Target Sets RFID Mandate
As expected, the country’s fourthlargest retailer, Target Corp., has joined Wal-Mart Stores Inc. in adopting a plan to use radio frequency identification (RFID) technology to track its incoming and outgoing merchandise.
The Minneapolis-based mass merchant has set a deadline of spring 2005 for its top vendors to have the required RFID hardware and software in place.
Wal-Mart has set its deadline for January 2005.
RFID technology uses radio waves to read chips attached to pallets, cases or even individual items. Target is requiring that RFID be used for pallets shipped into various distribution centers across the country.
The start-up plan will require only the company’s largest suppliers to be RFIDcompliant next year. But Target Chief Information Officer Paul Singer said the plan is to have all the company’s vendors integrate RFID by the end of 2007. He said Target has already begun testing RFID with several vendors.
RFID initiatives have challenged suppliers because systems can run from $250,000 to $500,000, according to ABI, a technology research company in Oyster Bay, N.Y. The market for RFID products is expected to top $7 billion by 2008, according to ABI. The researcher recommends that suppliers adopt long-term, wide-ranging programs with an information technology and crosscustomer focus.
Cisco Systems Inc., the Microsoft Corp., the Oracle Corp., SAP America Inc. and TIBCO Software Inc. have recently issued applications that integrate RFID into their supply-chain management systems. The aim is to take advantage of interconnected RFID opportunities because other companies are sure to follow Target’s and Wal-Mart’s leads.
“The progression begs the question: Who is next?” said Erik Michielsen, ABI senior analyst. “Will Carrefour make an announcement in Europe, or will another retailer such as Best Buy, Circuit City, Home Depot or Lowe’s follow Target’s lead?”
Regardless of the answer, Target’s announcement is expected to give RFID more credibility, Michielsen said. —R.M.
