Simon says, "Stick RFID tags on your products," and America's biggest consumer products companies promptly fall in line? That's precisely what happened when Simon (Langford) issued Wal-Mart's now famous RFID mandate. So what will Wal- Mart want next?
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
Not since the Y2K scare five years ago has the turn of the calendar year been the object of such intense speculation. But this time around, no one was hunkered down in a basement with a stash of canned spaghetti and bottled water waiting for planes to fall from the sky. In fact, those awaiting 2005's arrival displayed more curiosity than trepidation. And rather than prophets of doom, the curious were mostly consultants, manufacturers, retailers and RFID vendors with a single question on their minds: What would happen when 52 Wal-Mart suppliers officially began shipping pallets and cases tagged with tiny RFID chips to the mega-retailer's DCs?
Now, 60 days out, the verdict on Wal-Mart's bold experiment seems to be so far, so good. At this point, Wal-Mart appears to be solidly on track with its RFID initiative, which called for its 100 largest suppliers to begin using so-called smart tags to identify incoming pallets and cases. True, the retailer didn't have all 100 of its top suppliers on board on Jan. 1, but that was never the goal to begin with. All along,Wal-Mart had asked its top 100 suppliers to meet not a Jan. 1 deadline, but a January deadline, giving them the luxury of a 31-day window to get their cargo in chip-shape. And sure enough, by the end of January, 108 suppliers were shipping products carrying RFID tags to Wal-Mart, while another 29 expected to be on board by March 1. (Those who counted a total of 137 companies are correct. Aside from the mega-retailer's top 100 suppliers, 37 companies volunteered to participate.)
"There were no surprises in January and that's precisely what Wal-Mart wanted," says Kara Romanow, a research analyst at AMR Research, who tracks many of the consumer product goods (CPG) companies subject to Wal- Mart's mandate. But compliance, of course, is only a small part of the story.What about the retailer's larger goals, like cost savings and a reduction in stock-outs? "It's still too early to tell whether Wal-Mart will meet its goals," Romanow answers. "We really don't know if [RFID] will impact [stock-outs] yet. But this is not a failure either, just by the fact that there are so many technology companies out there investing to make RFID a more mature technology. Wal-Mart has absolutely moved both the technology and the CPG industry forward."
Working out the kinks
As for the Bentonville Behemoth's own assessment, preliminary indications are that Wal-Mart's management is pleased with what it sees so far. "Things are going well and we are pleased with the progress," said Simon Langford, the retailer's director of global RFID strategy, via e-mail. Langford reported that as of Jan. 27, 92 suppliers had shipped RFID-tagged merchandise to Wal-Mart DCs in Texas. So far, Wal-Mart has received more than 7,000 tagged pallets and 210,000 tagged cases, and has recorded 1.5 million electronic product code (EPC) reads.
That's not to say there haven't been some hiccups. But Langford remains optimistic that the kinks can be worked out. "As the tagged cases start to work through the supply chain, we will start to see improvements," Langford said. "We will be measuring these improvements ongoing as we roll our changes [out] to all [RFID-equipped] sites."
Of course, that's not to suggest that all of those suppliers are tagging 100 percent of their Wal-Mart-bound products. Wal-Mart has reported that on average, participants are tagging 65 percent of their stock-keeping units (SKUs). But some observers believe that figure is a bit misleading. Some smaller suppliers may be tagging a majority (or even all) of their stock-keeping units, they say, but most companies are tagging between two and 10 products. And it's important to keep in mind that "10 SKUs" may represent one product in 10 different sizes or colors.
"What you have to realize," says Romanow, "is that most of those top suppliers are only tagging a handful of products. So the 65 percent number doesn't [adjust] for the smaller suppliers who only have three or four products and who are tagging all of them, and it doesn't account for only the handful of products from the big guys."
