May 19, 2004, 12:00 AM

Wal-Mart clarifies its RFID mandates with suppliers: 100% not the goal

Reports of Wal-Mart’s inability to elicit full RFID compliance from suppliers have been based on a misunderstanding of its expectations, CIO Linda Dillman said at Retail Systems. Some suppliers will cover only about 65% of their products, she said.


Reports of Wal-Mart’s inability to elicit full product line compliance from suppliers with its RFID goals have been exaggerated and based on a misunderstanding of the retailer’s expectations, executive vice president and CIO Linda Dillman told reporters following a panel discussion on RFID at the Retail Systems Conference in Chicago this week. “We never expected 100%,” she said, adding that including 65% of products may be a more likely goal for some suppliers.

Dillman, Wal-Mart’s lead executive on its RFID plans, said industry analysts and published reports have exaggerated Wal-Mart’s challenges in getting suppliers to begin building out a system of placing RFID tags on cases and pallets along with RFID readers in distribution centers and other points along the supply chain. Wal-Mart expects its 100 largest suppliers shipping cases and pallets to its Dallas distribution centers under an RFID system by January 2005, followed by all of its suppliers a year later. RFID, or radio frequency identification, uses radio frequency technology to track product shipments and transmit data over the web to retailers and suppliers, allowing managers to plan for disruptions to expected deliveries and prevent store out-of-stocks.

Dillman said Wal-Mart expects suppliers to look at all of their products to see how many can be included in an RFID system. “That’s how we’ll know what’s possible,” she said.

She added that, because RFID supply chain systems are still being tested and developed, it will take time for companies to figure out which products are suitable for RFID today, and which may take longer for working out problems.

She noted that some pharmaceutical suppliers in a pilot project missed a March 31 deadline to begin shipping with RFID to a pharmaceutical distribution center. But she took the missed deadline in stride, she said, because some suppliers had trouble finding RFID tags of the correct size to fit some pharmaceutical products containers. A Wal-Mart spokesman says all 18 pharmaceutical suppliers in the pilot are expected to be shipping with RFID by June 30.


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