get the idea, more stories about RFID here. We live in interesting times. Technology is evolving at an exponential rate... now I wonder if we, as a civilization, will successfully cope with the realities of our resources-limited planet... (I'll stop here, I'm getting off-topic ;-)

Re:RFID and Walmart and more

[TopShelf]

For most in the retail distribution biz, the cost of RFID hasn't gotten low enough to justify the expense. Unless they apply RFID upstream within their own processes (a huge endeavor in cost & effort), it's just an additional cost of doing business with WalMart, having to slap an RFID tag on outgoing shipments.

It's probably been in their Ts & Cs for years

[originalhack]

They've probably had this in their terms and conditions on their purchase agreements for years.

Imagine you run a monster distribution center. You order from a zillion vendors and pallets of merchandise appear. Some pallets have a nice list attached to them describing what is in them so you can route them to the store without unpacking them. Others just show up with a pile of boxes and you have to, at least partially, unpack and re-wrap them to confirm the contents.

1. Your next version of your terms and conditions require a packing list.

Then, you find that most of the lists have the PO number on them and list the items by part number, but a few just say something like "Here's 10 cases of green shirts." Most have the packing list printed on a label on the side of the wrapped pallet. Some have it inaccessible from the outside.

2. Your next revision of your terms and conditions require the list to be on the outside and dictate the format.

After a few rounds, you realize that these lists are very expensive to produce and to read and all of your suppliers have (or should have) computers anyway, so you have them electronically send you the packing list and specify a shipment number. That number goes on a bar-code label at a specific place on the shipment. On your receiving dock, you have someone dance around each pallet to scan it and then it disappears into your warehouse.

3. Your next Ts and Cs require the bar-code

You find that the bar-code requires stopping the flow of items in all sorts of places. You invest in RFID readers for your whole distribution line. You tag all the incoming shipments as they arrive, and you find that it works.

4. Your next Ts and Cs require RFID labels.

A grace period comes and goes. Tagged shipments fly right through your distribution center smoothly, but you have some suppliers who still don't comply with your agreements with them and you have to stop each of those shipments on your dock and slap an RFID label on them yourself. The industry gets to the point where labels with tags are down to 40 cents in tiny quantities and the equipment to program them is down to under a thousand. There are also companies that will sell tags preprogrammed for a dollar or two. Still, some of your suppliers who were eager to sell to you and signed the Ts and Cs the day they took the order, fail to follow through.

5. You start to either refuse to accept shipments that don't comply with the contract or you charge a fee to fix the sloppy shipments.

Now, a legitimate issue is where the power in the relationship is. WM is well known for holding all the power and that really can be viewed as being all about price and accepting the Ts and Cs in the first place. That's an issue that comes up anytime they meet with a supplier. If your Verizon service stinks, you cannot do anything about it because, when you "negotiated" your contract, you could either sign THEIR terms or you could go to one of a tiny number of serious competitors who seem to have conspired to have equally onerous terms. (This is exactly why legislators keep looking at things like "customer bill of rights" legislation... the individual customer doesn't have the ability to choose a better contract).

Re:It's probably been in their Ts & Cs for yea

[HEbGb]

You are exactly right; most on this forum really don't understand this at all. Good job clearly explaining it.

Word of the Day...

[RealGrouchy]

When a retailer is able to charge/coerce the people it buys its merchandise from, that retailer is a monopsony. (I'm by far not the first to label Wal-Mart as such)

- RG>

Re:Word of the Day...

[Anonymous Coward]

Walmart has suppliers kissing their ass just to get their product into the store. The competition is amongst the suppliers to give Walmart the lowest price, and conform to their every wish. If the current supplier will not upgrade their business to RFID, the next one will.

Re:Word of the Day...

[jtgd]

Sheesh, before I clicked the link I thought this was some pun regarding Sony.

In Bulk

[Anonymous Coward]

I wonder what would happen if a supplier decided to get a bunch of rfid tags in bulk... that all returned the same data. Technically, they were tagged...

Yawn

[Anonymous Coward]

This practice is known in the industry as Expense Offset. When I worked for them 10 years ago, Federated (now just Macy's) assessed their vendors Expense Offsets for a whole host of things. Basically the merchandise was supposed to come as pre-prepped for the floor as humanly possible, and checklists for each type of item came with a dollar amount for each omission (no barcode tag, not on hanger, wrong creases that had to be ironed out, etc.)

Re:It's probably been in their Ts & Cs for yea

[kenb215]

Pressed the wrong button when moderating, oops. Undoing now, sorry.

loool

[mestar]

Wallmart charges its suppliers?

"The charge is to cover Sam's Club's cost to affix tags on each pallet, says a Wal-Mart spokesman."

Hey, Mr. Wallmart, you bought it, nobody forced you, too late to start complaining now.

Will they sell

[houghi]

something like this?

If it's supply-constrained, Wal-Mart matters 0

[tepples]

The problem is with board games and the like, you either deal with the world's largest retailer (and therefore have access to the world's largest retail marketplace) or you go out of business. Nintendo could sell as many Wii consoles without Wal-Mart as with Wal-Mart.

Re:If it's supply-constrained, Wal-Mart matters 0

[tomhudson]

"Nintendo could sell as many Wii consoles without Wal-Mart as with Wal-Mart."

Very true. Also, I've seen games sell for less at other stores than they do at WallyWorld. This past Christmas included Cranium (bought 3 copies) and an electronic Sudoku game (5 copies).

WalMart doesn't have any sort of monopoly on lowest prices. TV DVD recorders - Worst Buy/Future Shit had the best deal - bought 3 LG-850s at $99/each. Much better than anything WallyWorld had, even at a higher price.

Also, there are manufacturers who refuse to continue to sell to WalMart because it hurts their brand.

