Sam's Club, the warehouse club owned and operated by Wal-Mart Stores, has unveiled a plan to use RFID tagging on every level—pallet, case and item—by the fall of 2010.

In a letter to suppliers dated Jan. 7, 2008, Sam's Club outlines a two-year plan to phase in the tagging. The first step of the plan started on Jan. 30, when suppliers were asked to begin tagging pallets headed for the club's Desoto, Texas, distribution center.

As of Oct. 31 of this year, pallet-level tagging will also be required at the company's DCs in Kansas City, Mo.; Dayton, Texas; Searcy, Ark.; and Villa Rica, Ga. Pallet-level tagging will be required at Sam's Club DCs nationwide in 2009.

The club plans to expand into case-level RFID tagging in October 2008 and item-level tagging in October 2009.

The letter makes it clear that RFID tagging is not optional for suppliers, at least on the pallet level. Sam's Club plans to charge any suppliers who do not tag pallets at required DCs escalating fees per pallet. The fees are currently $2 per pallet and will rise to $2.50 in October 2008 and to $3 in January 2009.

Susan Kohler, a spokeswoman for Sam's Club, insists the fees mentioned in the letter are not a punitive “fine,” as they have been classified by some reports. The fees, she says, are part of what she calls a “service” the company is offering to help suppliers who are not yet able to provide their own tagging.