Today, the Wall Street Journal ran a front page article, Wal-Mart Radio Tags to Track Clothing, (paid subscription or sign-up account may be required) that no doubt was encouraged by Wal-Mart public relations. This article notes that this high-profile retailer is once again going to roll out an RFID tracking initiative, but this time, there is a well defined target, that being apparel, and more specifically, underwear and jeans.  The article brought out the tensions between the pro-tracking community and the consumer privacy advocates.  Interesting enough, the cable news and financial networks highlighted underwear tracking as their news byline, and that, too, provided plenty of fodder for viewer reactions.

The really interesting aspect to this story is the reactions that can be derived relative to the implications of RFID based tracking of inventory.  That actually occurred in our household, where my wife was the first to read the Journal.  She and I both had different viewpoints and perspectives to this announcement, as mirrored in the Journal article.

So, today we provide our Supply Chain Matters readers with two consecutive commentaries, one commentary from the perspective of supply chain strategy (penned by myself), and one commentary from the perspective of a knowledgeable consumer (most adequately represented by my spouse).  We believe that providing different perspectives and reactions to the same announcement would be both interesting as well as insightful for our readers.

The following is one of two different perspectives regarding today’s Wall Street Journal article indicating that Wal-Mart expects to track certain clothing through the use of RFID enabled smart tags. This commentary is in the context of the consumer perspective.

As I read the Wall Street Journal article Wal-Mart Radio Tags To Track Clothing, I began feeling that there will be nothing left private in my life.  I happen to agree with Katherine Albrecht, author of Spychips, when she says, “There are two things you really don’t want to [RFID] tag, clothing and identity documents…” I am not so quick to dismiss these concerns as “breathless conjecture”. Let’s check out what we already have in place.

Most of us carry at least one store card which tracks what and how much we purchase at our local supermarket, shoe store, drug store, clothing store or gas station.  We all want a bargain, so we easily give away our information to get the discount, special offerings, or members-only sales.  We tell ourselves that we control to whom and what we tell our chosen companies about ourselves, but truly, that is not the case.  They can discern a great deal about our personal and collective purchasing and lifestyle habits from tracking those seemingly harmless little cards or key chain dangles.  We are a supply chain executive’s and marketer’s dream customer.  For very little investment and work, they know oodles about what and how much they should order and stock and what does and doesn’t sell.

Now let’s introduce an RFID chip.  Let’s see…who doesn’t use underwear or wear jeans?  If this works and really does lower costs and reduce theft for Wal-Mart, and by the way, reduce the need for employees and all associated benefits costs, since there will be less need for sales associates, inventory checkers, and warehouse workers, then it will be used for all products and companies.  Think of it this way, if Wrangler and other suppliers have to invest in the new equipment for Wal-Mart, it’s a short leap for other retailers to initiate the sensors.

I don’t necessarily worry about “some unscrupulous marketer or criminal being able to drive by [our] homes and scan our garbage”, as I do about the web of potential and ultimately most probable linkages among all our consumer and identity cards.  It matters not whether the sensor tag is removable.   What matters is that individual items will be tagged with individual sensors.

We already have the cards and they will, sooner or later, be replaced with new ones that have RFID sensors.  I envision that, in time, the sensors will be added to the cards, probably without too much of a fuss, as we don’t pay much attention to replacement cards or their informational inserts. New types of IDs are already beginning to be used for special identity documents and drivers’ licenses.  We’re sold on this idea of personal convenience and extra safety.

We are also a society that wants safety and cost containment measures to assist our quality of life and purchasing power.  We think it’s a wonderful idea to fingerprint our children, give them picture IDs with bar codes and have them carry these identifiers with them all day.  They use them for bus boarding, in lunch lines, and corridor passes. Safety first, anyone who doesn’t belong doesn’t get a nifty badge; they get a visitor’s pass! Our special work and school badges keep us safe.  They also help insure that public and private funds are being used appropriately.  After all, we can’t afford to waste money on cheaters who shouldn’t be getting what it is they shouldn’t be getting nor doing what they shouldn’t be doing at the expense of the taxpayer or the company shareholders.

In the end, our RFID chipped cards and IDs will be linked to our RFID purchased goods chips which will be linked to RFID surveillance cameras.  Imagine what information we will share with anyone who wants to know.   Supply chain executives will be able to track inventory and replenish stores on a timely basis and marketers will be hailed as being ‘best of breed’ for being able to read the market so well that companies can control costs, improve working capital, and raise shareholder profits.

From birth to death, and possibly beyond, every aspect of our lives will be an open book.  Can you say “Big Brother is watching”?  I don’t think it can or will be short circuited (pardon the pun), but…I do shudder at the future of an open world from which we cannot hide.

