A Double

By Evan Schuman  |  Posted 2006-07-11 Print this article Print

-Edged Sword."> That last sentence, to put it bluntly, cuts both ways. By forcing suppliers to deliver, Dillman used the incredible influence and power of Wal-Mart to force an industry to a place it might not have been ready for. Suppliers had to comply and, as a practical matter, other large retailers ignore what Wal-Mart does at their own peril.
That doesnt necessarily mean that they have to copy the moves, but they must at least study them and do so seriously. With RFID, anything approaching serious study requires a very serious financial investment.
Dillmans efforts forced the industry to make the move, but much of the industry today is still struggling to make RFID work consistently, accurately and effortlessly. Those words are simply not in the lexicon of the typical RFID tag, whether its active, passive or it-appears-to-be-in-a-coma. Was Dillmans new assignment—as executive vice president of risk management and benefits administration at Wal-Mart—a promotion as a reward for doing a great job? Or was she shifted aside for, as some critics have charged, overreaching with RFID and putting Wal-Mart in an uncomfortable technological position where backing away from the not-always-perfectly-operating RFID strategy would have been difficult? One of the first things Ford did when he took over the reins back in mid-April was to try and comfort suppliers with a "no change in direction" statement. Click here to read more about Ford taking his post at Wal-Mart. "Like Linda, I view RFID as a strategy that offers tremendous competitive advantage," Ford said. "There will be no slowing down." But Wal-Mart observers such as Fontanella—and hes not alone, but getting industry people to speak candidly about Wal-Mart on the record is none too easy—say that a "slowing down" may be quite close to what Ford is doing. Maybe not so much "slowing down" as lightening up. When it comes to RFID, "Wal-Mart is today taking a much softer approach," Fontanella said. "Its being done more with a velvet glove than with a sledgehammer." Although some might see that as little more than good judgment and prudent diplomacy, that was not Wal-Marts way under Dillman. "As recently as a year and a half ago, they were dictating. If you dont do this, in a year and a half, you wont be a supplier to Wal-Mart," Fontanella said. Asked if Ford is indeed backing off of RFID, Fontanella said that he didnt think he was, but that the two execs have such different management personalities that he feels like this is a sharp change, in attitude if nothing else. "Linda was tough. This guy [Ford] is coming at it in a different way," he said. "This CIO is taking a different approach. If you look at the European experience with mandates, it was done very similar, on an almost voluntary basis. Guys like Tesco and Metro talked about a value proposition." This is all going on with the background that Wal-Mart is still quietly struggling with its RFID efforts. "Wal-Mart is having significant problems. There are problems inside of Wal-Mart," such as distribution centers that "cant handle" Gen2 communications, Fontanella said. "Theyre looking to replace those readers. They cant comply with the latest standards." On the other hand, its quite easy to be Mr. Nice Guy when youre maintaining a program that tons of your suppliers have already been forced to join. Read more here about Wal-Marts efforts to move into the computer retail business. A huge amount of investment has already been made so sheer momentum—and the human nature resistance to giving up and conceding that tons of investment was a waste—so its not difficult to gently persuade people to keep on going. In other words, if the roles had been reversed and Ford had been the one who had to force an industry to comply and then Dillman had the luxury of coming in a couple of years later to transition it to the next phase, the personality approaches might have also been reversed. But in case Fontanella is right and we are starting to see a kinder, gentler Wal-Mart, thats pretty scary. The world may or may not have been ready for RFID a few years ago, but theres no way that world of retail is ready for a kind, gentle and polite Wal-Mart. Thats like McDonalds health food or Costco convenience. Certain concepts simply cant mix without violating the laws of nature. Evan Schuman is retail editor for Ziff Davis Internets Enterprise Edit group. He has tracked high-tech issues since 1987, has been opinionated long before that and doesnt plan to stop anytime soon. He can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.

Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.

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