The following is one of two different perspectives regarding today’s Wall Street Journal article indicating that Wal-Mart expects to track certain clothing through the use of RFID enabled smart tags. This commentary is in the context of the supply chain perspective.
Well here we are yet again, another business headline involving Wal-Mart and a new RFID initiative that promises great value. The real question is have we as a supply chain and broader business community learned from all the previous RFID endeavors? According to the Journal article, removable RFID smart tags are to be initially placed on underwear and Wrangler jeans at the point of manufacturing, and if successful, expanded to other products. Wal-Mart is indicating that it will subsidize the costs of the tag sensors, but suppliers will have to invest in the tracking infrastructure. To alleviate consumer privacy concerns, the retailer is further demanding that suppliers affix the tags to removable labels or packaging, instead of embedding them in the apparel. But alas, that does not calm the fears of consumer privacy advocates. The article rightfully points out that RFID tracking is not new to retailing, and is successfully done in other regions, most notably certain retailers in Europe.
Having observed supply chain related RFID initiatives since the very beginning, I offer the following perspective. First, I have always been of the belief that auto-ID tracking technology can pay tremendous dividends to supply chain business and customer fulfillment processes. The opportunity is the ability to literally connect the physical supply chain by electronic means, providing all kinds of benefits in inventory management, tracking, replenishment and fulfillment programs.
There were many obstacles in previous initiatives. These included the high cost of the tags themselves, the expensive cost of the scanners, the ability of software applications to process real-time data, the lack of consistent identity standards, and fears from consumer privacy advocates. Some years later, much is changed. Individual tag prices have come down, certain software applications are RFID enabled, and the standards have improved. Technology vendors have also ratcheted-down the hype that RFID cures all ills. The consumer issues still remain.
At this juncture, all of us should be a lot smarter and more pragmatic on the proper rollout, deployment and adoption of smart tag enabled inventory tracking across the various tiers of the supply chain. We have learned that suppliers cannot be the sole subsidizer for the benefit of a single customer. We have hopefully learned that consistent standards benefit all. Auto-tracking is first and foremost a supply chain efficiency initiative, not a sales and marketing initiative to gain insights on consumer buying habits. Finally, we should have learned that consumer concerns about privacy are genuine and real, and had better be addressed in any rollout initiative, especially involving Wal-Mart.
I applaud initiatives that improve inventory item tracking and more responsive customer fulfillment tracking processes. Technology such as RFID smart tags can be effective enablers to such processes, if deployed correctly. Unfortunately, the name Wal-Mart associated with such initiatives still evokes multiple concerns.