We received a number of great responses to our piece on Wal-Mart’s RFID Timeline, which looked back on the almost six years since the retail giant’s first announcements regarding RFID.
We include some of those below, including our Feedback of the week from the RFID program manager for a very large consumer goods company, who says, “It is somewhat frustrating to read the list here and remember each thrill and subsequent disappointment I felt with each pushback.”
He understandably wished to remain anonymous.
You'll find that and several other great letters below.
Feedback of the Week: On Wal-Mart’s RFID Timeline:
It is extremely interesting for me, as it somewhat chronicles my career in RFID.
The adoption curve that we have endured is obviously extremely long. It is somewhat frustrating to read the list here and remember each thrill and subsequent disappointment I felt with each pushback.
I would say we are almost numb to the point of cynicism now. Do not get me wrong, my company is still committed to the benefits of RFID (both internally and externally), but, I think you can see parallels in our adoption to the rest of industry.
We have all followed the Gartner technology hype cycle so closely it is scary!
Now, I was not working during the bar code implementations in the 80s, but I would have to guess there are some similarities to that technology platform's adoption as well. Albeit the supporting infrastructures platforms are different, but some parallels nonetheless.
Manager, Consumer Goods Company
Name withheld by Request
More on RFID Timeline:
Another point is the business case for RFID.
With all the effort that went into this program, did all stakeholders have their contributions and benefits clearly articulated?
RFID is only one component in the fight against out-of-stocks. However, there are more pieces to that puzzle, like store execution, CRP, etc. So, when one piece of the RFID 'system' has challenges, including readability, costs, etc, we don't look to additional benefits of the tool, including enhanced supply chain visibility, product traceability, etc.
We need to keep pushing to overcome this age-old dilemma of OOS. It is crazy that we have not solved this yet.
RFID can work, it doesn't have to be the exclusive silver bullet, but it can, and does work. (The largest food supplier in The Nordics, Matiq, is using it as we speak for traceability.) We need to pick a problem to solve (OOS), and address it with all elements of the task, not relying on only one piece and throwing our hands up when that one piece underdelivers to one or more stakeholders, when, in fact, the whole process may have been set up to fail.
Global Consumer Products Industry Marketing Executive
This timeline provides us the opportunity to see the value derived by RFID. Because the value is less than the expense, business has not adopted it. It is not, however, a fault of RFID technology to deliver value.
This value is dependent not on the new technology that can deliver it, but the old technology that cannot accommodate it. A full $8.40 per CG case is spent on direct labor, error resolution, trade promotion, IT Systems support and inventory carrying costs. There is plenty of value to be derived with RFID; or Imaging, Speech, and GPS, for that matter.
A previous post by a CG Company Manager referenced the technology adoption patterns of the 1980s. The foundation of the current systems were cast back in those days and serve to stop forward progress today.
Only when innovation can be more readily accommodated without the associated risk, expense and delay of modifying, integrating or replacing the existing systems, then new technologies can rapidly saturate your company and supply chain for only profitable uses. Until then, get your timelines ready for other advances that fail to deliver their available value.
I often feel like I am living the modern version of the 'Emperors New Clothes' fairy tale when it comes to discussing RFID.
First, the costs have not yet made it affordable to tag individual units. Second, the read distances for the tags are not as far as expected. Third, no one has really worked through all the software changes that are needed to avoid embarrassing consumer mistakes, like retailers charging customers for the products they bought last week but are carrying in their coats.
The one hope was that RFID could be used to monitor business processes and execution at store level. This made sense because it does not require as much precision as inventory management and does not involve the consumer.
Now it is appearing that even when RFID points out failure in execution it will take more than merely raising awareness to correct problems. Maybe the stores knew all along they were not executing the display program. Awareness was not the issue, it was 'What do I do with all the merchandise from last week?'
I just have to shake my head at the whole thing.
In the interest of full disclosure, I was at the big meeting that Wal-Mart called shortly after the very first announcement where the top 100 vendors came to learn what was really expected of them, and some technology providers (including my old company) were invited to demonstrate that real business process could be enabled with RFID. And I was pushing my company to be more involved in it, in part, because of the flurry of activity driven by Wal-Mart.
But pallets? I never understood why they started there. Most companies don't do enough with the data they already get related to pallet and case, even without the RFID tag. The whole point of RFID is stockouts at the shelf, and pallets are not the place to start with that.
Funny thing though, as soon as they started exploring shelf issues with RFID, a lot of in-store execution issues became highly visible. I have seen Kraft do a detailed explanation of root causes of stockouts at the shelf, and a LOT of them fall on store employees.
Tom Gruen at the University of Colorado has done extensive research into shelf-level stockouts, and I don't remember the exact number, but it was an extraordinary percentage that could be attributed to store employees in one way or another.
If you go into this thinking that it is lazy, shifty suppliers that are shorting you at the shelf or playing supply chain tricks, and you are magnanimously going to help them sell more through RFID-driven supply chain efficiencies, you are delusional.
And if you are not committed to making your own serious internal process changes, then really, why bother?
Retail Systems Research
RFID--no--solution. Just--tool. Pointless--without--in-store--compliance--discipline.
Phew. Glad I got that out of my system.
This review of the RFID saga provides a valuable perspective on how even big players sometimes confuse a promising technology with a workable solution.
Point solutions are pointless in the absence of core underlying implementation practices. Most chain grocery and mass stores today cannot comply effectively with planogram, promotion, new-item introduction or other merchandising plans because they lack systematic practices, enabling communications and measurement tools to back them up.
There is no single solution to this, but there is a solution path, and RFID may well be one of the stops along the way.
When companies like Wal-Mart begin to share daily data on merchandising implementation performance, issues and compliance rates using portals like Retail Link, the true journey will begin.