We're fast approaching the 15 year anniversary of a rather – it seemed at time – momentous event.
In early September 2003 in Chicago, the first "EPC Symposium” was held – EPC standing for electronic product code – the relatively new, simpler form of RFID developed at the Auto ID Center at MIT.
There was electricity in the air. Walmart had in June announced the first wave of its case-level tagging requirements. Most attendees believed RFID was really going to change the supply chain world.
Gilmore Says.... |
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| By 2006, we will roll it out with all suppliers," Walmart spokesman Tom Williams says. [SCDigest note – haha.] |
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The big news at the event was the formation of a new organization called EPCglobal, a unit of the Uniform Code Council (now GS1). It was to be chartered with commercializing RFID technology, with the MIT Auto ID center giving up its standards work to focus on research as just the "Auto ID Labs.” (It didn't last long, as an aside).
So it has been almost a generation since the start of the famous and infamous Walmart RFID mandate and the beginning of the intense RFID hype cycle. Many newer supply chain professionals probably know little or nothing about this history, especially as RFID use in the US supply chain remains tepid at best.
So to fill that historical gap, below is a timeline I first compiled in 2009 of the Walmart RFID mandate. Though it stretches on from 2003 through early 2009, for all intents and purposes the Walmart program was dead in the water by 2006 – after hundreds of millions had been spent by the retail giant and its suppliers.
It is quite a tale and worth remembering.
June 2003: Wal-Mart's then CIO Linda Dillman announces the start of the retailer's EPC compliance program at a meeting of the VICS organization, saying Walmart would ask its top 100 suppliers to begin tagging pallets and cases starting in January 2005.
August 2003: Walmart says it will require all of its suppliers to put RFID tags carrying Electronic Product Codes on pallets and cases by the end of 2006. "We have asked our 100 top suppliers to have product on pallets employing RFID chips and in cases with RFID chips. By 2006, we will roll it out with all suppliers," Walmart spokesman Tom Williams says. [SCDigest note – haha.]
November 2003: Walmart brings the "top 100 suppliers” into Bentonville to learn more details of its RFID program, qualifying its previous announcement by saying the initial requirement will be for the first 100 to tag pallets and cases being shipped to three Texas DCs in January 2005.
April 2004: Walmart begins its RFID trial by receiving cases and pallets of product with EPC tags at a single distribution center in Sanger, TX as part of a test being conducted with eight suppliers. The tagged goods are to track goods to the back of seven Walmart stores in Texas served by the DC. The first eight suppliers, which each tagged just a small number of SKUs, were Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestlé Purina PetCare, Procter & Gamble, and Unilever.
June 2004: Walmart meets with its top 100 and "next 200" suppliers in Bentonville to lay out its RFID tagging requirements and timeline. Suppliers are told that by June 2005, RFID systems will be operating in up to six of its distribution centers and 250 stores. Walmart further says that it expects to be using EPC technology in up to 13 distribution centers and 600 Walmart and Sam's Club stores by the end of 2005.
Deadline for the "next 200 suppliers” to start tagging cases and pallets is set for January 2006, though what shipments to what DCs is not clear.
October 2004: Walmart says it plans to start shipping RFID-tagged cases and pallets to a Sam's Club store in Plano, Texas very soon, starting the division's RFID program.
January 2005: Many, but not all, of the "top 100” start shipping some tagged products to three Walmart DCs in Texas.
March 2005: CIO Linda Dillman says Walmart is on track to support RFID capability in 600 stores and 12 distribution centers by the end of the year.
October 2005: Walmart says that by the end of this month, it will have installed radio frequency identification systems in more than 500 stores and five distribution centers.
October 2005: Walmart says it expects the next wave of 300 suppliers (making 600 total) to start shipping tagged cases and pallets by January 2007.
October 2005: A Walmart sponsored report from the University of Arkansas' Information Technology Research Institute, a part of the Sam Walton College of Business, releases a report based on its preliminary study of the impact of RFID on reducing retail out-of-stocks (OOS). The researchers conclude that RFID reduced OOS at store level by 16% over non-RFID based stores.
January 2006: Walmart says it is piloting a program with a few suppliers and EPCGlobal to generate advance ship notices for supplier shipments based on RFID reads.
January 2006: Supposed deadline for the "next 200 suppliers” to begin sending some tagged product to some DCs, though relatively few do in any meaningful way.
March 2006: Walmart says it is working on two "proof of concept” pilots for using sensors along with RFID tags to track produce and environmental temperatures as the products move along the supply chain.
April 2006: Walmart says it will phase out the use of Gen 1 tags by in favor of Gen 2 by mid-year, saying it will no longer accept the use of Gen 1 tags on the cases and pallets it receives from its suppliers after June 30.
April 2006: Linda Dillman leaves as CIO to take an executive role in Human Resources. Rollin Ford, previously head of supply chain and logistics, becomes CIO. Ford subsequently takes a much lower profile approach to RFID.
September, 2006: Walmart announces that by January 31, 2007, another 500 of Wal-Mart's 3,900 stores will have RFID readers installed. If it happened, that would bring the total of RFID-enabled Walmart stores up to 1,000.
February 2007: The Wall Street Journal runs an article entitled "Walmart's Radio-Tracked Inventory Hits Static." The article says, "Walmart Stores Inc.'s next leap forward in ultra-efficient distribution is showing signs of fizzling," given a lack of internal progress in rolling out the technology and a lack of value for suppliers.
Rollin Ford writes rebuttal letter to the WSJ, and Walmart finds the CIO of Campbell's Soup and the chairman of Smucker's to support RFID value prop. Meanwhile, CIO of Sara Lee says at the same time that RFID isn't making sense at the current level of cost and performance.
October 2007: Walmart announces a major change in its RFID strategy, largely abandoning the initial pallet/case focus on shipments going to Walmart stores in favor of three focus areas: (1) shipments going to Sam's Club; (2) promotional displays and products going to Walmart stores; (3) tests to see RFID's impact in improving category management in select areas. "We're coming at RFID from a different angle," Walmart's VP of Information Technology, Carolyn Walton, says at the EPC Global conference.
January 2008: Walmart announces its first real compliances "penalties” for failure to tag products, specifically for shipments to its Sam's Club chain. Walmart says in letter to suppliers that a failure to tag pallets sent to its distribution center in DeSoto, Texas, or directly to one of its stores served by that DC after January 31 will be charged a service fee, starting at $2 per untagged pallet on Feb. 1, and capping at $3 per pallet on Jan. 1, 2009.
January 2009: Sam's Club dramatically lowers penalties for failure to tag pallets from $2-3 dollars per pallet to just 12 cents – what Walmart estimates it will cost Sam's to do the tagging itself. It also pushes back the rollout schedule announced the previous January, saying the tagging requirement will apply only to pallets sent to the DeSoto DC or stores served by that DC in 2009. DC. Pallet-level tagging is expected to be rolled out chain-wide in 2010, while the deadline for tagging sellable units is "under review."
February 2009: Procter & Gamble says that after "validating” the benefits of RFID in merchandising and promotional displays, it is ending its pilot program with Walmart for those displays, implying Walmart is not acting on the information to improve store execution.
And those last two entries basically signaled the ignominious end.
So there's a look back. A look ahead for RFID in a few weeks.
What were your thoughts on RFID back in 2004? Any reaction now to the Walmart RFID timeline? Let us know your thoughts at the Feedback section below.
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