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WTN Interview: John Pulling, Provia Software
Hitting the Wal-Mart RFID Deadline

Editor’s Note: John Pulling, Provia's vice president and COO, served as his companies representative on the Auto-ID Center, the independent organization that led the development of the Electronic Product Code (EPC) Technology Network, which links serial numbers to product information stored in a database. Provia Software is a Michigan-based warehouse management systems vendor that specializes in radio frequency identification tagging (RFID). The company has been working with Gillette on a pilot test, and has deep expertise in applying RFID technology to distribution and manufacturing operations. Pulling recently sat down with WTN contributor Ben Bradley to share his thoughts on revolutionizing supply chains with RFID technology.

WTN: Why is there such a buzz surrounding RFID technology?

John Pulling: From a technical standpoint, RFID is a simple concept with enormous implications. RFID technology is expected to one-day replace bar code technology. How? Put an RFID tag, which is a microchip with a built-in antenna, on a case of products, and suddenly a computer can "see" it. Put tags on every can of Coke and every car axle, and suddenly the world changes. No more inventory counts. No more lost or misdirected shipments. No more guessing how much material is in the supply chain --or how much product is on the store shelves. Over the past year, a number of global retail product manufacturers like Gillette, Kimberly-Clark and Proctor & Gamble have conducted tests of RFID technology. On November 4, Wal-Mart outlined requirements that its top 100 suppliers would need to become compliant in RFID technology by January 2005, and in the process confirmed that RFID was an important business technology and not just a passing fad.

WTN: Is Wal-Mart replacing bar codes? What’s the difference between bar codes and RFID tags?

Pulling: Bar codes will continue to see widespread usage for many years to come. However, all bar codes have a fundamental limitation: they are a line-of-sight technology. This has a number of important consequences. First, in most cases, they need to be scanned manually. This means there is a labor cost associated with every read, and the possibility of human error. Second, bar codes need to read individually. Multiple items cannot be read at one time. Combined, these two factors mean that bar codes are only read at a few control points in the supply chain. However, the use of bar codes has kept inventory accuracy at rates of over 99 percent. Right now, RFID does not have that level of accuracy, but the technology is rapidly improving.
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WTN: Will Wal-Mart use RFID to track individual products?

Pulling: While item-level tracking tests have been conducted, the focus of RFID for the foreseeable future will be to track inventory at the case and pallet level. Wal-Mart’s immediate requirements are that its suppliers must be RFID compliant at the case and pallet level by January 2005.

WTN: What level of investment are Wal-Mart suppliers facing?

Pulling: Companies will spend anywhere between $50,000 and $350,000 just to take care of the initial RFID requirements mandated by Wal-Mart. This investment alone won't deliver the level of ROI suppliers will want. As suppliers incorporate RFID throughout their supply chains, they will begin to see ROI in the form of reduced-labor costs, greater efficiency in shipping, 100 percent inventory visibility and increased counterfeiting safeguards.

If Wal-Mart suppliers can’t hit the RFID compliance deadline of January 2005, due to issues that are beyond their control, it may create opportunity for third-party logistics providers. Some of Wal-Mart’s suppliers may decide to outsource their shipping and processing of products that go to Wal-Mart rather than invest the time and resources in RFID. In fact, I believe that a number of companies will handle the mandate in this fashion.

In addition to being presented a terrific opportunity to work with Wal-Mart, the 3PLs [third-party logistics providers] would likely be opening themselves up to securing some significant new business. After all, other retailers are obviously watching Wal-Mart closely and will likely soon be demanding RFID capabilities from their own suppliers soon.

WTN: If my company is not a Wal-Mart supplier, why should I care?

Pulling: There are strong business cases for implementing RFID in the heart of the supply chain of most industries today. RFID has been in the auto industry for many years, using active RFID tags to keep track of vehicles in the assembly line. The tags are re-written and applied to a new vehicle, saving costs. Another example is in healthcare, where RFID technology could help eliminate counterfeit drugs through more accurate tracking and tracing capabilities. In the government sector, RFID would provide an asset management platform for use by many different agencies.

If Wal-Mart suppliers can’t hit the RFID compliance deadline of January 2005, due to issues that are beyond their control, it may create opportunity for third-party logistics providers. Some of Wal-Mart’s suppliers may decide to outsource their shipping and processing of products that go to Wal-Mart rather than invest the time and resources in RFID. In fact, I believe that a number of companies will handle the mandate in this fashion.

In addition to being presented a terrific opportunity to work with Wal-Mart, the 3PLs [third-party logistics providers] would likely be opening themselves up to securing some significant new business. After all, other retailers are obviously watching Wal-Mart closely and will likely soon be demanding RFID capabilities from their own suppliers soon.

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Ben Bradley is a contributing writer for the Wisconsin Technology Network and the founder of Growingco.com and Benbradley.net. He can be reached at ben@benbradley.net.


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The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of the The Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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