Sooner or later, most consumer goods companies will encounter a downstream customer — think Wal-Mart, Sam's Club, or Target — that asks for product to be delivered with RFID tags and tracking. The prospect of ramping up an RFID infrastructure from scratch can be daunting, but progressive companies are already looking down that road.

For Sam's Club's current suppliers and prospective partners, the road is already underfoot.

Sam's Club's RFID project began in earnest in January, making suppliers that send product through the retailer's DeSoto, TX, distribution center responsible for adding RFID tags to the pallets they send. Manufacturers that fail to tag will incur a $2 per pallet charge, according to Sam's Club, increasing to $3 per tag as of January 2009.

Currently limited to the DeSoto distribution center and confined to pallet-level tagging, the program will expand markedly by 2010. Four additional Sam's Club distribution centers will require RFID tagging come fall 2008, with the remaining 17 coming on board next January.

For now, suppliers need only apply RFID tags to the pallets they ship, but Sam's Club has more auspicious — and costlier — plans. On a progressive rollout schedule, the company will ask its suppliers to tag the cases they put on pallets, and then the individual products as well — the dreaded item-level tagging that few industries have undertaken to date. By Oct. 31, 2010, supplier shipments to any Sam's Club distribution center will have to contain item-level RFID tags in addition to case and pallet labels.

Executives at Sam's Club are quick to emphasize that their RFID initiative is separate from the plan introduced by the company's corporate parent, Wal-Mart. That insistence may stem from the fact that Wal-Mart's RFID program for suppliers has been long on ambition but short on enforcement.

"Most of the companies I talk to are now tagging three or four SKUs" for Wal-Mart, says Steve Banker, director of supply chain management research at ARC Advisory Group. "As long as suppliers are willing to show Wal-Mart that they're trying new things, that they're trying to get ROI but they haven't gotten it yet, they've been able to keep this down to a pretty small program."

Don't expect the same largesse from Sam's Club, says one product manager at a company that makes RFID compliance kits. "They're starting to run reports now, so they're going to start fining," says the manager, who until recently worked at Wal-Mart and asked not to be identified by name.

"I'm not sure they're going to back off so much this time," agrees Pete Poorman, principal analyst for RFID at ABI Research. Poorman portrays the program as the "normal course of business" for Sam's Club and its suppliers. "It's just what you have to do," he says.

Even so, Sam's Club is jittery about appearing too strong-handed. "Industry has been referring to this as a mandate and chargebacks," says company spokeswoman Susan Koehler. Instead, she says, the tagging fees are "an interim service until [suppliers] can develop their own strategies."