Wal-Mart rolls out RFID pilots

May 4, 2004
Wal-Mart rolls out RFID pilots Wal-Mart Stores Inc. (http://www.walmart.com) has begun a limited field trial of its radio frequency identification (RFID)

Wal-Mart rolls out
RFID pilots

Wal-Mart Stores Inc. (http://www.walmart.com) has begun a limited field trial of its radio frequency identification (RFID) initiative, and remains on track for the January 2005 milestone, according to Gus Whitcomb, director of corporate communications. The retail giant's three Dallas Metroplex distribution centers (DCs) have had RFID readers mounted and hard wired on its shipping and receiving docks in preparation for Wal-Mart's top 100 suppliers to begin shipping tagged product by January 2005.

Of the 137 suppliers who so far have stepped up to the challenge of tagging pallets and cases in compliance with Wal-Mart's RFID initiative, Wal-Mart has met with 110. Only two of its top 100 suppliers have said they have a problem meeting the January 2005 deadline. It isn't the technology that stands in their way, says Whitcomb, but internal factors at those suppliers' organizations. He says Wal-Mart is “extremely optimistic” about meeting the January deadline for the top 100 suppliers to be RFID-compliant.

“None of us — including Wal-Mart and our suppliers — are going to know what's really going to happen until we get to January 2005,” Whitcomb admits, sounding reminiscent of comments on Y2K preparations prior to January 2000. But, he continues, none of the top 100 suppliers involved in the initial RFID program (or the 37 voluntary members) have said the technology is a problem.

What is a problem, according to a recent survey conducted by analyst firm Forrester (http://www.forrester.com), is the cost of implementation. Forrester estimates the total pricetag to launch and maintain an RFID program for one year could cost a typical Wal-Mart supplier more than $9 million.

Wal-Mart is operating a lab at corporate headquarters in Bentonville, Ark., where it has individuals assigned to work with each supplier. Its own field test, as it describes a June ramp up in its three Dallas-Ft. Worth DCs, is designed to test shipments from a small group of suppliers under actual conditions. Another goal is to look for additional benefits to Wal-Mart's own operations from the shift to RFID. That's a message Wal-Mart is carrying to its suppliers as well.

Linda Dillman, Wal-Mart's chief information officer, frequently challenges suppliers to look internally to see if RFID can help them generate an even bigger return on investment on what they're doing to meet the Wal-Mart RFID initiative, Whitcomb notes. As other retailers — notably Target Corp., Home Depot Inc. and Albertson's — unveil their own RFID plans, many retail suppliers are facing multiple compliance issues.

As a member of EPC Global (http://www.epcglobal.com), Wal-Mart has encouraged others to join the organization it feels will help standardize approaches to RFID.

RFID initiatives have received early and vocal opposition from privacy advocates. One leading privacy group says it's not against the technology; it's against some of the uses of the technology. That shift in thinking, says Whitcomb, is encouraging.

To allay consumer privacy fears, Wal-Mart has been very public about its goal of using the EPC (electronic product code). “As these [activist] groups see organizations like Wal-Mart go forward and do this in the most open way by educating consumers, maybe that will bring down the rhetoric a little.”

The mass retailer has made a commitment to get consumers comfortable with the RFID tags. To that end, Whitcomb stresses that Wal-Mart is emphasizing that RFID tagging will help ensure the products they want are on the shelf whenever consumers enter a store. LT

May, 2004

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