Chicago—By 2005, Wal-Mart will require the top 100 manufacturers to tag their products with tracking devices to monitor movement of cases and pallets through distribution channels, from manufacturer to store shelves.
The technology, referred to as RFID, or Radio Frequency Identification, are tiny chips but come with a big price tag, $0.20 to $0.25 cents apiece. “You could swallow one and not notice,” said John Rand, senior analyst for Management Ventures, Inc., Cambridge, MA.
Wal-Mart is one of the developing partners of the technology. There are many implications for the tagging including tracking the physical location of the product in real-time as it moves through the distribution channel, tracking shrink (a major problem especially for high-value products subject to shrink) and improving supply chain management, Rand said.
Originally the thought was to tag every individual consumer product to track the product from production all the way through POS, but consumer privacy advocates bristled at that claiming it would violate shoppers’ privacy and Wal-Mart backed off, said Ken Harris, a partner with Cannondale Associates, Wilton, CT, who discussed the issue during a workshop session Monday.
The advocates groups said they, “thought that big brother was going to be able to watch the consumers because they would know what products they had in their home,” Harris said.
So Wal-Mart settled for tagging case packs and pallets.
“Wal-Mart is looking at it saying, as far as their concerned, just knowing about information about products in cases throughout the supply chain is worth while,” Harris said.
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