Bob Trebilcock

Sam's Club issues an RFID mandate. Haven’t we heard this song before?
February 12, 2008

It’s like deja vu all over again. John Fogerty

I don’t know about you, but the new RFID mandate from Wal-Mart caught me by surprise.

This time, the afflicted are suppliers to Sam’s Club stores. Still, details will sound familiar to anyone who’s followed the Wal-Mart RFID story over the years. The new requirements will be phased in over time, beginning with tagged pallets going to one distribution center in Texas.

My first reaction was: Haven’t we heard this song before? With apologies to John Fogerty, isn’t it like deja vu all over again? 

Not so fast, says Mike Liard, the research director for RFID and contactless technologies at ABI Research.

As a guy who has followed every twist and turn of the original Wal-Mart mandate, Liard sees something different here. “If Wal-Mart follows through, this one has teeth,” says Liard. “That’s what I think is most exciting about this.”

In this case, Sam’s Club plans to charge suppliers $2 a pallet for non-compliance, a fee that escalates to $3 per pallet next January. That’s $120 to $180 for each 53-foot trailer with standard pallets stacked two high. Chew on that!

If you’ve ever read his reports or heard Liard speak at an RFID conference, you know that one of the questions he has consistently asked of Wal-Mart is: What’s the penalty for non-compliance? In other words, what good is a mandate if no one pays a price for thumbing their nose at the requirement, or simply doing the minimum to comply?

“If you really have a mandate with a penalty for non-compliance, vendors are going to take a harder look at the technology and ask whether it can solve real world business processes that they can’t solve otherwise,” says Liard. “Without a mandate, they may not dip their toe in.”

Mandates also drive standards, and standards drive down costs. That leads to adoption.

While Liard is excited by the prospect of a mandate with teeth, he still says no one has satisfactorily explained how suppliers benefit from Wal-Mart’s RFID initiatives.

“The important piece of the puzzle has always been the data,” says Liard. “Now that we can capture it, how do we leverage it? There are vendors out there creating solutions to use RFID data, but we still haven’t figured out how to seamlessly share that data across an open-loop supply chain, like the retail supply chain. That has to be flushed out if manufacturers are ever going to move beyond a slap-and-ship mentality of doing the minimum with the technology to comply with the mandate.” 

That too will sound familiar to anyone who has listened to this song before. This time, it might not be deja vu all over again.

Let us know how your company is coping with the Sam’s Club RFID mandate by posting below.

Posted by Bob Trebilcock on February 12, 2008 | Comments (1)