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Friday, July 30, 2010

Walmart revives RFID to life



The future has come

Imagine going to a Walmart store, filling up your cart and walking right out the door. You will no longer have to wait an associate rings up each item in your cart one at a time. Instead, a miniature yet smart electronic tags will communicate with an electronic reader that will detect every item in the cart and ring each up almost simultaneously. The reader will be connected to a WAN network that will send purchase information for your products. No more lines, no more waiting, no sweat. Instant shopping made easy. And that's RFID.

Yes, starting on August 1, Walmart Stores Inc, the world's largest retailer, for the 3rd attempt, is reviving its seven-year old smart tagging program that had been stalled several times in the past. This time, it will be placing removable smart identification tags called Radio Frequency IDentification (RFID) on men's clothing such as jeans, and undergarments to gain more control of its inventory and process. According to Walmart, tagging men's clothing with smart tags is just the beginning since the retailer is eventually expand it to other types of merchandise soon. Prior to this undertaking, Walmart and its suppliers have been using smart tags years before,  but only to track pallets or cases of merchandise in their warehouses, distribution centers, and docks.

Example of EPC RFID tag used by Wal-Mart

RFID a better choice over barcode scanning? 

What makes RFID tags a lot better and more efficient than the conventional barcoded scanning? In seconds, retail personnel will be able to determine which item sizes are missing, which items are on hand in the stock room and ordering process will proceed almost immediately. No need for individual scanning because RFID readers simply detect all items almost simultaneously in one pass at check out rendering the conventional barcode scanners essentially inefficient. Another cool thing about smart tags is it reduces the incidence of merchandise theft because RFID readers can also monitor where specific merchandise at: whether it is hidden inside a customer's bag or misplaced somewhere in the store. 

I think this extension of its original program really benefits the retail industry. When Walmart becomes successful in its implementation at this time, we shall expect a plethora of retailers implementing the same technology and methodology. But there will always be challenges ahead.


RFID and privacy concerns
Richard Stallman at WSIS 2005 presenting his RFID badge
 wrapped with aluminium foil as a way of protesting RFID
 privacy issues.

To understand more about the privacy issues being raised by private organizations, it is important to learn the basis how one's privacy can be affected. Understand that the technology behind RFID is essentially the same as any wireless-based devices that use radiowave technology such as your cellphones, which frequencies can be hacked using the right scanning device and not just by Walmart employees.

One more thing: The signal emits by these smart tags cannot be turned off. Even if removed by consumers. As Walmart anticipates, the tags remain active and, whether sitting in the garbage or in the closet, they can be scanned by anybody since signals are never turned off.  

Several privacy related organizations have expressed concern about the new program, especially because the tags will be used at the item-level, which in some minds might give someone the capability to track what specific consumers buy or even what items they have in their homes. This is invasion of privacy, said Katherine Albrecht, the director of a private organization called Consumers Against Supremarket Privacy Invasion and Numbering. She said that this initiative is the first piece of a very large and very frightening tracking system. Albrecht fears that retailers could scan personal information and use the data to some other means. Katherine Albrech, is the author of a popular book, Spychips: How Major Corporations and Government Plan to Track Your Every Purchase and Watch Your Every Move.


Analysis

In my knowledge, this will be the third attempt for Walmart to introduce the technology to its line of merchandise. The company had done some pilot program sometime in 2003 and it was called Electronic Product Code (EPC), an early version of RFID. Then in 2005, the roll out had started with top one hundred of its suppliers tagging cases and pallets particularly at its Texas distribution centers.

Shortly, the move had ultimately halted causing all of retailers to withdraw from the program due to latters' lack of compliance and Walmart's inability to search for the right value proposition and lack of push from the management itself. Then in 2009, Walmart had tried to revive the program. This time in a smaller scale using Sam's Club as the pilot store. Again, the program suddenly stalled due to suppliers' lack of RFID compliance.


Today, Walmart is facing another situation but of the same challenge: RFID implementation in item-level. No Sam's Club or other external pilot program will be involved this time. But it is going to be a test program right inside Walmart's men's clothing department. If it succeeded in its implementation and can resolve known and unknown issues that could arise in the application of the program, then the giant retailer has just taken the first little step towards convincing its critics. Walmart must demonstrate to its critics that RFID is not  just another commercial fairy tale which has failed the test of reality, but a non-fiction technological miracle that only the brave could go through the test and succeed.

Do you think WalMart will get this newest RFID program right this time?

-----------------------------------------------------------------------------------------------------------------
More recommended readings:


Spychips: How Major Corporations and Government Plan to Track Your Every Move with RFID    RFID For Dummies  TA100 - RFID Tag Alarm System

126 comments:

  1. retail CIOAugust 04, 2010

    Nice post btw. I think that it is a matter of time for Walmart to achieve an almost flawless RFID methodology. It is good thing that Walmart has narrowed down its pilot program version into men's clothing. If it won't succeed for the nth time, at least the financial consequence will not be that disastrous.

    The Department of Defense takes 11 years until 2015 to finish its rfid pilot projects before a decision to be made for its application in all military equipment, supplies, and high tech projects.

    So I think Walmart is heading in the right direction. But it will take years before it becomes RFID compliant to all its merchandise departments and stores nationwide.

    ReplyDelete
  2. Detroit ExpertAugust 05, 2010

    This is Walmart's most ambitious project of the decade. I heard that the dry run since Aug. 1 was not bad at all. I have not heard any major issues yet.

    Does the men's department smart tagging program applies to all Walmart stores or just to select few?

    ReplyDelete
  3. One issue being raised is not so much about the benefits of RFID technology in relation to supply chain, but the issue of privacy

    Most experts agree that RFID brings supply chain management more efficiently. But the growing concern of privacy issues remains to be resolved. The more Walmart said it a hundred times, that privacy shall not be compromised, the more the issue becomes prevalent.

    Technology is power. and greater power comes with greater responsibility. Walmart, being the biggest retailer in the world should exercise its power very responsibly. Great post Mariner.

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