Supply Scan

New Wal-Mart CIO Committed To RFID

The pioneering work at Wal-Mart to mine the supply chain benefits of radio frequency identification (RFID) will continue unabated under Rollin Ford, Wal-Mart's new executive vice president and chief information officer.

Ford, who previously served as the company's executive vice president of logistics and supply chain, strongly endorsed RFID technology at the biannual CIO summit, hosted by Wal-Mart in Bentonville, AR, April 12.

Ford said that both logistics and information systems were at the center of Wal-Mart's competitive advantage and that he intended to build on the success of his predecessor, Linda Dillman, who was named executive vice president of risk management and benefits administration at Wal-Mart.

He added that he was committed to Dillman's vision and to the pioneering work in RFID that she led at Wal-Mart.

Ford also reaffirmed the company's commitment to the EPC standard and said he was impressed with the change in performance the company had seen through the use of the EPC Gen 2 standard.

SYSCO Picks Site For Third RDC

SYSCO Corp. will purchase a 320-acre site in Hamlet, IN, to construct its third redistribution center (RDC).

The state of Indiana, through its economic development corporation, Starke County and the town of Hamlet worked together to provide an incentive package that helped attract SYSCO's Midwest Redistribution Center.

The approximately 700,000-square-foot operation will include freezer, refrigeration, dry storage and office space and a truck maintenance facility. It is expected to be completed within 18 months after construction begins.

Once the RDC is operational, it will begin supplying products to 14 SYSCO broadline facilities in Illinois, Indiana, Iowa, Kentucky, Michigan, Missouri, Ohio, Pennsylvania and Wisconsin.

The redistribution center is the third site location of as many as nine planned facilities throughout the United States as part of SYSCO's Supply Chain Initiative project. The goal of the project is to maximize efficiencies and create supply chain capabilities that increase value to suppliers, customers and SYSCO by using more efficient planning and forecasting methods and leveraging technology systems to reduce operating and delivery expenses.

The first redistribution center, which began shipping products in February 2005, is located in Front Royal, VA, and services 14 SYSCO operating companies in the Northeast. The second one is under construction in Alachua, FL, and will supply SYSCO operating companies in the Southeast when completed.

Organics Take Off In Foodservice

Chefs across the nation have embraced organics as a defining food trend, according to Organic on the Menu: Healthy Eating Trends in Foodservice, a new report from Packaged Facts, New York.

While organic menu items account for only 2 percent of total foodservice sales, the foodservice market for organics appears to be growing at a rate of 20 percent annually—keeping pace with organics at retail, which have grown at rates between 17 percent and 20 percent since 1997.

Organics have taken off in college foodservice operations, with 18- to 24-year-olds being strong advocates of vegetarian and vegan fare. Concurrently, at white tablecloth restaurants, where patrons don't flinch at the additional cost and seasonal menu fluctuations, organics have caught on with chefs paying particular attention to introducing locally produced organics.

Supply and seasonality challenges abound, however, as the popularity of organics has outpaced conventional farmers' ability to transform conventional farms into organic—a process which can take up to five years.

C&S Warehouse Workers Sue For $750 Million

One current and three former warehouse employees at a C&S Wholesale Grocers warehouse in Newburgh, NY, charged the company with routinely cheating warehouse workers out of millions of dollars a week in wages, and filed a nationwide class-action lawsuit in U.S. District Court for the Southern District of New York April 6.

C&S, in a statement issued the same day, denied the allegations, saying they are "without merit. The company is confident that it will be completely vindicated on all counts," the statement said.

The four plaintiffs, Armando Hernandez, Michael Wands, Michael Rodrigues and Joseph Alvarez, are seeking $750 million in unpaid wages and overtime on behalf of thousands of warehouse selectors, lift operators, backhaulers and slot cleaners in the 14 states where C&S operates warehouses. The case applies to all piece-rate incentive warehouse workers who have been employed by C&S since 2000.

The suit alleges that C&S, which is based in Keene, NH, violated federal and state labor laws by illegally chopping workers' wages as punishment for mistakes on the job; failing to pay overtime; failing to pay for time worked in excess of 10 hours a day; failing to pay employees their agreed hourly rates; and encouraging employees to work off-the-clock and through lunch without pay.

"To make matters worse," explains Steven Wittels of the New York and Washington law firm of Sanford Wittels & Heisler, lead counsel for the workers, "C&S punishes an entire team of workers for one person's mistake. C&S employees work in four- to eight-member selection teams. If one team member makes an error, C&S collectively punishes everyone on that team and cuts their pay."

"Collective punishment echoes the employment practices of the Gulag labor camps," Wittels says. "There's no place for these kinds of tactics in 21st Century America."

But C&S defends the team concept, saying in the statement that it "does not in any way violate any law or regulation." It further called the concept "the cornerstone of creating an empowered and engaged workforce.

"Industry analysts and academics alike have praised the C&S team concept. Beyond that, a case study by one of the nation's premier business schools has taken a favorable position on the team concept in place at C&S," the company statement said.

"C&S is punishing its low-income workers at the same time the company is projecting record revenues of $18 billion this year," says Jeremy Heisler, co-lead counsel in the case. "Meanwhile, the hard-working employee making those profits possible has little choice but to keep quiet about the company's sweatshop practices or lose his job."

Click here to view PDF version of the Top 20 Public Refrigerated Warehouses For 2006 table.

GMA Lays Framework For Future EPC/RFID Successes

The Grocery Manufacturers Association (GMA) unveiled its new proposals to speed adoption rates of the Electronic Product Code and radio frequency identification (EPC/RFID) during its Information Systems/Logistics Distribution Conference in Tucson, AZ, earlier this month.

Partnering with IBM Business Consulting Services, GMA surveyed CPG companies regarding their current and planned use of EPC/RFID technologies. The survey results, published in GMA's "EPC/RFID: Proposed Industry Adoption Framework," show that manufacturers believe in the long-term benefits of EPC/RFID, including improving promotion compliance, proof-of-delivery and out-of-stock rates, but struggle with the near-term business case.

"In the competitive CPG industry, companies are investing in resources and technologies that improve their performance and cut costs. Our survey found that many manufacturers recognize that EPC/RFID is just one of the tools that they can use to meet both of those goals. However, EPC/RFID is not a one-size-fits-all technology, and manufacturers continue to face challenges in implementing it because of ongoing technology, data, and business process challenges," says Pam Stegeman GMA vice president of supply chain and technology.

To overcome the challenges the industry faces, GMA's report outlines a framework for manufacturers to use as they discuss the best ways to prioritize EPC/RFID deployment with retailers and technology suppliers. GMA's recommended framework sets out three tiers:

  • EPC-advantaged: Products or scenarios, such as promotional events, with high benefit potential and few issues with tag read rates, which provide a logical starting point for pilot programs;
  • EPC-testable: Products or scenarios where business benefits are less apparent and/or some deployment challenges exist. These products or scenarios should be the focus of readability and tagging tests with the goal of moving them into the EPC-advantaged category;
  • EPC-challenged: Products that do not have foreseeable benefit potential in the near term and present significant deployment challenges. This tier requires focused testing and, potentially, additional research and development.

"The goal of this framework is to help companies and the industry begin productive discussions on identifying challenges with this technology and using learnings from pilot programs or additional research to overcome them — all with the goal of eventually moving EPC-testable and challenged products into the EPC-advantaged tier," Stegeman adds.