Texas Tagged As Start Point For RFID RolloutTexas Tagged As Start Point For RFID Rollout

Wal-Mart Stores Inc. executives last week met with about 125 suppliers to provide further details on its radio-frequency identification mandate, which calls for its top suppliers to use RFID tags on pallets and cases by January 2005. At meetings in Bentonville, Ark., the retailer laid out a plan for a phased implementation starting in Texas.

Three Wal-Mart distribution centers and 150 stores in the Lone Star State will be the initial focus of the rollout. The nation's largest retailer then wants to rapidly bring on line about 100 additional distribution centers and 3,000 stores by the end of 2005.

Starting small sounds good to Mattel Inc., which was among the companies attending the meeting. The challenge for the toy maker will be sorting through which of its products go to the Texas distribution centers. "But at least we aren't trying to run before we walk," says CIO Joe Eckroth.

Some things are still up in the air. Wal-Mart says it may demand compliance for some as-yet-unidentified products on a tighter schedule than the regional rollout requirements. Wal-Mart also told suppliers that it will initially accept shipments using any RFID-enabled tags that are Electronic Product Code-compliant and in the UHF frequency; such tags contain numbers identifying manufacturer, product, and serial number. In the long term, it will support the pending EPC 1.2 standard from EPCglobal, the organization that has taken over the work of developing RFID standards from the Auto-ID Center. Wal-Mart instructed its suppliers not to delay implementations over standards concerns and instead upgrade later, if necessary.

The problem, says AMR Research analyst Kara Romanow, is that today's RFID readers aren't software-upgradeable, meaning suppliers may incur additional costs when they move to support EPC 1.2. "There are still a lot of details missing and conflicting messages, and yet they're being asked to spend between $13 million and $23 million to implement [an RFID system]," she says.

A Wal-Mart spokesman says the rollout is a work in progress and that the company is open to feedback. "The key is flexibility, but we don't want to sit around and talk," he says. "We're ready for the next step."

Mattel and the rest of Wal-Mart's top 100 suppliers have been asked to present plans by February for how they will fulfill the retailer's mandate. Eckroth says Mattel is working to comply but isn't rushing to beat competitors. "This has to be a smart implementation, not a heroic implementation," he says. "We want to be a fast follower, not at the bleeding edge, because there will be lots of trials and tribulations."

Sun Microsystems last week became the latest vendor to try to help suppliers meet the retailer's demands. The company is opening a test center in Dallas next month where current and prospective customers can test their RFID systems. The center will include hardware, software, and services to simulate a range of distribution-system environments (for more, see "Test Center In Heart Of RFID Country").