The investment company RW Baird puts out an informative publication each month summarizing RFID developments. In the most recent issue (see RW Baird’s RFID Monthly), it comments on the recent, mostly negative Wall Street Journal article on what the paper characterized as a slow down in Wal-Mart’s RFID roll-out amidst vendor dissatisfaction with their return on investment from the program. (See SCDigest’s RFID Program at Wal-Mart Going Slow, Wall Street Journal Says; Xterprise CEO Rebuts Negative WSJ Article, Wall Street Journal Gets at Least Part of RFID Story Wrong).

The WSJ piece was “factually correct for the most part. It suggests that RFID has not lived up to hyped expectations in the retail supply chain, and faces significant challenges, including higher costs relative to bar codes, limited deployment capability and weak return on investment,” according to the Baird report.  “The story also suggests that Wal-Mart and its suppliers are not achieving any meaningful reduction in supply chain costs and that suppliers are “grumbling.””

But, it says the article didn’t consider the full picture, saying there is greater traction than the report indicates, even though to some extent Baird itself said there was little action in the retail compliance area of RFID the previous month. (See RW Baird Says Consumer-to-Retail RFID Activity Lags Active Tag Market.)

Baird suggests:

• Though the WSJ story focused on reducing supply chain costs, Wal-Mart’s primary focus is on reducing out-of-stocks. It points to the University of Arkansas study showing a 16% reduction in out-of-stocks from RFID at Wal-Mart stores (see Wal-Mart Out-of-Stock Study – Proof or Not?)
• Suppliers are not likely to see any ROI until they start to increase the percent of products being tagged. It says that percent where ROI may be achieved is at 10-20% of total volume – though it I unclear where this number comes from.
• Wal-Mart may have slowed the RFID rollout under new CIO Rollin Ford when he took the job effective April of last year, as he reviewed the RFID project. Since his review, he has publicly supported moving forward with RFID, Baird says.
• Other positive trends, such as industry groups and lower tags prices…