Learning to Love RFID

By the time you read this the lucky top 100 Wal-Mart suppliers will have already met with the good folks in Bentonville and received their RFID marching orders. Ooops, I mean their RFID guidelines. After making a lot of calls and meeting with key executives around the industry, it's clear many CG firms already know what's coming and are conflicted about how best to proceed.

This is partly due to the fact that the 2005 deadline for the lucky 100, announced so prominently by Wal-Mart in June, was never more than a pipedream. The actual timeline, to be announced at the November meeting according to my sources, allows for a much longer roll out. Some CG executives give Wal-Mart credit for being bold and getting the RFID ball rolling. Others are less generous.

Either way, it's now clear that Wal-Mart never intended to invest in the infrastructure to accommodate enterprisewide RFID-tagged shipments. At the moment, my sources report that Wal-Mart is planning to equip only a handful of its more than 50 distribution centers with complete RFID infrastructure, a far cry from what was expected in June.

There are many reasons for Wal-Mart's newfound go-slow approach. Standards still need to be agreed upon. Technical bugs worked out. Equipment prices slashed. And someone still needs to develop a business case justifying the multi-million-dollar capital investment.

But there's another, equally compelling reason. Jim Crawford, a highly regarded analyst at the RetailForward consultancy group, worked out some figures and discovered when Wal-Mart is equipped with a fully RFID-compliant supply chain it will need to process in excess of 7 terabytes of information daily. As the terabytes pile up week after week, Wal-Mart's data-management bandwidth will approach the equivalent of thousands of the world's fastest and most powerful supercomputers.

Not all industry figures agree with Crawford's analysis, noting that technology and processes are evolving rapidly, and today's IT executives are far better at managing big-bang IT deployments than their predecessors.

They also note that focusing on RFID problems is beside the point. According to these executives, Wal-Mart is a customer -- a massive customer -- and smart CG firms meet the needs of their customers. So, the best advice is get over lingering RFID phobia and move on. It's Wal-Mart's world. We just live in it.