Bob Trebilcock

When Wal-Mart calls to talk about RFID, it’s time to listen
February 26, 2008

More than four years after Wal-Mart  announced plans to add RFID tags to pallets and cartons, the world’s largest retailer remains as committed as ever to the technology, according to John Simley, a Wal-Mart spokesman. 

I realize that sentence may generate a collective: “Duh!” among readers. After all, didn’t Wal-Mart just start requesting suppliers to Sam’s Club to begin tagging shipments to one of its DCs in Texas or pay a $2 per pallet penalty for non-compliance?

I reiterate it for two reasons.

1) It wasn’t that long ago that The Wall Street Journal ran a lengthy story claiming that Wal-Mart had all but given up on RFID. That one came completely out of the blue to those of us who have followed RFID in the supply chain closely.

2) It comes directly from Wal-Mart, and it’s not that often over the years that I’ve had the chance to actually talk about the retailer’s plans with Wal-Mart. When one of their representatives calls to talk about RFID, it’s time to listen.

So, what did I learn from my conversation with Simley last week? I took away a couple of key points:

RFID is one component of Wal-Mart’s broader sustainability efforts: Last May, I listened to Wal-Mart’s CIO link RFID to the retailer’s Sustainability 360 initiative at RFID Journal Live in Orlando. That’s Wal-Mart’s drive to remove waste and non-renewable energy from the supply chain. Simley also put RFID in that broader context. “There are some compelling sustainability benefits to the technology,” he told me. “Think about the energy expended to produce a product, especially a perishable product like fresh food that has to be cultivated, processed, packaged and sent through the supply chain. If it arrives too late or damaged in a way that it can’t be sold, that energy is wasted.”

The biggest benefit to date has been in the stores: While Simley wasn’t certain how many of the chain’s 100 distribution centers have implemented RFID, he said the technology has been “implemented to some degree in about 1,300 stores.” Knowing that stock has arrived at the store and has moved from the back room to the selling floor, especially around promotional items, appears to have generated the most value to date. “The ability to get featured products in the hot spots in the stores is very important,” he said. “We can make sure items go exactly where they’re supposed to go for a promotion.”

Most DC processes are still being driven by bar code scans, but ….: Simley agreed that bar code scanning is still driving most DC processes, but he expected that to change over time for a simple reason. “Items that are tagged move more reliably through the supply chain,” he said.

Adoption will take time: When the Wal-Mart mandate was first announced, many predicted the end of the bar code. In fairness, that may have been more the result of media hype than anything Wal-Mart said. Still the perception remained. But based on my conversation with Simley, Wal-Mart understands this is a process that will take time, as did the adoption of bar codes. In fact, when I asked him about the long-term adoption, he referred to bar codes in the supply chain. Has this been harder or taken longer than Wal-Mart expected? “I think you need to look at the past example of bar codes,” Simley said. “By that standard, it’s moving very quickly.”

Posted by Bob Trebilcock on February 26, 2008 | Comments (0)