Suppliers, Competitors Balk at Wal-Marts RFID Lead

 
 
By Jacqueline Emigh  |  Posted 2004-09-05
 
 
 
Many companies have queued up quickly behind retail giants Wal-Marts RFID mandate. But others now look much less willing to toe the line. Certainly the impact of RFID will be large, industry watchers predict, however, the technology will hardly hit all at once, despite the best plans of Wal-Mart.

Since Wal-Mart Stores Inc. issued its original RFID edict, companies such as Target Brands Inc., Albertsons Inc. and Best Buy Co. Inc. have all followed suit with their own initiatives. Insider reports suggest that Kroger Co. and CVS Corp. hold similar plans.

On the other hand, some of Wal-Marts other competitors, including Circuit City Stores Inc., are adamant about setting their own timetables.

"Let Wal-Mart lead and bully the suppliers. For us, RFID is a future," offered Chief Information Officer Mike Jones of the Richmond, Va.-based Circuit City, in an interview with eWeek.com.

"You can be an early adopter, or you can be an adapter. We are an adapter," Jones said.

Significant barriers to RFID include pricing and accuracy, he said. "One of these [barriers] needs to go down. The other needs to go up. Successful read rates [for RFID tags] are still only in the high 80s to low 90s."

As Circuit City sees it, RFID is only part of what Jones calls "the whole wireless opportunity." During an upcoming pilot of supply chain technology with IBM, Circuit City will compare a Linux operating system vs. Microsoft Corp.s Windows XP as a platform for retail sales associates.

In addition, the evaluation could include wireless POS (point-of-sale) terminals, Jones said. But when asked if RFID will be part of Circuit Citys technology test, the answer was negative.

Meanwhile, product suppliers have little choice but to adhere to Wal-Marts RFID edict—or pay convincing lip service to it, at least, analysts said.

At a suppliers meeting early this summer, Wal-Mart unveiled bold plans to expand upon its initial RFID rollout, adding 100 more retail stores by June, 2005, and 350 more stores by October of the next year.

But despite Wal-Marts staunch outward appearance, some analysts are picking up signs that the mandate might now be wavering a bit in the face of implementation costs, technical limitations and overall industry foot-dragging.

The RFID industry is buzzing with controversy over one companys plan to pursue RFID patent fees. Click here to read more.

"Weve been perceiving that Wal-Mart might have started to soften its stance," said Andrew Bartels, vice president at Forrester Research Inc., of Cambridge, Mass.

David Schrier, an analyst at Oyster Bay, N.Y.-based ABI Research, drew a similar observation during a recent industry Webcast last week. In early trials with suppliers, Wal-Mart has started to recognize some of the challenges posed by RFID, he said. Schrier considered this to be particularly true at the item level, as opposed to palette- and carton-level RFID, which is easier to implement.

Still, even if Wal-Mart keeps sticking to its guns, there are practical restrictions on how fast suppliers can respond, according to Bruce Hudson, analyst at Meta Group Inc, of Stamford, Conn.

"Forced adoption doesnt always work. Companies will move to RFID at the rate at which business processes can change," Hudson said in an interview with eWEEK.com.

Along the same lines, analysts said that even initially reluctant suppliers will leap to RFID, just as soon as profitability is here.

IBM, Microsoft and Oracle have started piloting RFID software with their customers. Click here to read more.

For IT providers, analysts predict rampant opportunities around RFID, across categories ranging from cards and reader hardware to middleware, supply chain software applications, systems integration, and global cargo tracking infrastructure.

However, analysts see RFID as unfolding in a series of waves, with RFID hardware striking first. Moreover, RFID is envisioned as catching on much earlier in certain vertical industry segments—such as automotive and pharmaceutical—than others.

Check out eWEEK.coms Supply Chain Management & Logistics Center for the latest news and analysis of enterprise supply chains.

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