Narrator:

Welcome to the supply chain visibility stories, the podcast for supply chain managers, brought to you by ACSIS, the 100% supply chain visibility cloud solution provider. Supply Chain Visibility Stories is hosted by Bill Wohl, a technology industry veteran and enterprise software professional.

Bill Wohl:

Thanks everyone for joining us for this next in the series of discussions exploring the intersection of technology and business. We're talking supply chain. Our podcasts are designed to be brief and focused and we're hoping this format inspires our audience, you to think about how technology impacts your own organization and how to engage with us. And so I'll have information about how to engage with this series and our guests at the end of today's discussion. Hi, I'm Bill Wohl and I'm honored to be the host of this series brought to you by ACSIS. I'm always fascinated by the business challenges faced by companies and how those challenges can be addressed by technology. And with a focus on supply chain, our series topics have really ranged all over the place from so-called edge devices, that's today's topic, all the way back to the big macro trends which are driving today's global business and all of it around the topic of global supply chains. Today, we're going to continue our discussion of RFID tagging and the so-called Walmart mandate. They call it a requirement for many suppliers, it is a mandate. To discuss this, we have two guests on the program. Please welcome, Michael Feine of Zebra Technologies and our regular guest, John DiPalo, Chief Strategy Officer at ACSIS. Michael and John, welcome to the program.

Michael Feine:

Happy to be here.

John DiPalo:

Bill, thanks for having me on again. I appreciate it.

Bill Wohl:

John, let's start with you. Last time we talked about quote meeting the requirement unquote, but today is really about what happens before shipment to Walmart, the suppliers supply chain. So much to gain from thinking about RFID before latestage labeling, right?

John DiPalo:

Absolutely. You know, and when we, you know, we've been down this Walmart requirement previously. And we saw a lot of very large companies you know, not take advantage of data that they could have upstream in their supply chain by really focusing on kind of what we called late stage label application or slap and ship as people called it. And that you know is an area where you know you're adding labor you're adding tasks to your product just before it goes out the door in order to facilitate the requirement from your downstream retailers and the part that companies miss if they go that route is you have a huge opportunity to gather very granular highfidelity data upstream as product is manufactured, as product hits your distribution centers, as product is moved by leveraging individual identification of product that ultimately will be consed by your downstream partners. So why not take advantage of it early and take a lot of the manual labor that was done in tracking and moving that product and automate that to the extent possible. So that's what the beauty of RFID brings us if instrented the right way within your supply chain.

Bill Wohl:

So let's dig into that a little bit with an expert. Michael, again, welcome to the program. Most of our listeners and people in the supply chain business know a lot about Zebra, really a global leader in tagging, barcoding, equipment, labeling, and services. It's pretty interesting business, and we appreciate Zebra people being on this program. What's your role at Zebra? 

Michael Feine:

Yeah, thanks Bill. So, my name is Michael Feine. I've been at Zebra almost 16 years now. And, my current job at Zebra is I'm I lead our product management function for our RFID printer encoder devices. And those are the devices that print and encode the RFID tags that we're all talking about here, right? That are very topical with this expanded mandate from Walmart and many of the suppliers, right? So, we have a whole portfolio of these devices, but many  Walmart suppliers, retail suppliers, right? Even the retailers themselves Yes, right? Use these devices to print and encode those RFID tags to make sure that we have the right data on that item and make sure that the data is accurate, that it's scalable, and that the process of encoding those tags isn't holding up your supply chains or the retail stores. I like to think of our role in the the printer encoder world as setting a really good foundation, getting the right tag on the right item, making sure that it's compliant with the right data standards, compliant to the right specs, if it's Walmart,  for a Walmart kind of requirement or or another retailer and and then ultimately just make make sure that we set that good foundation to drive the business value on top of that and and for retailers, right? That's usually inventory accuracy or knowing what I have in store, right? And I know today kind of the topic of this pro this session is kind of about looking at upstream, right? So once it's it's not this technology is not only for the retailers to take advantage of. I think there's a lot of value to be had by the suppliers as well. 

Bill Wohl:

Well, this is, you know, a classic Walmart approach. They have such power in the market. They're driving and pulling through technology and leading everyone along, whether they're apparently ready or not. We talked with your colleague Kelly Brennan in the last podcast in this series about meeting the deadline. So, if we think about how to get value from an investment in RFID back into the supply chain, what are you hearing from customers? What's on their minds about their biggest challenges?

