Subject: [NEXTEL-1] UPS ramps up supply chain RFID to meet Wal-Mart, Defense plans

From: [email-masked]
Date: Sat, 20 Dec 2003 15:12:05 -0500

UPS ramps up supply chain RFID to meet Wal-Mart, Defense plans

By Bob Brewin
DECEMBER 19, 2003

United Parcel Service Inc. is working with supply chain customers to help them
and it meet plans by Wal-Mart Stores Inc. and the Defense Department to require
passive RFID tags on all pallets and cases by January 2005, according to Bob
Nonneman, a UPS industrial engineer who works on RFID systems. 

At the same time, New York-based American Express Co. has seen an increase in
merchant and customer use of its RFID-based ExpressPay pilot program at more
than 350 fast-food outlets and gas stations in Phoenix, said David Bonalle, vice
president and general manager of advanced payments. Bonalle pointed to
"significant" growth in the number of customers using a key-fob-based RFID tag
to pay for purchases of less than $100 and in the number of merchants signing up
for the test system since it was launched in July. 

As for UPS, Nonneman said the shipping company operates distribution centers for
firms that will need to meet the Wal-Mart and Pentagon RFID requirements and is
working to develop a business case to incorporate RFID tags into its global
distribution system. He didn't say which companies UPS is working with. 

Nonneman said UPS is participating in RFID pilot tests with customers to
determine the best approach to take at the distribution centers it operates.
While UPS will continue to use bar code scanning systems in its low-margin
small-package business for years to come, Nonneman said the company is also
working with Wal-Mart to determine how to handle small packages delivered to
that company's stores after January 2005. 

Mike Liard, an analyst at Venture Development Corp. in Natick, Mass., said UPS
has little choice but to incorporate RFID into its supply chain business, since
that is a requirement for anyone who does business with Wal-Mart, the Pentagon
and their top 100 suppliers. But "there are a lot of question marks" about RFID
standards and technology that could push the initiative to use 900-MHz, passive
RFID tags beyond January 2005, he said. 

Nonneman said he sees real utility in using RFID to track high-value shipments
and hazardous material and combining the tags with temperature sensors to track
perishable goods. The Defense Department plans to test RFID tags equipped with
temperature sensors to track field ration MREs next fall (see story). 

Bonalle said American Express' ExpressPay system, which is based on 1356-MHz
tags, has cut transaction times from an average of 16.6 seconds with a credit
card to 8.6 seconds with an RFID ExpressPay key fob.
 
 http://www.computerworld.com/printthis/2003/0,4814,88424,00.html

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