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BENTONVILLE, Ark. - Wal-Mart and eight product manufacturers have begun testing electronic product codes, or EPCs, at certain supercenters and one regional distribution center in the Dallas/Fort Worth metropolitan area.
The pilot is the latest phase of Wal-Mart's implementation of radio frequency identification (RFID) to enhance product availability for the retailer's customers. The real-world trial comes after exhaustive testing at the company's RFID lab and months of joint preparation by Wal-Mart and its suppliers. Field equipment testing has been going on in Texas since the middle of the month, but no products with RFID tags had been placed in stores yet.
"It is imperative that we have the merchandise the customer wants to buy when they want to buy it," said Linda Dillman, e.v.p. and c.i.o. "We believe RFID technology is going to help us do that more often and more efficiently. This will help us increase customer satisfaction in the near-term and ultimately play an important role in helping us control costs and continue offering low prices."
Wal-Mart has set a January 2005 deadline for its biggest 100 suppliers to place RFID tags on cases and pallets going to Wal-Mart stores and SAM'S CLUB locations in the Dallas/Fort Worth area. Since announcing that initiative nearly a year ago, 37 further suppliers have voluntarily elected to meet that same milestone. The implementation that began Friday will pave the way for reaching this goal.
"We can certainly understand and appreciate consumer concern about privacy," Dillman said. "That is why we want our customers to know that RFID tags will not contain nor collect any additional data about consumers. In fact, in the foreseeable future, there won't even be any RFID readers on our stores' main sales floors.
"However, down the road there are so many possibilities to improve the shopping experience that we hope customers will actually share our enthusiasm about EPCs," she continued. "As we look forward five, 10 years, we see the possibility of offering expedited returns, quicker warranty processing, and other ways to minimize waiting in lines. There are also positive product recall implications and a critical ability to combat counterfeit pharmaceuticals.
The eight manufacturers taking part in the first part of the pilot are The Gillette Co., HP, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestle Purina PetCare Co., The Procter & Gamble Co.,and Unilever. More suppliers will join the trial in future weeks.
To begin with, 21 products from the more than 100,000 products typically carried in a supercenter will be included in the pilot. Cases and pallets with these products will include EPCs when delivered to Wal-Mart's Sanger, Texas regional distribution center, where RFID readers at dock doors will automatically inform Wal-Mart's operations and merchandising teams, as well as suppliers, that this exact shipment of products has arrived and is within the building. Cases will then be taken from pallets and processed as usual through the distribution center. Wal-Mart is aiming for 100 percent readability of pallet tags through dock doors and 100 percent readability of case tags on distribution center conveyor belts.
At seven pilot stores in the Dallas/Fort Worth area, RFID readers at dock doors will replicate the process from the distribution center by automatically confirming that this particular shipment is currently in the store's back room. Individual products will then be stocked as needed.