Starting in 2009, Walmart will require all of its Chinese suppliers to use RFID rather than bar codes. RFID is expected to cost about 20 times more for each of Walmart’s 1,000-plus suppliers in China. Could the demand next be shifted to U.S. suppliers like greenhouse growers?
It very well could be, considering an estimation by RFID provider Invengo Information Technology that Walmart should save $8.35 billion. According to Chen Chang’an, general manager of Invengo, Walmart can now check production information, brand name, production location and price very quickly. Those advantages should, in turn, reduce Walmart’s chain and distribution costs.
The adoption of RFID in China is just one of several steps Walmart has taken to impose stricter standards on Chinese suppliers. Just two months ago, Mike Duke, vice president of Walmart who will soon take over as company CEO, said Walmart would be specifically asking Chinese apparel suppliers to report the name and factor location of their products, as well as take responsibility for their subcontractor’s work and products.
Apparel suppliers who failed to meet Walmart’s new standards would be dropped, Duke said. Eventually, all Chinese suppliers are expected to abide by the same standards.