Wal-Mart to Push for Adoption of RFID Technology

Wal-Mart will ask its top 100 suppliers to begin placing radio frequency identification (RFID) tags on all pallets and cases of product entering its distribution centers beginning in 2005, with additional suppliers being requested to follow in 2006.

Wal-Mart spokesman Tom Williams said for now the retailer is focusing on the uses of RFID in its 106 distribution centers in the US. He said the company did not yet have a list of the exact suppliers that would be included in this Top 100 list of RFID users. Asked how Wal-Mart would convince these suppliers to adapt the new technology, he responded: "Just partnering with us. We're telling our suppliers that this is the direction we want to go in. Period."

Williams would not be more specific in terms of incentives involved, but denied there would be any penalties for those who did not comply. "You don't impugn a relationship by penalizing people," he said. "The motivation will be that this will be for the benefit of the supplier, our company and the customer really."

Added Williams: "We see a great advantage with RFID in our distribution system and something that is immediately applicable. We try not to get involved in technology unless it's going to bring advantages right away. We think RFID will speed our ability to gather more data, more quickly."

Dan Bodnar, director, product marketing, data capture systems, Intermec Technologies, said a typical RFID system consists of the data-containing tags for the pallets and cases, readers which could be set around the doors of the warehouse and software which communicates the product data to the company's enterprise system.

Bodnar and other RFID experts say Wal-Mart's announcement is a significant milestone in the history of RFID adoption. "I think it's a breakthrough for RFID in the retail supply chain," Bodnar said. "What Wal-Mart has done is make it a viable technology, if you will, for the retail supply chain and consumer products goods supply chain."

Dan Mullen, interim CEO, AIM, a trade group for the automatic identification and data capture industry, compared it to Wal-Mart's initial adoption of barcodes years ago. That move hastened that technology's adoption among other retailers. "When that was adopted, once people realized that some of their peers were getting a competitive advantage by utilizing the technology they jumped in in a greater way," he said.