Wal-Mart pulls back from RFID push in its distribution centers

Wal-Mart, under scrutiny for not meeting its goal of installing RFID in 12 of its distribution centers, is now shifting its focus for RFID to the store level, away from its distribution centers.

Two years ago, the world's largest retailer set a goal for 12 of its warehouses to be RFID-enabled by the end of 2006. But it only reached this objective in five of those centers.

Now Walmart is claiming that its focus for RFID isn't at the warehouse level--it's the store level. In a Computerworld article, Simon Langford, head of Walmart's RFID program comments on the retailer's current efforts:

"We’re focused on the store level," said Langford. "If we focused internally [at the distribution centers], it would provide no value to our suppliers. When we set out on this journey, we really focused on the collaborative benefits; we wanted what was going to drive sales for our suppliers and to get product on the shelf, where it needs to be for our customers to buy."

Langford credited the use of RFID technology with cutting the incidence of out-of-stock products by 30% while improving the efficiency of moving products from backrooms to store shelves by 60%.

"RFID in our stores is going to drive the initial value," he said. "We see distribution centers as coming onstream a bit later."

It would be nice if, somewhere in his comments, Langford would admit that RFID has been more costly, less reliable, and more difficult to implement than Wal-mart originally planned. The 600 Wal-Mart suppliers who were forced to adopt RFID technology under the gun of Wal-Mart's mandate, know this all too well.

Wal-Mart's shift in strategy is symptomatic of a larger slow-down in the adoption rate for RFID in supply chain applications, although the technology appears to be gaining ground in selected uses, such as asset management. For more on this subject, see our recent analysis at Computer Economics on the RFID implementation slowdown.