Wal-Mart's RFID Push Loses Momentum

In an post back in February, I argued that RFID is important to small manufacturers, and that's absolutely true. But developments at Wal-Mart have stalled RFID's momentum - at least a little. It's not that RFID is suddenly going to become obsolete, like the HD-DVD, which has now been effectively knocked out of the consumer market by Blu-Ray. Far from it. There are still huge players behind RFID, like the U.S. Department of Defense, and RFID's broad adoption is certain.

But it's not going to happen overnight.

As Don Gilmore of Supply Chain Digest reports, the Wal-Mart RFID  push was strongly backed by the former CIO Linda Dillman, who was frequently quoted in the press. Dillman is now heading up Wal-Mart's risk management efforts, and the new CIO, in Gilmore's words, "while certainly supportive, has been noticeably less vocal on the topic."

The mandate for RFID tagging at the pallet level for Walmart's Sam's Club stores is still in effect (at least to my knowledge), but the company's deployment of RFID has obviously slowed.

No one familiar with information technology should be surprised. Wal-Mart took what's known in the trade as a "big-bang" approach to RFID, as opposed to slow, incremental adoption. Such approaches are usually failures. Their neatness and all-encompassing logic have a strong appeal to the corporate mind, even though this neatness again and again fails to jibe with the realities of actual supply chains with real products, trucks, etc.

What does the Wal-Mart slowdown mean? Sellers to Sam's Club or the DoD excluded, I think that small business owners who feared they were going to have to make a big investment in RFID can relax for a couple of years. It's still coming, just not as soon as many people thought.

The RFID/Wal-Mart scenario is a classic example of how small businesses that depend on a single customer for a large percentage of their business open themselves up to being jerked around. And by the way, I know this from personal experience as a business owner. Diversifying your customer base is not easy. But ya gotta do it.