Dont Mess With Wal-Marts RFID Pilot

 
 
By Larry Dignan  |  Posted 2004-07-06 Email Print this article Print
 
 
 
 
 
 
 

The retailing giant's radio-wave tracking pilot may be less than perfect, but the company and its suppliers are forging ahead anyway. Pony up here to see how the testing is going in Texas. (Baseline)

At a Wal-Mart Supercenter in Denton, Texas, a hallway leading to the retail floor has two pairs of gray and black, 6-foot-high silhouettes with yellow eye-like lights within 10 feet of each other. The mission: Detect and record goods that contain tags emitting radio waves.

Down the road at a Hickory Creek store, printers from Hewlett-Packard sit on shelves with radio frequency identification (RFID) tags attached. A brief note informs customers that Wal-Mart is testing electronic tagging. The tags sit on the bottom side panel of the printer box. Each tag carries the serial number, model and an undisclosed "option" code as a backup for the bar code.

Welcome to the epicenter of Wal-Marts early efforts to track the movement of 21 tagged products wirelessly. Ultimately, all of the 100,000 types of products found in the average Supercenter will be tracked. Here in Texas, Wal-Mart is receiving 21 tagged products from eight suppliers at Distribution Center 6086 in Sanger and distributing to stores in the Dallas-Fort Worth metroplex. Wal-Mart says it will begin bringing more suppliers into the pilot each week, leading up to its January 2005 deadline to have its top 100 suppliers shipping RFID-tagged goods.

Wal-Mart says the RFID trials are a success with the occasional "pilot learnings." But analysts wonder what constitutes a success for Wal-Marts RFID efforts. Is success 100 percent of Wal-Marts top suppliers sending 100 percent of their goods tracked by radio waves? If so, the RFID mandate is falling short. Is success moving an industry forward toward RFID gradually? If so, Wal-Mart is successful. Does success mean Wal-Marts suppliers get a return on investment from RFID? No one knows.

The latter question is a stickler, says AMR Research analyst Kara Romanow, who adds few suppliers will generate a return beyond keeping Wal-Mart happy. "A lot of this is hype," says Romanow. "[Suppliers] are barely closer to 100 percent compliance with Wal-Marts deadline than [they] were six months ago." A trip to Wal-Marts Texas beachhead shows it is forging ahead. RFID readers and tagged cases and pallets are arriving from eight suppliers—Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestle Purina PetCare, Procter & Gamble and Unilever. These tagged cases are tracked by radio waves as they arrive from Sanger and move to the store floor, but the technology is still immature. Wal-Mart wouldnt discuss its read rate--the ability of a reader to recognize the radio waves from a tag--but tracking tests at Sun Microsystems nearby Carrollton facility show the chances of a reader recognizing a tag may be little better than a coin flip. A lot of trial and error is needed to get 100 percent read rates in the lab, and those results are no guarantee theyll hold in the real world. Thats what Wal-Mart is wrestling with now. Wal-Mart has kept a tight lid on the specific details of its pilot, but has acknowledged "a few minor bumps in the road." Simon Langford, Wal-Marts manager for RFID, says all top 100 suppliers will hit Wal-Marts deadline of January 2005, and 37 more volunteers will join them. The catch? Not every product will be tagged. "Its not viable to tag everything," says Langford.
The reasons why suppliers wont have 100 percent of goods tagged vary, according to Langford. Less-than-perfect read rates, lack of returns for suppliers and expense of the tags are all valid reasons to fail to tag all products. Langford says Wal-Mart is willing to work with a supplier that tags 80 percent of its products and "provide feedback" to get its partner to 100 percent. Its too early to discuss fines, he says.
Check out eWEEK.coms Mobile & Wireless Center at http://wireless.eweek.com for the latest news, reviews and analysis.

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Business Editor
ldignan@ziffdavisenterprise.com
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
 
 
 
 
 
 
 

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