The road ahead
Now that the first round of RFID implementations is over, all indications are that Wal-Mart intends to stay the course. For one thing, Wal- Mart is pressing ahead with the installation of RFID-reading equipment in more distribution centers and stores. In preparation for the January rollout, Langford reports, Wal-Mart outfitted 104 retail stores with RFID equipment, deployed 14,000 pieces of hardware and ran 230 miles of cable. Now, it's barreling ahead with an expansion program. The retailer expects to have six distribution centers and 250 stores equipped with RFID readers by June, and 12 DCs and 600 stores by October.
In addition, the retailer is forging ahead with plans to bring more suppliers on board.Wal-Mart has put its next 200 biggest suppliers on notice that they'll be expected to begin tagging pallets and cases of selected products by January 2006. By the end of 2006, the retailer expects its entire supplier base (up to 20,000 suppliers) to be "engaged in RFID in some form or fashion." Langford has not revealed when Wal-Mart might start to roll out RFID internationally.
As for the 100 top suppliers, they're not off the hook yet. Wal-Mart has asked them to tag more products. But even without Wal-Mart's latest request, they'd still be facing a new set of challenges. In late December, the standards body EPCglobal ratified the Generation 2 standard for RFID tags. With the Gen 2 technology expected to become available in the second half of the year, many of the top 100 suppliers have resigned themselves to writing off their initial investments and starting over with the newer technology.
That Gen 2 rollout has thrown a wrench into the plans of others as well. Initially, industry analysts had predicted that compliance would be easier for the 200 suppliers in the second wave (which includes companies like E.&J. Gallo Winery), assuming that they could ride the coattails of the first wave of suppliers. But now, it looks like the advent of Gen 2 technology will make much of that early experience irrelevant.
Still, at least they're not starting from scratch. "For those next 200 suppliers, there are some small advantages in … that we have some standards out there now and that there is some knowledge about readers and antenna placement that they can leverage during their pilot," says Gene Alvarez, vice president at Stamford, Conn.-based Meta Group.
Has that assurance provided any consolation for the suppliers preparing for Round 2? "I've had two reactions from my clients," Alvarez says. "One wants to get on this as quickly as possible because if they can beat a competitor, maybe they gain preferred supplier status with Wal-Mart. The other client doesn't have a great deal of money to invest and wants to do the bare minimum, waiting things out until [it] can implement RFID properly. I think we'll see more people in that category."
Metro goes on the record
Wal-Mart isn't the only retailer riding the RFID wave. Metro Group, the world's third largest retailer, has also been busy deploying RFID. In fact, Metro has a bit more RFID experience under its belt at this point than its Arkansas-based counterpart does: Metro's RFID mandate carried a November 2004 deadline.
Unlike the notoriously tight-lipped Wal-Mart, which hasn't spoken much publicly about its experience, the Düsseldorf, Germany-based Metro has been publicly touting the cost savings and operations improvements it's realized from RFID. For one thing, the company says it has found that RFID-tagged shipments can be unloaded and checked in faster than their tagless counterparts, averaging just 15 to 20 minutes per truck. For another, it reports that RFID has helped it identify and eliminate weak spots in its handling processes.
According to the retailer, Metro has integrated RFID into existing operations so that RFID-tagged pallets and cases can be detected and recorded at the shipping pOréal. Tag IDs are then transmitted over a local area network (LAN) to a local server. The tag number, which functions as a serial shipping container code (SSCC), is then compared with electronic data interchange (EDI) data from the retailer's merchandise managing system on a central server. At that point, shipments can be either cleared or flagged if there is a discrepancy between the shipment and the EDI documentation or if the scanner experiences problems reading the RFID tag.
So what's next for Metro's RFID initiative? Gerd Wolfram, director of IT strategy, buying and development services for MGI Metro Group Information Technology, a Metro subsidiary that supplies the company with IT services, says that by the end of 2005, Metro expects to have 100 companies in its supply chain sending it RFID-tagged shipments. Next year, Metro expects to receive tagged shipments from its top 300 suppliers, which provide the retailer with merchandise that accounts for 60 to 80 percent of its total revenue.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”