TI Goes Straight To Gen 2 RFIDTI Goes Straight To Gen 2 RFID

Texas Instruments Inc.'s Educational & Productivity Solutions (E&PS) business group said Wednesday it has become the first Wal-Mart Stores Inc. supplier to ship the retailer cases and pallets affixed with Gen 2 radio frequency identification (RFID) tags, bypassing previous generations of the technology. Test shipments began on Dec. 29.

TI will ship a dozen SKUs to five Wal-Mart distribution centers in Alabama, Arkansas, Oklahoma, Louisiana, and Texas. "Twelve in our calculator line meet Wal-Mart's request for Gen 2 tags," said Keith Hodnett, vice president, Texas Instruments and supply chain manager for the Educational & Productivity Solutions group. "We've also had inquiries about Gen 2 from several European and U.S. customers. Target is one."

The products to Wal-Mart's distribution centers (DC) will ship from TI's 500,000-sq.-ft. North American DC facility in Alliance, Texas. But there are plans to expand the project into the Netherlands within the next 12 to 16 months to serve European customers.

TI budgeted less than $500,000 for initial investments in hardware, software, consulting, integration and tags, and came in below budget, Hodnett said. "I believe it will take at least two to three years to get the full return on investment," he said. "On going investments are small."

The system ties into Oracle Corp.'s enterprise resource planning platform and data warehouse where inventory and point of sale information is tracked.

It's not clear the quantity of data the RFID system will generate from the dozen SKUs, but Hodnett said TI will begin collecting the information toward the end of this month. The company estimates it will use 250,000 RFID tags in 2006.

Some of those tags will affix to cardboard product displays that sit on the retail floor, too. "Back-to-school is our Christmas time for educational items," Hodnett said.

As for the products, tags will remain on the cases and pallets for now. Eventually, TI will embed RFID tags in each product to deter theft. But the plan is not only to track products through the supply chain and into the retail stores, but also to monitor environmental disposal. Julie England, vice president, Texas Instruments and general manager for TI-RFid Systems, said TI RFid Systems in July 2005 began production of its EPC Gen 2 inlays and straps and has plans to release and use the silicon products toward the end of the first quarter.