Wal-Mart Touts Advances in RFID

Published: September 19, 2006

by Alex Woodie

Wal-Mart has been attempting to reshape its image from a greedy, uncaring corporation that doesn't pay a living wage to a neighborly provider of low-cost goods and jobs for millions of workers. The retail giant apparently is also trying to redefine how its suppliers and business partners--many of which are OS/400 shops--look at Wal-Mart, which last week took the unusual step of providing a progress report into its contentious radio frequency identification (RFID) initiative.

According to Wal-Mart's September 12 announcement, its 300 largest suppliers are already including RFID tags with their shipments. That number will double in January, when the next 300 biggest suppliers go live with RFID. Those manufacturers and distributors are due to start testing the technology next month. In terms of Wal-Mart's own progress in RFID, the company reports that more than 500 of its stores are currently using RFID chips, and that another 500 will be up and running by the end of January 2007.

It's been several years since Wal-Mart unveiled its mandate to start replacing barcodes with RFID chips, which are supposed to eliminate manual processes from retail and supply chain activities, and make the process of tracking goods, confirming receipt, and re-ordering products much more automated. However, many of Wal-Mart's suppliers have expressed concern that new technology will end up costing them more to implement than they will get back in supply chain efficiencies. Such grumblings are rarely aired openly for fear of angering the retail giant.

Fear not brave suppliers, says Wal-Mart: Supply chain savings are for everybody.

"Recent internal analysis of our ongoing efforts, along with the launch of EPCglobal Generation 2 tags, reinforces the value of this technology for Wal-Mart, our suppliers, and ultimately our customers," says Rollin Ford, executive vice president and CIO at Wal-Mart. "We're aggressively moving forward with the expansion of RFID-enabled facilities."

The adoption of the Gen2 tags has been key, says Wal-Mart, which expects the cost of RFID to keep falling, while performance keeps increasing, as suppliers move to the new Gen2 tags.

"We continue to work with suppliers to help them see the vast potential of RFID," Ford says. "We're already fully convinced of its value and are ready to step up the pace since we know we are only touching the tip of the iceberg when it comes to the benefits of this technology."