When a retailer has decided to deploy RFID into their supply chain, they will need to notify its vendors and manufacturing partners. Most major retailers source merchandise from hundreds of brands and suppliers. In order to ensure consistency through their supply chain, the retailer will announce how and when they expect their suppliers to add RFID tags to their merchandise.
There are numerous moving parts and fine details that go into a RFID mandate. Some mandates may require vendors to tag goods at the item level. This is typically reserved for high value items such as designer bags and jewelry. For consumer goods and apparel, it is generally expected that retail vendors and suppliers tag goods via shipped pallets and bulk packages. Once these pallets or packages are tagged, suppliers can send them to their retail partner for inbound reception. Retailers will likely have a system set up where shipments are reviewed and tags automatically scanned as they enter their facility. If merchandise is not tagged to the specifications of the retailer’s mandate, the supplier may get penalized or even have their entire order nullified. This is known as a chargeback, and it can cost suppliers and distributors millions of dollars. This is why it is absolutely vital for a retail vendor to make sure their RFID tagging operations are in compliance with its retailers.