Most of the times, some muscle is required to enforce rules and policies. Wal-Mart seems to be doing exactly that. To justify investments and contain costs of tagging RFID tags to unmarked pallets from Sams Club suppliers, Wal-Mart 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.
Wal-Mart has apparently tired of its investments in radio frequency identification turning into a prolonged pilot study and is stepping up pressure on suppliers to comply with its 3-year-old inventory-technology mandate. 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. "It's really designed as a short-term solution for those suppliers that may need a little more time to implement their own tagging solution," he says.
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. It makes sense: Sam's Club has far fewer suppliers than Wal-Mart stores, and customers buy products by the case, the pallet, or individual packages that are larger (like a 48-count box of granola bars) than what's typically sold in retail stores. That means fewer RFID tags, at about 20 cents a piece, which makes the cost more digestible for Sam's Club suppliers. The division contributed $41.5 billion to Wal-Mart's $344.9 billion in revenue for its 2007 fiscal year.