Retail behemoth Wal-Mart will require its Chinese suppliers to use RFID tagging to label shipments as of January 2009. Stricter requirements began to be introduced in October of this year, but by next year, the standards will effect all of Wal-Mart’s more than 1,000 Chinese suppliers.
RFID tagging is expected to cost the suppliers roughly 20 times more than the bar-coding system now in place, but the changeover offers the retailer major benefits. It is estimated that the introduction of RFID technology to Wal-Mart’s supply chain will save the company up to $8.35 billion annually as well quickly providing important product information.
In a possible nod to the recent safety concerns surrounding some Chinese imports, the new information requirements will provide not just the name and factory information of the supplier, but also provide details about any sub-contractors involved in production. These standards are already being applied to apparel suppliers, and will extend to all products in the coming months. Any suppliers who fail to meet the new information standards will be dropped from Wal-Mart’s supply chain.