Wal-Mart Suppliers Do the Slap and Ship


Last year Wal-Mart asked their suppliers to start using RFID tags on pallets and other large containers. Wal-Mart set a date of Jan 1, 2005 to get it working. Now, it looks like Wal-Mart's suppliers won't make the deadline. There are apparently technical hurdles, and the cost of the RFID devices is always an issue, but more daunting are the business case hurdles that many companies can't get over. Rather than going for an expensive integration of RFID technology into their entire operation, about 70% of the suppliers are doing what's called "slap and ship."

Essentially, what these suppliers will be doing on Jan. 1 is sticking an RFID tag on only a certain percentage of cases and pallets in warehouses that are closest to Wal-Mart's Texas distribution centers. Slap and ship involves minimal data integration and leaves the retail supply chain still blind to product movement. And it will apply to only a small percentage of the products shipped to Texas.

Not surprisingly, slap and ship is not a method endorsed by Wal-Mart. "It's something we sort of cringe at," says Simon Langford, Wal-Mart's manager of RFID strategy.

Langford won't say as much, but come Jan. 1, Wal-Mart could use some positive publicity about its RFID program. The reputation of the world's biggest retailer has been tarnished of late with allegations of unfair wage practices, hiring illegal immigrants and discriminating against female employees. And now some industry experts are predicting that suppliers' failure to meet the RFID mandate could be more bad press for the retail chain. Wal-Mart's biggest mistake, they say, was imposing a top-down mandate on its suppliers before the technology and business needs matured to where RFID-tagged inventory made good economic sense for suppliers, customers and Wal-Mart

Wal-Mart's suppliers can't afford to make them mad, so they'll do just enough to stay in Wal-Mart's good graces. Some complain that the technology just isn't mature enough yet. Of course, Wal-Mart was hoping that they could hasten the development of RFID by providing a big push. They probably have and this might all still work out. I think too much will likely be made of this missed deadline. Wal-Mart is being bold and that's something companies in their position ought to do once in a while.