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Last update: August 31, 2004 at 9:45 PM
Best Buy planning radio IDs on goods
Melissa Levy, Star Tribune
September 1, 2004
Hoping to stock its shelves with the latest tech gadgets more quickly and cut costs, Best Buy Co. Inc. on Tuesday unveiled plans for using radio frequency identification (RFID) tags.
In doing so, the Richfield-based consumer electronics retailer joins two of its biggest rivals, Wal-Mart and Target, who plan to begin rolling out the technology with their suppliers next year.
Best Buy said it will require its 90 largest vendors to place RFID tags on product cases and pallets by January 2006, and all suppliers must use them by May 2007.
"We believe RFID technology can transform the way products are produced, distributed," and presented in stores, said Bob Willett, Best Buy's executive vice president of operations.
RFID, dubbed the next generation of the bar code, has been embraced by retailers trying to become more efficient in their inventory tracking and management.
Instead of having workers scan individual bar-coded items in a warehouse, RFID tags use a microchip and antenna to store and emit data about all of the merchandise on a pallet.
That means the retailer can immediately know when products leave the distribution center or need to be replenished.
Last summer, Wal-Mart Stores Inc. became the first in the industry to divulge its RFID plans. The world's largest retailer is testing the technology at a distribution center and seven Wal-Mart Supercenters in north Texas. In the pilot, eight suppliers -- including consumer goods giants Gillette Co., Kraft Foods, Procter & Gamble Co. and Unilever -- are tagging the cases and pallets of 21 products.
Wal-Mart said in June that it expects its top 100 vendors, and 37 volunteering firms, to be using RFID tags in north Texas by January. The technology could be rolled out to as many as 13 distribution centers and 600 Wal-Mart and Sam's Club stores by October 2005. Wal-Mart will require its next 200 largest suppliers to begin using RFID tags in January 2006.
Meanwhile, Minneapolis-based Target Corp. told its largest suppliers in Feburary that they must affix RFID tags to pallets and cases of merchandise shipped to certain regional warehouses by late next spring. All of its vendors will be expected to use the technology by spring 2007.
Best Buy said it will use Accenture to further develop its RFID strategy, as well as oversee implementation and vendor compliance. The retailer long has used the consulting firm for advice in such areas as inventory management.
RFID has been criticized by privacy advocates, who fret that shoppers and their purchases will be tracked long after they leave the store. But retailers have insisted that RFID use on individual items that consumers buy is a long way off. Best Buy, for example, said Tuesday that in the "long term" the technology could be used to speed product returns and warranty claims.
Melissa Levy is at mlevy@startribune.com. |
