SCDigest editorial staff

The News: A continuing story in the Wall Street Journal on the quest of one small manufacturer to get its unique pens into Wal-Mart stores highlights the challenges of getting product from Wal-Mart DCs to the right stores and selling positions.

The Impact: Is RFID what’s needed to solve this problem? And who is to take responsibility – the retailer or the manufacturer?

The Story: Since fall of 2005, the Wall Street Journal has been following the efforts of PenAgain to get its writing implements into Wal-Mart stores.

The small manufacturer of a pen with a unique wishbone style design has gone through a gauntlet of hurdles to the point where Wal-Mart agreed to a sales test of the product in 500 stores.

PenAgain’s two owners were mostly worried about customer response. They found, however, that they needed to pay more attention to the challenges after shipping their products to Wal-Mart DCs of getting it to the right stores and right locations in the stores.

“For instance, [the owners] quickly learned that merely shipping the product doesn’t mean it will get onto the shelves right away, or in the assigned spot,” the Journal wrote this week. “Sometimes pens sat in Wal-Mart stock rooms; other times, they got placed in locations the PenAgain teamed believed were poor, such as near the pet food or potato chips.”

It quotes one of the founders as saying, “These are big companies with heavy back end systems that can track everything. But if human beings are involved, problems are going to happen.”

As they discovered the issues, PenAgain hired a merchandising firm to call Wal-Mart stores and check on goods receipt and product placement, as well as visiting dozens of stores personally.

The story quotes Excell La Fayette, Wal-Mart’s director of supplier development, as saying, “To find out if it’s in the backroom and hidden and not on the shelves shows that they are as engaged as the buyer.”

This small tale in a sense mirrors some of the test results of Gillette (now part of Procter & Gamble), which last year found through pilots of RFID/EPC (Electronic Product Code) there were substantial problems with promotional displays making it to the store floor consistent with plans for the promotion. There was a substantial increase in sales from getting the timing right. RFID was positioned as the tool to enable that through improved visibility.

RFID (in conjunction with the right visibility and event management software tools) can provide visibility to where product is in Wal-Mart or any retailer’s supply chain. Is it the best way? That is less clear. As we’ve noted before, it seems likely some lower tech and modified existing tools might go along way to solving at least some of the problems (such as Target stores’ simple store room locator system), but perhaps they just can’t go far enough.

The other question will be how definition of the role of monitoring this data – and procedures for reacting and escalating when something is found amiss – will be handled between retailer and supplier. This in turn will depend in part on the level of autonomy for shelving and location decisions at the store level versus headquarters.

If nothing else, it shows in the consumer good to retail supply chain, the “last 50 feet/yards” of movement from the store receiving dock to selling position still has a long, long way to go.

Does the challenge of getting goods – even at Wal-Mart – from back room to store shelf surprise you? Is RFID the answer, or should other methods be tried first? And who should have the responsibility for monitoring RFID data – the retailer or the manufacturer? Let us know your thoughts.