Through a special arrangement, presented here for discussion is an excerpt of a current article from Supply Chain Digest.
The recent news that Procter & Gamble was ending its successful test of putting EPC/RFID tags on promotional displays going to Wal-Mart with the implied issue being Wal-Mart's inability to act on the data to drive better execution of getting displays to the floor triggered us at Supply Chain Digest to take a look back on the whole RFID program at Wal-Mart.
It was an interesting review.
You can find a graphic of that timeline here (Wal-Mart RFID Timeline), but on RetailWire we just wanted to provide some perspective on the nearly six year Wal-Mart journey.
Wal-Mart first made its announcement of a plan to require tagging at the pallet and case level in June of 2003. That was several months before EPCGlobal as an organization, taking over the pioneering work of MIT's auto ID center, was actually launched.
The initial plan called for the first "top 100 suppliers" to begin tagging pallets and cases in June 2005. The scope was unclear at first, but eventually the requirement was limited just to product being sent to three distribution centers in Texas. During 2004, eight large suppliers (Gillette, HewlettPackard, Johnson & Johnson, KimberlyClark, Kraft Foods, Nestlé Purina PetCare, Procter & Gamble, and Unilever) did some testing with Wal-Mart with a limited number of SKUs.
In the fall of 2003, a Wal-Mart executive said all suppliers would be tagging by the end of 2006. That of course never happened.
Many of the top 100 suppliers more or less met something close to the requirement for tagging by the end of January 2005 for the three DCs. The requirement for the next 200 suppliers, which were scheduled to go live in January 2006, really never materialized.
In October 2005, a Wal-Mart sponsored research effort by the University of Arkansas said preliminary data showed RFID tagging reduced store stock outs by 16 percent.
In April 2006, Wal-Mart CIO Linda Dillman, the public point person for Wal-Mart's RFID program, took a new executive role in human resources. Former supply chain head Rollin Ford became CIO - and took a much lower profile on RFID.
In February 2007, The Wall Street Journal wrote a negative article on Wal-Mart's RFID efforts, citing internal delays and the low value prop for manufacturers. Wal-Mart rebutted the thesis, and found a few suppliers that agreed, but at about the same time Sara Lee's CIO said the value wasn't there (yet).
In the fall of 2007, Wal-Mart announced it was significantly changing its RFID strategy, focusing on Sam's Club, promotional displays, and a pilot in category management.
In 2008, the Sam's Club tagging program, including the first ever actual compliance penalties, was announced. In January 2009, the Sam's Club schedule was pushed out, and the penalties dramatically reduced; "fines" for lack of tagging went from $2-3.00 per pallet to 12 cents Wal-Mart's cost to apply a pallet tag.
In February 2009, P&G ended its promotional display efforts.
So, what can we take away from all this?
- Wal-Mart clearly overestimated its ability to drive change;
- Wal-Mart confused the public campaign, announcements, etc. with its real operational goals. It got caught in a sense by its own PR campaign, and overpromised and underdelivered, when as usual the opposite would have been the better path;
- Slow but steady often really does win the race.
RFID will come, benefiting from the lessons of its history.
Discussion Question: What lessons can be learned from Wal-Mart's program to bring RFID to retail? Do you agree that Wal-Mart overestimated its ability to drive change? What's the next step for RFID?