Wal-Mart forges ahead with RFID

Wal-Mart recently notified, in writing, suppliers of its Sam's Club warehouse stores that it will charge a US$2 service fee for pallets of goods that are not tagged with RFID after January 2008.

The technology has been helping Wal-Mart work more closely with a number of its suppliers, including Kimberly-Clark and Daisy Brand, to make sure promotions are executed on time. P&G one of the first 100 Wal-Mart suppliers to implement RFID, is also a giant company, and their return on investment in RFID can be realized in volume transactions - something small suppliers just cannot accomplish.

Wal-Mart Stores Inc. says its customers are finding the items they want in stock on shelves more often in stores that are using RFID, according to initial findings from a 2005 University of Arkansas study. The study also showed that RFID-enabled stores were 63% more effective in replenishing out-of-stock products than control stores not equipped with the technology.

Although there are much fewer Sam's Club suppliers compared with more than 20,000 suppliers for Wal-Mart stores, the company has invested millions in RFID in its Wal-Mart banner stores, it seems inevitable that this policy will eventually spread. Wal-Mart is now clearly reaffirming its commitment to RFID. How the Wal-Mart schedule will ultimately impact the various “tipping points” for manufacturers and suppliers is still not clear. Perhaps the retail giant may choose only to do promotions for suppliers using RFID.