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Will Wal-Mart Order RFID Tagging?

Rumors are rife that Wal-Mart plans to require suppliers to tag pallets and cases by January 2005. RFID Journal reveals the truth about Wal-Mart's plans and its 12-year quest for affordable RFID.
By Bob Violino
Tags: Retail
Mar 16, 2003—March 17, 2003 - A wave of fear has been sweeping through the ranks of Wal-Mart's more than 10,000 suppliers. The concern is over rumors that Wal-Mart plans to require them to put radio frequency identification tags on pallets and cases shipped to its stores and distribution centers by January 2005. Since most suppliers "don't even know how to spell RFID," as one put it, the growing sense of panic is understandable.

The rumors stem from two speeches recently given by senior Wal-Mart executives. John Colbern, Wal-Mart's manager of supply chain strategy, told a gathering of members of the International Mass Retail Association in Florida last month that Wal-Mart expected to be ready to handle tagged pallets and cases by 2005. And Wal-Mart CIO Linda Dillman made similar comments at a gathering of suppliers.
RFID can improve an already super-efficient supply chain

Dillman's comments were incorporated in minutes of the meeting, and that document has been circulating among some suppliers, who have interpreted it as a mandate. They've been inundating some sponsors of the Auto-ID Center with frantic calls, asking for help in getting up to speed on RFID.

Tom Williams, a spokesperson for Wal-Mart, last week told RFID Journal what the company's official position is. "We hope to be working with some suppliers at the case level by 2005," he said, stressing the word "some".

We spoke to several of Wal-Mart's largest suppliers and they confirmed that Wal-Mart has made it clear to them that they should be RFID-ready by 2005. They say that Wal-Mart plans to begin tracking pallets and cases from its largest suppliers first and will likely require the rest of its supply base to tag pallets and cases after the system has proven to work reliably. "I think you'll begin hearing statements from Wal-Mart about what it expects from its suppliers towards the end of this year," says a senior supply chain executive at a major consumer packaged goods (CPG) company.

So does that mean small and mid-size suppliers are off the hook? Perhaps for now. But Wal-Mart is clearly serious about implementing RFID in general and the Auto-ID Center's Electronic Product Code (EPC) technology in particular. Its decision to implement the technology could be delayed or disrupted by problems with the Auto-ID Center's system or inadequate supply of low-cost tags and readers. But overall, the evidence suggest Wal-Mart plans to implement RFID as soon as possible.

Wal-Mart has always been secretive about its technology for competitive reasons, and RFID is no exception. The company has asked vendors to bid on RFID warehouse projects but refused to tell the vendors where the warehouses are. But over the past six months, RFID Journal has interviewed more than 50 suppliers, technology providers and members of the Auto-ID Center to learn more about Wal-Mart's intentions. All of the sources spoke on background -- that is, they agreed we could use the information, but could not identify them as the source (for fear of jeopardizing their relationship with Wal-Mart). The result of this investigation shows that Wal-Mart is clearly intent on reaping the benefits of RFID technology.
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