Michael Feine:

Yeah, I mean the first step is become compliant, right? The first step is to become compliant. Tag your products to meet the retailer's requirements. And I know we've we've talked a lot about that kind of being a being a new being a new thing. The reality is for many products that's been around for a long time, right? It's I I don't know probably 10 years certain product categories have been required to be RFID tagged by Walmart. The and other retailers, right? What we're seeing now is really an expansion going into broader categories beyond apparel, home goods, sporting sporting goods, all kinds of new categories. And I think it's because of the success in those other those other categories, but when we look upstream, right, what kind of benefits can those suppliers achieve there? There's really kind of three things that I see kind of broadly or that I see kind of, you know, the leading suppliers taking advantage of. And the first one is around claims compliance. So, right, retailers and suppliers have claims issues where there's disputes over did I ship the right product? Did I ship the right quantities? Did it go to the right store. And what RFID does is now now that it's easy to count at the item level to really validate down at the item level, that can really make that claims compliant compliance process much less, I'd say, abstract than it was before, much more data driven than it was before. And there was a really nice white paper and guidelines from GS1 really recently, a collaborative effort between retailers and brand owners about how to make the most of that and how to take advantage of that technology for claims compliance.

Bill Wohl:

Great.

Michael Feine:

So that's the first one. The second benefit that we often see at the supplier side. It kind of goes along with claims compliance, and that's just shipment validation, right? That's outbound shipment validation. Maybe it's at the item level, but you know, maybe that's validating if I'm supposed to have 100 pairs of socks in this case. You can use RFID through a tunnel.  validate are there 100 pairs of socks in that case? Did I accidentally put a shirt in that case that was supposed to have 100 pairs of socks? Is it the right size of those 100 pairs of socks?  the but it doesn't necessarily even have to be at the item level. We've even seen really good success cases with just kind of case level validation and knowing that okay, if I'm packing a truck out of my distribution center that's supposed to go to one store, do I have all the boxes on that truck that are supposed to go to that store? Am I missing one? Do I have an extra one? So, it's about kind of shipment validation. You can either go down all the way to the item level or even at the case level, but that that shipment kind of case pick pack shipment validation is a really common use case.  and the University of Auburn. There's a there's a project there called CHIP.  I forget what the acronym stands for, but they've put out some really nice, you know, academically rigorous studies on the benefits to suppliers of those use cases.  And then I would say the third benefit that we see, and this is where it this is where it's it's the brands that have I think been at the forefront of this and that's around diversion gray market, right? So, if I have a product that's you know highly kind of counter fitted or or or that's that has a highly controlled channel to market and maybe that's Nike shoes or Adidas shoes or maybe it's some luxury goods or you know I'm making this up right but you know Northace items or like right kind of like like high higherend brands right those are often counterfeited and often have different channels to market well now with with RFID now I can tell all the way down to the to the individual item so in in the past when we just had barcodes right I don't know if you could I know this is a podcast but I'm I'm holding up some bit some charts here. But on a barcode, this only identifies what that specific item is. It doesn't tell you which one it is, right? So when I go down to the with RFID, now that I have that serialized down to the item level, I can tell, okay, did I send that box of shoes to this retailer X? And if I did, why are they showing up on eBay now? Right? Just as an example. So that that gray market kind of keeping channel integrity and anti-counterfeiting kind of kind of use cases are the really the third benefit that we see supply taking advantage of.

Bill Wohl:

I know it's a somewhat direct question and maybe even a little unfair, but we've been down this road with Walmart before and some of these technology experiments didn't work out that's left some suppliers a little gunshy about the work and the investment that's required. Have we moved past that phase? Are we at a point of maturity at this point where confidence is really high that this is going to work? Because it's a pretty dramatic expansion of categories all at once.

Michael Feine:

It's a large expansion of categories, but right I'm I'm here to say those scars and that pain in the past is is gone, right? It's the the industry is the better for it, right? Those early days were painful. I I lived through it. I have some scars to prove it, but the technology is night and day from a per performance standpoint. It's night and day better from a cost standpoint, right? I think on the last session, Kelly mentioned you can often get retail RFID tags for 5 to seven cents today. So, it's they're very affordable. They meet market need from a performance standpoint, right? And I think the other thing just we've seen is the use cases are there, right? So that I I think when you look at the tag voles and the growth projections and even the last few years, the growth of this technology has gone through. I mean, we're as an industry, we're we're shipping 30 billion RFID tags this year. That's which is a tremendous number, right? 

Bill Wohl:

That is a huge number. But it raises a question that as I dug into this topic a little bit, I heard about often large suppliers, manufacturers they have lots of customers. Walmart is just one of them albeit they're relatively large. As this requirement date has approached a lot of manufacturers are segregating an amount of inventory for this project as they sort of kick off this process of RFID work. At some point, I would have to believe the typical manufacturer would say let's not just do this for Walmart. Everybody else is going to want to do it and let's just tag everything.  I think You call that the tipping point. Can you talk a little bit about what is the tipping point and what are you seeing with customers?

