Wal-Mart and its seriousness towards RFID

I don’t know how many of you may agree with me but the real impetus RFID got was when Wal-Mart started pushing it hard. This was the period when the technology came into limelight since it had the backing of the big daddy of the retail world. As it was one of the early adopters it did face some resistance initially and one of the prime reasons was the investment involved behind it. Initially it was tough but still the company continued with it since it believed that it could definitely gain from the technology in the
long term.

It was in 2003 when the company issued a mandate to its suppliers to tag their cases and pallets by 2005 which would enable both sides to ensure better tracking of products in the supply chain and a better inventory levels too. Though some of them have implemented it but still there are around fifteen hundred suppliers who have still not complied with this mandate.

Now Wal-Mart seems to be acting tough with its suppliers and in order to ensure that compliance is met it will be charging a $2 fee for every pallet which is not tagged with RFID from Jan 30. Wal-Mart is now looking forward to convert its seven hundred store Sam’s Club division as an example of RFID supply-chain technology in action by 2010. Talks have already been going on for around months with Sam Club suppliers for RFID compliance and a letter dated Jan 7 including a 21 month timeline was sent for meeting the timeline. Just have a look at the timeline:

– Jan 30, 2008: pallet-level tagging for DeSoto, Tex., distribution center.
– Oct. 31, 2008: pallet-level tagging for an additional four distribution centers, case- and mixed-pallet level tagging for Texas distribution center.
– Jan. 30, 2009: pallet-level tagging for remaining 17 distribution centers, case- and mixed-pallet level tagging for an additional four distribution centers.
– Oct. 31, 2009: case- and mixed-pallet level tagging for the remaining 17 distribution centers; selling-unit -level tagging for Texas distribution center.
– Jan. 30, 2010: selling-unit-tagging for an additional four distribution centers.
– Oct. 31, 2010: selling-unit-tagging for remaining 17 distribution centers

The suppliers already seem to be in a state of shock due to a fee being imposed and in case they don’t meet up the deadline a number of them could face fee as high as $3.

It looks as if the company wants to set Sam Club as an exemplar of RFID supply chain technology making a big impact. The good thing from suppliers’ point of view is that since there are fewer suppliers for Sam Club and customers here opt for larger cases of products as compared to those which are sold in retail stores hence bringing down the cost of RFID tags to 20 cent a piece which makes life a lot easier for the suppliers.

Wal-Mart was one of the early adopters of the technology and from this it seems that it won’t relent until and unless it utilizes the technology to its full potential. Best of luck Wal-Mart in your endeavors!!