Wal-Mart's RFID edict ripples through IT

the other shoe has dropped. Wal-Mart has laid out requirements for its suppliers to tag all cartons and pallets with wireless RFID (radio frequency identification) sensors by Jan. 1, 2005.

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Back in September, I wrote about RFID and how networks will be tasked with handling more data -- a lot more. Now it’s worth taking a closer look at what’s at stake for IT as it incorporates RFID data into its networks.

At the most basic level, there is device management to contend with: hundreds of RFID readers and thousands of tags to monitor. Bret Kinsella, general manager at Sapient’s supply chain service, says not to worry about tags but that the readers look more like servers or racks of servers.

IT will need to know when they are working and when they are down. Instructions will have to be sent to the readers telling them when to read tags and when not to read the tags on certain pallets. Also, as Wal-Mart and the other large retailers upgrade the EPC (Electronic Product Code) standard, who do you think will be responsible for the upgrade? Right now, Wal-Mart says it is content with the Class 0 EPC standard, but it is moving to Class 1.2. Substitute the word version for class, and it sounds a lot like plain-old software support.

IT departments now have a data-generating device on the edge of the network. They will need to get the data from the edge into the enterprise. Then the data on the tags will have to be associated with other tags and with transactional documents, such as a sales order or a bill of lading.

Right now, this is done by people, but it still must be integrated into the infrastructure.

Wal-Mart says that this will be a phased rollout, with only 150 Wal-Mart stores in Texas expecting pallets and cartons with RFID tags.

How does a manufacturer discriminate between the pallets going to those Texas locations and the rest of the country? Sure enough, there are companies such as Zebra Technologies that make products such as the R140 printer encoder. It encodes a smart label — a 4-inch-by-6-inch label with an embedded RFID tag and antenna — right before the carton or pallet is labeled. The company’s Alchemy software allows suppliers to designate on the fly how boxes and pallets get encoded for location, among other things. The Wal-Mart decision is certainly a windfall for Zebra, but again, more devices to manage for IT.

Beyond these issues, RFID data will also have a role to play in enterprise apps. A customer service center gets an inquiry about a shipment, and the service asks about the EPC that is associated with the order. The EPC data will have to be rendered through the traditional apps the enterprise uses.

Further out, the CIO needs to think about adding business intelligence to generate useful information such as demand forecasting.

Finally, to get an idea of the scope of Wal-Mart’s RFID requirements, ponder this: According to Randy Whitchurch, CFO at Zebra, Wal-Mart is responsible for 17 percent of retail volume worldwide and receives on average 8 billion cartons a year. The first phase of its RFID edict is targeted at its top 100 suppliers, who are responsible for one-eighth of those cartons. In other words, 1 billion cartons will need to be tagged.

When it comes to understanding the repercussions of RFID, CIOs and CTOs have a lot of catching up to do, Sapient’s Kinsella says, and they don’t have the luxury of waiting until tomorrow.