Marie Ferrari

The following is one of two different perspectives regarding today’s Wall Street Journal article indicating that Wal-Mart expects to track certain clothing through the use of RFID enabled smart tags. This commentary is in the context of the supply chain perspective.

Well here we are yet again, another business headline involving Wal-Mart and a new RFID initiative that promises great value.  The real question is have we as a supply chain and broader business community learned from all the previous RFID endeavors? According to the Journal article, removable RFID smart tags are to be initially placed on underwear and Wrangler jeans at the point of manufacturing, and if successful, expanded to other products.  Wal-Mart is indicating that it will subsidize the costs of the tag sensors, but suppliers will have to invest in the tracking infrastructure.  To alleviate consumer privacy concerns, the retailer is further demanding that suppliers affix the tags to removable labels or packaging, instead of embedding them in the apparel.  But alas, that does not calm the fears of consumer privacy advocates. The article rightfully points out that RFID tracking is not new to retailing, and is successfully done in other regions, most notably certain retailers in Europe.

Having observed supply chain related RFID initiatives since the very beginning, I offer the following perspective.  First, I have always been of the belief that auto-ID tracking technology can pay tremendous dividends to supply chain business and customer fulfillment processes.  The opportunity is the ability to literally connect the physical supply chain by electronic means, providing all kinds of benefits in inventory management, tracking, replenishment and fulfillment programs.

There were many obstacles in previous initiatives. These included the high cost of the tags themselves, the expensive cost of the scanners, the ability of software applications to process real-time data, the lack of consistent identity standards, and fears from consumer privacy advocates.  Some years later, much is changed.  Individual tag prices have come down, certain software applications are RFID enabled, and the standards have improved.  Technology vendors have also ratcheted-down the hype that RFID cures all ills. The consumer issues still remain.

At this juncture, all of us should be a lot smarter and more pragmatic on the proper rollout, deployment and adoption of smart tag enabled inventory tracking across the various tiers of the supply chain.  We have learned that suppliers cannot be the sole subsidizer for the benefit of a single customer.  We have hopefully learned that consistent standards benefit all.  Auto-tracking is first and foremost a supply chain efficiency initiative, not a sales and marketing initiative to gain insights on consumer buying habits.  Finally, we should have learned that consumer concerns about privacy are genuine and real, and had better be addressed in any rollout initiative, especially involving Wal-Mart.

I applaud initiatives that improve inventory item tracking and more responsive customer fulfillment tracking processes.  Technology such as RFID smart tags can be effective enablers to such processes, if deployed correctly.  Unfortunately, the name Wal-Mart associated with such initiatives still evokes multiple concerns.

Bob Ferrari

If you have been living somewhere on another planet, you may have not noticed that there has been an alarming increase in erosion of quality control processes leading to all sorts of product recalls.  If you need any evidence, you are welcomed to search Supply Chain Matters under the category of supply chain risk management.  Few categories of products have been exempt and the most sensitive, including pharmaceutical drugs and food have experienced breakdowns in quality.  The latest of these has been a compounding series of incidents related to manufacturing and supplier-related quality breakdowns involving the McNeill Consumer Healthcare Products division of Johnson & Johnson (J&J), manufacturers of brands such as Tylenol, Motrin and other products.  Six product recalls of medicines have been issued since September, and the brand suffers from lack of  trust  among consumers. The latest development to this saga is that J&J and the FDA continue to perform manufacturing quality audits across J&J’s supply chain, and now problems have been discovered at a third manufacturing plant located in Lancaster, Pennsylvania.  J&J has further indicated that its Fort Washington, Pennsylvania plant, the prime manufacturing facility for Tylenol products may well remain closed for the remainder of this year, possibly longer.

The latest incident to hit this week’s news wires involves chicken nuggets.  Yes, it’s chicken nuggets.  Purdue Farms Inc., known best for those classic and entertaining Frank Purdue commercials that stressed superior quality, has now joined the public product recall club.  More than 9000 pounds of cooked frozen chicken nuggets, sold at Wal-Mart under the ‘Great Value’ brand, are being recalled because they may contain foreign plastic materials caused by a breakdown in a processing process. The company stresses that no sicknesses have been reported and this voluntary recall is being conducted for precautionary reasons.  If you need more specific information, here is the link to the USDA press release.

Is nothing immune to quality breakdown anymore?  Now chicken nuggets have been impacted, our chicken nuggets!

From chicken nuggets to antacids to our OTC drugs- every step of this reverse consumption chain has been impacted in the last 24 months.  Which symptom or which contamination came first?  Is there nothing sacred?

Are there common and related themes to all of these incidents across multiple industries?  Absolutely! My view is that multiple years of cost reduction across multiple supply chain related processes have come home to roost.  But, that will be the topic of a forthcoming posting. Today is a day for fretting.

Bob Ferrari