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In a reality-check for the euphoria over RFID technology in the retail industry, Wal-Mart Stores Inc. is backing out of a planned trial to track Gillette products as they`re pulled off of store shelves. Its plans continue for RFID in the supply chain.
In a reality-check for the euphoria over RFID technology in the retail industry, Wal-Mart Stores Inc. is backing out of a planned trial to track Gillette Co. products as they`re pulled off of store shelves. Its plans continue for RFID in the supply chain.
Wal-Mart and Gillette had planned to begin testing RFID tags on products placed on shelves in a Wal-Mart store in Brockton, MA, but the project was aborted before the shelves were completely set up, a Wal-Mart spokesman says.
Neither Wal-Mart nor Gillette would directly comment on why the project was being aborted. But Linda Dillman, Wal-Mart`s CIO and leader of its RFID plans, said at a conference last month that RFID tags would not be suitable for item-level use until their per-tag price reached 5 cents or less. Depending on the volume of tags ordered from a supplier, most per-tag prices today are about $1.
A Wal-Mart spokesman adds that the company expects to realize immediate gains through a faster and more efficient distribution system as it concentrates on rolling out an RFID program with its suppliers. It has called on its 100 top suppliers to have RFID tags on all pallets and cases delivered to Wal-Mart`s more than 100 distribution centers by January 2005, and it expects to have virtually all of its suppliers shipping RFID-tagged pallets and cases by 2006, the spokesman says.
Wal-Mart and Gillette were also facing mounting criticism by public-interest groups in Massachusetts concerned about the potential invasion of privacy that could result from having RFID tags permanently attached to products. In the Brockton project, Wal-Mart and Gillette were to use shelf-mounted RFID readers to record the movement of RFID-tagged products as consumers picked them off of store shelves. Among the potential uses of the system would be to automatically update inventory records and replenishment.
Data processed in RFID supply chain systems will eventually be accessible through the Electronic Product Code Network, which will transmit RFID data through the Internet and make product-tracking information instantly available to retailers and their suppliers on a web page. The EPC Network is being developed by the Auto-ID Center, a non-profit RFID research and development organization based at the Massachusetts Institute of Technology, with cooperation from Wal-Mart and others.
Analysts say that RFID will probably become widely used in supply chains before retailers begin to aggressively push its use on store shelves. "Everybody`s looking for the next big thing in technology, but smart store shelves is not something that`s going to happen overnight," says Kent Allen, retail industry analyst for Aberdeen Group. "But RFID is something that`s very real and will play a big part in supply chains."