What have we learned about RFID from Wal-Mart?

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 7/19/2005

Last January, Wal-Mart launched a new era in supply chain management when 100 or so suppliers began shipping cartons and pallets tagged with radio frequency identification tags (RFID) to a few distribution centers in Texas.

Although the initial shipments were limited in scope, this is potentially a big deal. While it’s too early to predict the outcome of the Wal-Mart RFID mandate, ten years from now it may prove to be as important a step as the first bar code scan in an Ohio grocery store in the 1970’s.

With another mandate looming for 200 more suppliers in January 2006, what have we learned about RFID in the supply chain from Wal-Mart so far? There are at least four lessons.

The first is this: within certain limitations, the technology works.

“That doesn’t come as a surprise to those of us who have worked with RFID,” says Greg Gilbert, director of RFID solutions and strategy for Manhattan Associates (877-596-9208). “Our biggest fear was that between the hype, hyperbole and misconceptions, people were expecting RFID to do things it can’t do.”

For that reason, Gilbert contends the second lesson from Wal-Mart is that it pays to define goals and expectations going into an initiative like this.

The third is that this is difficult stuff, no matter how easy some try to make it sound. “RFID is not an out-of-the-box technology and it won’t be until there are more deployments and more investment in research and development,” says Kevin Ashton, vice president, marketing, ThingMagic (866-833-4069). “The companies that address the complexity will see success.”

The fourth lesson, which may be most important of all, is that to Wal-Mart, this is no one-time experiment. “It’s clear that Wal-Mart is more committed than ever,” says Patrick Ervin, vice president of Business Development, retail supply chain vertical, Alien Technology (408-782-3900). “They’re going to another 200 vendors. They’re adding store sites and they’re increasing the number of SKUs that they’re tagging. They have a large investment and they’re not backing off.”