Various news outlets are reporting that in early November, Wal-Mart met with approximately 100 representatives of its top suppliers to outline its requirements for use of radio frequency identification technology (RFID) in the coming years.
RFID tags use radio frequencies to transmit information. The tags can carry more information about a product than currently used bar codes and can be scanned more quickly. According to RFID Journal, RFID technology offers companies a way to capture accurate, real-time information about the products they make, move and sell.
In June, Wal-Mart announced it would ask its top suppliers to use the RFID technology on shipping pallets and cases by January 2005, and all suppliers would be expected to comply by January 2006.
The New York Times cites a report by consulting firm A.T. Kearney which concludes that, after an initial investment, the technology ultimately will save Wal-Mart and other retailers who use it billions of dollars through more precise tracking of inventory and decreased labor costs in inventory management. Also citing Kearney research, the article states that suppliers will need to invest millions of dollars to comply with the RFID requirement, depending on the volume of business the supplier does with Wal-Mart and the cost of the tags (which the article states is currently around 15 cents a tag but is expected to drop in price).
In addition to concerns suppliers will have about the cost of implementation, some organizations have expressed concerns about potential privacy issues, should the technology become widespread and be used on individual purchase items, in addition to shipping pallets and cases.