So where does all their money come from?

[Anonymous Coward]

I work for a company that has done business with Wal-Mart on their distribution centers. I've now worked on a couple of their DCs, and they seem to be by far the most difficult company to do business with that I have ever worked with. In all areas they demand suppliers comply with their standard way of working for efficiency. Even when you've done a good job for them, they seem to have a policy of attempting to bleed any profit for the supplier out of the contract. We just have to start out by increasing the prices of our services to 2-3 times the amount we charge other companies. I think the only way of working with them is to not be greedy. Don't ever see the dollar signs of increasing your business 300% a year because you're selling to Wal-Mart.

They make a hell of a lot of money from somewhere. When you look at the prices they charge in store, that money isn't coming from their customers.

Yes, it helps

[raftpeople]

The contents of the pallet (SKU's, qty's, etc) are sent electronically before the pallet arrives. The serial number in the RFID chip on the pallet is read and matched to the same serialized pallet in the database that was sent previously, so the system knows what the product is, who it came from, which purchase order, etc.

Hmmmmm.....

[IHC Navistar]

What if somebody smartsd up and sends them a pallet with strong magnets in it?

old news

[jaydanie]

They been pushing this for about 4 or 5 years now. This is old news.

RFID and Walmart and posts.

[Anonymous Coward]

"now I wonder if we, as a civilization, will successfully cope with the realities of our resources-limited planet... (I'll stop here, I'm getting off-topic ;-)"

Oh, no, no, please continue. I'll just slap an RFID tag on it and read it later.

Privacy concerns

[Antony-Kyre]

Unlike bar codes, RFID chips could label an item as specific, making it easier to do inventory by doing a scan without double counting.

However, if someone purchases it out at the register, do they remove the code from their database, or keep it in their system? Do they purge it after so many days (the concept of 90 day returns, or whatever store policy), or do they keep it indefinitely?

What happens if the store kept it indefinitely, thus making the unique item specific to you. Meaning, if the RFID chip is physically attatched to the item in such a way it cannot easily be removed, and you say, give it to someone who "then" commits a crime with it, are you going to be seen as partially responsible?

RFID Sabotage - Invites disaster

[Anonymous Coward]

An aggreived ex employee could sit in the carpark, firing off all sorts of random RFID pulses with a very strong directional antenna - that would slow things. A pinprick and a drop of acid could stimebob the tag, so it fails to ping 24 hours after admittance.

Or an array of 24 RFID tags with a circular moving window, so the pallets ID changes one every hour. Or an employee gived the chip a jolt from a modified stun gun, after entry, and say once its on the racks - must be static.

It would be very profitable to be able to switch tags, on say the bottled pickles pallet, and the LCD TV pallet. A remotely programmable RFID tag would be the go.

Basically saying you can save the time over and above a barcode wand - which must be not much. Which means not looking much at the pallet, if at all - many opportunities.
We are now saying - dont look at the stock coming in, the computer will hear its ping.
That like giving a blind man a dollar note, and telling him its an 100. Begging for trouble.

Re:It's probably been in their Ts & Cs for yea

[kindbud]

(This is exactly why legislators keep looking at things like "customer bill of rights" legislation...

And they just keep looking, and looking, and looking.... "Now them's some pretty fine consumer rights we're admiring in this here bill."

Translation

[ivan256]

They told WalMart to go to hell so they could continue to support their smaller distributors. After a few years they realized that they failed miserably and rolled over for Sears/K-Mart instead since WalMart won't take them back.

Re:Translation

[plague3106]

Ya, they really are fucked. Being sold without lowering quality in a nationwide store. What a failure..

Re:Translation

[ivan256]

Are you sure they didn't lower quality to increase volume? Wasn't part of their stated intent to support their independent retailers and avoid selling in a nationwide store?

Re:Translation

[plague3106]

No, I read the original article on snapper. The lowering of quality was directly related to Walmarts demand to sell for lower prices. It said nothing about making more mowers at current cost.

Also, instead of having say three mowers in 20 different independent stores, they can have 60 mowers at one Sears / Kmart location. Also, they can increase production while keeping the cost the same. What they wanted to avoid was increasing production while lowering quality (i.e., by cutting corners on materials, QC, etc).

Sure it is a good use for RFID...

[ibsteve2u]

And when Wal-Mart's efforts are completed, the cost of RFID chips will be low enough to make it worth sticking them in your Sam's club card so Wal-Mart can see where you browse in their stores.

And then with some cross-marketing agreements with major fast food chains, gasoline retailers, amusement parks...why shucks, Sam's kids will soon be able to tell where you are and what you're likely to do next.

For marketing purposes only, of course...

Good luck on your planet.

[professorguy]

I guess Wal*Mart has no effect on your life. Why don't you go to your favorite store and buy a box of matches?

The fact that a box of matches is no longer a usable product is due to the "race to the bottom" started by Wal*Mart. The quality of matches is so poor now because they must be made ever cheaper for the big suppliers to carry it and anyone not making them cheaper is cut off from the market. Matches are now so cheap, they are essentially no longer available (the ones you can buy are not really 'matches' in the sense that you could start a fire with them).

I dare say that your inability to buy matches is due to Wal*Mart regardless of where you actually try to buy your matches.

Now follow this reasoning with about a million other formerly useful products which are all rapidly disappearing from the market and you are affected by Wal*Mart without actually shopping there.

Re:Good luck on your planet.

[Anonymous Coward]

Or people find that a lighter/and or electric fire starter are usually much better and then not having to buy matches?

Can't Wait

[EdIII]

When they start applying it to packages, is the day 1.99$ PS3's will be sold.

Steven Wright wants to know...

[GentlemanRogue]

can I put an RFID tag on a pallet filled with boxes of tin foil?