California Apparel News

As Wal-Mart Stores Inc. and the Target Corp. prepare to implement radio frequency identification technology (RFID) into their back-office operations, the governing bodies setting standards for RFID and electronic product codes (EPCs) are undertaking an ambitious educational campaign to prevent the mass chaos that could arise when retailers launch initiatives Jan. 1.

The Uniform Code Council Inc. (UCC)—which is in a joint venture with EPCGlobal Inc. and EAN International, all based in Lawrenceville, N.J.—staged nearly 100 seminars at the Uconnect Conference, held May 25–27 at the Hilton Anaheim Resort and the Anaheim Convention Center in Anaheim, Calif. About 1,800 people attended sessions covering electronic data interchange (EDI), supply-chain management and other electronic commerce applications. About 1,200 attended last year’s conference.

The RFID/EPC expo and conferences were of particular interest because Wal-Mart and Target are inching closer to implementing programs using the wireless technology to enhance their warehouse operations. Starting in January, Wal-Mart is requiring its top 100 vendors to have EPCs attached to incoming merchandise. These codes will be placed on labels outfitted with RFID chips and antennas to facilitate the reading of the codes by Wal-Mart’s RFID scanners.

While small to mid-size apparel companies do not need to worry about spending thousands of dollars on this emerging technology, volume companies such as the VF Corp. (Wrangler, Lee, Nautica and Earl Jean) are part of the mandate. Eventually, the EPC labels are expected to become a common aspect of back-office operations in the same way that EDI entered the industry 25 years ago.

Technology advantage

EPCs will work similarly. Vendors will need to join EPCGlobal and pay a scaled fee. While Wal- Mart and Target are not abandoning traditional bar codes, they are using EPCs because the codes can be read in real time throughout the supply chain—from the supplier to the distribution center to the store. Other bar codes, which use batched data, usually sit a day or two before any action is taken.

At Uconnect, the main concerns about EPCs involved establishing global standards and a universal format. The technology has been around for years, being used for toll roads and by the military, and manufacturers have produced various types of chips. Some chips can be rewritten repeatedly while others can be used only once. Frequencies can vary from 2 feet to more than 100 feet.

“There’s not going to be onesize- fits-all,” said Mike O’Shea, director of corporate RFID strategies for Dallas-based consumer goods company Kimberly-Clark Corp.

“It’s going to be a journey. We need the executive support. There’s no out-of-the-box solution,” added Sean Campbell of IBM Business Consulting Services. “There are lots of unknowns. The process needs support.”

Moving with the big guys

While these embryonic stages look similar to the early days of EDI, Campbell said EPCs will likely be adopted much more quickly given Wal-Mart’s support.

“This is very different,” Campbell said. “It’s the marriage of physics and IT [information technology]. We need to get the standards in place. It took 10 years for the big stores to adopt EDI. Let’s not make that same mistake again.”

Both Shea and Campbell urged companies to educate themselves and leverage their knowledge and experience to find the best vendors to outfit their RFID needs. They emphasized live testing and careful estimates of integration costs.

O’Shea said Wal-Mart has made strides since announcing live testing in the Dallas area last month. His company is one of eight participating in the live testing.

At Uconnect, Wal-Mart executives said the retailer has been experimenting to see how various tag types and tag placements impact readability on products in a non-laboratory environment. The aim is to make this information available to suppliers early on so they can meet the readability goals established by the retailer.

Others have privacy concerns, worrying that consumers could be tracked beyond the store level through RFID-tagged merchandise.

Yuichiro Hanawa, an executive with Japanese conglomerate Mitsui & Co., said that while it is important to deal with privacy issues, “it’s also important to sustain the momentum [of RFID].” Hanawa said setting international standards remains a critical issue. EPCGlobal has defined passive tags as a potential standard, but many are opting for active tags, which use internal batteries and can store more information, he said.

UCC spokesman Jack Grasso said the council has established the first version of a standard protocol and will release a secondgeneration standard sometime during the fourth quarter. Meanwhile, a number of conferences will take place in the coming months, including the EPCGlobal Conferenceon Sept. 28–30 in Baltimore. Another Uconnect is planned for next spring in Dallas.

Puzzling solutions

Retail logistics executives from Saks Inc., Dillard’s Inc., Federated Department Stores Inc. and the Best Buy Co. spoke on the challenges of implementing a supply-chain system that would satisfy an array of people, from vendors and store buyers to customers.

Pam Sweeney, senior vice president of systems and technology at Federated Department Stores, compared her mission to building a new car out of current and experimental equipment. “How do you position yourself so you capitalize on some of the newer technologies when you’re so saturated with an existing technology? That’s my challenge,” she said.

Retailers spoke briefly about the programs they are experimenting with. Dillard’s Director of Vendor Relations Anita Spence said the company hopes the Global Data Synchronization Network will simplify the process for vendors registering their goods at the department store.

A challenge for Saks is finding the right technology to color code apparel sections so consumers can easily find the size and style of clothes they are seeking, said Mary Lou Woods, Saks’ vice president of corporate vendor relations.

Vendors have yet to find the best solutions for implementing new technology, said Patricia Vesey of Best Buy. “Trying to understand RFID and the implications for our business is something we’re trying to figure out,” she said.