WalMart refines its original RFID strategy

Filed in archive Supply Chain on October 31, 2007

It seems that WalMart has backed off from its original tight plan on RFID because Carolyn Walton, VP of Information Technology for WalMart officially announced a dramatic change in the company´s strategy earlier this month. She said in the EPC Global conference on Oct. 5 that WalMart, from now on, is going to focus only on three lines of initiatives in respect to RFID:

1) Pallet tagging for a Sam's Club DC to test RFID-based putaway

2) Tagging of just products and dis-plays on promotion for the week, testing new "hot spot" reader networks in store to improve pro-motional execution

3) Tagging an entire category, start-ing with a test of air fresheners, to see if sales can be lifted through improved in-stocks.

Observers of the industry such as SC Digest believe that WalMart has come to an understanding that the more evolutionary approach of competitors like Tesco is more effective and so has adopted a similar strategy in contradiction to its original plan to enforce its suppliers to use RFID on the case level.

In my point of view, there is a business case for the current initiative compared to the earlier projects and specially if implemented well, WalMart will benefit a lot. What do you think?

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Response from: Chris Kapsambelis (11/01/07 12:43pm)

In 2003 Wal-Mart abandoned the use of item level RFID tagging saying that there was a more immediate opportunity to achieve success by concentrating on case level tagging. None of Wal-Mart’s suppliers was able to justify RFID on an ROI basis for case level tagging.

Now, Wal-Mart is moving to use RFID for pallet level tracking by promising its suppliers up to date feedback on the status of promotional items. I am sure that if Wal-Mart carries through with its promise that the suppliers will feel the money spent on RFID tags for pallets will be well justified.

Does Wal-Mart really need RFID to provide this info to its suppliers or are they using it as a carrot to keep suppliers from abandoning RFID altogether. With practically every other associate at store level carrying a mobile barcode scanner, I find it hard to believe that Wal-Mart does not have a handle on the status of promotions. They probably never had a reason to provide the feedback to the suppliers until now.

Look for an announcement that this too will be abandoned in a couple of years.