Michael Feine:

Yeah. The nice thing about this technology is especially in the retail space is that it's all driven by GS1 standards. So a GS1 SG2 and it stands for serialized global trade identification number. It's basically a UPC code plus a serial number that's standardized. So any retailer globally that's doing RFID, as far as I know, they're all doing SG tins, which is great from an interoperability standpoint because like you said, Bill, it makes a supplier not have to segregate that inventory. It it that says if I know Walmart has this spec and Kohl's has this one and Macy's has this one and right, it's it's like the UPC code, right? It's standardized across there.  so yeah, and then what we see from from the supplier standpoint is that it's often much lower than that tipping point kind of role is much lower than I would have expected kind of kind of from afar. And we're hearing that depending upon the category or what your tagging process is, whether that's going to be the DC level or hopefully source level up upstream. Oftentimes, it's as low as 30 to 40%. Right? If I have 30 to 40% of my  vole on a unit basis that's required to be tagged. Oftentimes, these users are or customers or brand owners I would say probably more correctly are finding that it's more efficient for them just to tag everything.

Bill Wohl:

Right.

Michael Feine:

And then and then so it kind of snowballs, right? So then once you know Walmart has put out this new requirement that's driving a lot more tag roles. Those that drives kind of more tagging at at suppliers and then all of a sudden other retailers realize that oh wait, I have the majority of stuff in my store already tagged anyway, right? So I might as well start taking advantage of that because it's already on my products.

Bill Wohl:

Even at the lower cost of tags, if you're a manufacturer that's shipping millions of items a year, a few cents here and a few cents there can add up. But I think the point you're making is just the effort required, labor cost, warehouse space, and all the rest of segregating. You really start to balance out one cost versus the other. And is there an inevit that's an inevitable downstream push? Everybody's going to be doing this now. We got to get there anyway. Let's just make the jump and go.

Michael Feine:

And in, you know, in certain categories, I think apparel retail is there that it's RFID is just becoming as ubiquitous as the barcode, right? To to a lot of the those a lot of those product categories now it's like trying to sell a you know an apparel item or if I'm a brand owner trying to manufacture an apparel item without an RFID label on it is is like trying to sell one without a UPC code right it's it's becoming table stakes of what I need to do to do business in that category.

Bill Wohl:

I love understanding what the value is on an upstream basis John let me come back to you, what advice do you give to customers about how to navigate these projects? Are they more worried about technology? Is it really about technology integrations, the cost of tagging, where should they focus first? Or maybe it's as simple as you need some good experts sitting next to you. What's your advice to them?

John DiPalo:

Yeah, I think that engaging an expert who's been there before who has done it who can also understand your internal manufacturing and distribution processes is key, right? Because at the end of the day, to get the true value upstream, you know, that that Michael talked about plus, you know, various other ones, you really have to think about how much further back in my own manufacturing or supply chain process can I tag a product, identify it, and then start to capture that information. You know, that the the real additional value beyond all of the very valuable items, you know, that Michael talked about in his examples, , is to be able to control, you know, the process of moving, the process of manufacturing, the process of packaging, you know, product as it goes out the door. You know, and I can I can give an example, t's an apparel example. You know, I was in Vietnam at one of the large clothing manufacturers and they had two sides of their warehouse and one was for RFID enabled product and one was for non-RFID-enabled product. And when you went into the non RFID enabled product section, there were literally dozens of people packing and re-checking every carton of product that went out the door. When I went over the other side, there were two people there and they were taking cases of product, putting it on an RFID enabled table, pressing button and verifying that as it went out the door, right? So, the labor savings alone was tremendous, plus the ability to generate the perfect order every time to your customer was built into the process. So, that's really what we're looking to get to is how can you improve customer service, lower your labor costs, and improve your processes as you're as you're starting to enable this technology.

Bill Wohl:

Fascinating. What you're talking about today with RFID has been the basis of supply chain all along and much much more for our program to talk about. Thanks to Michael Fine for being on the program from Zebra and to all the experts at their company for participating in this program and to John Dalo as always for your sage advice. Thank you both for being on the program.

John DiPalo:

Thanks. 

Michael Feine:

Thank you.

Bill Wohl:

Thanks too for everyone at ACSIS for making this podcast series possible. We welcome your comments and questions about the discussions on these podcasts. You can engage with us at the official ACSIS  Twitter and LinkedIn accounts. So please be a part of the discussion. I'm your host Bill Wohl and for everyone at ACSIS, thanks for joining. We look forward to our next podcast. Talk soon.

Narrator:

Thank you for listening to Supply Chain Visibility Stories brought to you by ACSIS, the 100% supply chain visibility cloud solution provider. Visit us on the web at acsisinc.com. That's acsisinc.com or join the dialogue on social media. Look for ACSIS Inc. on LinkedIn and Twitter. Join us next time for supply chain visibility stories brought to you by ACSIS.