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Wal Mart holds firm on RFID Deadline

June 7, 2004
Wal-Mart holds firm on RFID Deadline CHICAGO A year ago, Wal-Mart Stores Inc. (www.walmart.com) sent shockwaves through the entire logistics field when

Wal-Mart holds firm on
RFID Deadline

CHICAGO — A year ago, Wal-Mart Stores Inc. (www.walmart.com) sent shockwaves through the entire logistics field when its chief information officer Linda Dillman announced that the retail giant expected its suppliers to adopt radio frequency identification (RFID) by January 2005. That announcement came at the 2003 Retail Systems, and in the past 12 months, the amount of hype generated by companies with products even remotely suggestive of RFID has helped revive the given-up-for-dead technology marketplace.

At this year's 2004 Retail Systems show, attendees didn't come looking for more hype — they wanted answers, and they wanted them from Wal-Mart. Seizing on the moment to clarify the aims of its RFID initiative, the retail giant sent Michael Duke, president and CEO of the Wal-Mart Stores division, to answer the three most-asked questions:

  • Will Wal-Mart be reading RFID tags at point-of-sale terminals (i.e., registers) in January 2005?
  • Will Wal-Mart be placing readers in every one of its distribution centers by January 2005?
  • Is Wal-Mart slowing down the deployment timetable for RFID?

The answer to each of the questions, says Duke, is “no.”

“Wal-Mart's top 100 suppliers — as well as 37 volunteers — are working aggressively toward the January '05 time period,” Duke says. “The whole focus of January '05 is on tagging at the case and pallet level, focusing on solutions that will deliver for both suppliers and Wal-Mart.”

It's important to pay attention to exactly what Wal-Mart does — and doesn't — say, Duke stresses. Wal-Mart did not say all cases and pallets would use RFID technology by January 2005. The retailer neither intended nor assumed it could achieve 100% flow of cases and pallets by January 2005, Duke points out.

Furthermore, he continues, Wal-Mart did not say it would be live in all stores, clubs and distribution centers by January 2005. Its intention was to pick one geographic area — a distribution center, a group of stores — in which to begin.

“Of course, we did not say we would not work with suppliers that have issues,” says Duke. “We have cooperated very closely with the supply industry and have had very positive response from our suppliers.”

Wal-Mart went live with the project in the Dallas area on April 30, 2004, where it is running RFID in one pharmaceutical distribution center (DC), one regional DC and seven stores. During the remainder of 2004, it will expand use of RFID to one grocery DC, one Sam's Club DC and some Sam's Club stores.

In the longer term, through 2005, Wal-Mart will expand its rollout of RFID to its entire domestic suppliers with the aim of having them all compliant by 2006. During 2005 and 2006, Wal-Mart will also begin implementation of RFID through its international network.

In the year since Wal-Mart launched its RFID initiative, a number of other organizations have announced similar projects, including the U.S. Department of Defense, Target Corp., Home Depot Inc., German-based Metro and U.K.-based Tesco.

“I can't imagine business today in retail and for suppliers without the technology we already have,” Duke says. “But we need to keep raising the bar and improving even more. Bar code technology transformed the way we all do business. RFID's [potential] is even greater. It will not just transform — it will revolutionize.” LT

June, 2004

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