RFID: Proceed with caution

Despite this warning, Wal-Mart is sticking to its commitment, says Langford. He claims that since making the announcement in June 2003, another 36 suppliers have actually volunteered to become RFID compliant. "We are not backing off; we are accelerating. By the end of 2006, we will be live in all stores in the US with all suppliers."

Despite this ambitious target, Langford claims that Wal-Mart is taking a realistic approach to the technology and admits that some suppliers have already encountered problems adopting it.

"At no time did we expect all 100 suppliers to tag 100 percent of their products from day one," he says. "We have had two suppliers that have major internal challenges, so we are working with them on the other options," he says.

According to Langford, there isn't a fixed deadline for every category and suppliers will be judged by product type. "We know that water in glass bottles is very difficult compared to dry goods and there will be different deadlines applied."

Better, simpler, cheaper
Wal-Mart is not the only retailer to come up against the problem of how to get small supplies, with small IT budgets, to commit to RFID. Tesco, an up-market UK equivalent of Wal-Mart, has seized on the potential of RFID in the same way as its US counterpart and is expected to lay down a similar mandate to its supplier base in the coming months.

"The radio barcode (Tesco's term for RFID) may be smaller than the barcode but the way it will transform the industry will be just as great," says Tesco IT director Colin Cobain. As far as he is concerned, the technology has passed his three-point test: better, simpler and cheaper; and it's all systems go.

Tesco plans to have readers and tags in all the key points of its supply chain and has carried out four significant trials to date, including an item-level tagging project with Gillette.

But during a recent conference organised by UK RFID standards organisation e.centre, it became clear that Tesco could face some of the same supplier issues as Wal-Mart. During the question and answer session following a talk from Cobain, one supplier questioned Tesco's aggressive adoption plan.

Supplier will let you down
"Many people are asleep on this issue and many suppliers of Tesco will be caught sleeping. I think many of your suppliers will let you down," said the supplier.

Tesco's Cobain responded by pointing out that Tesco wasn't trying to catch anyone out with its RFID strategy and that suppliers would have six months' notice to comply with any adoption mandate. "We think six months is enough providing you start looking now which is why I am attending events like this. We intend to run an event later this year to give our suppliers more info."

But while moving to any new technology can be daunting, adopting RFID doesn't have to be a massively expensive process, says Geoff Barraclough, from BT Auto-ID Services, the telco's RFID business group. The organisation, created in February this year, offers a hosted RFID service to avoid the massive integration costs of plumbing RF chips and readers into existing enterprise applications.

Although Barraclough advocates companies carrying out a substantial project around RFID rather than toying with small trials, he claims the initial outlay isn't that much. "RFID isn't as expensive to implement as you think. When we mention that the only way to go is to get your feet wet, then that's a 50K decision, it's not a 500k decision. At the end of the day most large companies don't need an away day to make that kind of commitment," he says.