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 Legal Briefs
By Gina Valeri Director of Legislative Affairs & General Council, APPMA Four letters that were essentially meaningless to manufacturers a few short months ago, are now on the top of everyone's minds. RFID, or radio frequency identification, is a technology that has been around since the 1940s. Relatively few applications existed for it until it was used for building security, E-Z Pass or Fastlane and Mobile Speedpass. However, RFID is taking on a new immediacy in the retail world thanks to Walmart's adoption of it. The world's leading retailer is extending its electronic products code (EPC) initiative to incorporate RFID. In less than a year, Walmart expects to have RFID up and running in six distribution centers and 250 stores and Sam's Clubs. Walmart plans to extend the technology to 600 stores by October 2005 and will work with 200 of its suppliers to switch to RFID by January 2006. Walmart isn't the only major retailer to be delving into this new technology. Target and Albertsons are also launching RFID programs. Clearly, manufacturers who balk or choose to ignore the trend will miss out on the opportunity to get in at the ground level and be forced to scramble to get up to speed later. So what exactly is RFID? RFID tags and readers communicate through radio waves. A tag is placed on a lot or even an individual item and a reader in the warehouse or retail establishment can read and manipulate data on the tag. This data is stored in a live database which can be used to track inventory in real time. These and many other advantages over barcode technology exist for RFID use including, scanning which can be done from almost 15 feet away, no line of sight necessary. In addition, items do not necessarily need to be scanned individually but while remaining in the pallet. Meanwhile, using EPC, a new product numbering standard developed by the Uniform Code Council, specific codes can be assigned to items and manipulated through the supply chain. According to a Walmart press release, "Companies that have incorporated RFID into their supply chains are reaping tremendous benefits, including significant cost savings, improved customer satisfaction, increased security, and increased inventory control." Specifically, RFID tags contain microchips that house the codes which can be affixed to items as big as pallets or as small as individual products. The reader receives transmitted code from the tag. Lastly, the codes are unique and can be useful for security and authentication purposes as well. What does this mean for the pet industry? Though it will take 10 years or more for this technology to be fully integrated into most major retailers, before you know it, it will be here. And unless reader manufacturers figure out a way to write their own microchips into the system, the cost will remain upwards of $1200 per reader alone. Also, House Resolution 4673 was introduced in June in the US House of Representatives and would require all products with RFID tags to be labeled as such. In addition, consumers would have to be given the option of having the device removed from the product at the time of purchase in order to address individual privacy concerns about purchasing. Nonetheless, manufacturers will be compelled to find solutions that include this technology in order to compete with companies supplying to the large chains. For more information, contact Gina Valeri, APPMA's Director of Legislative Affairs & General Counsel, at gina@appma.org. To access more information about specific issues or services, click here. |
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