Wal-Mart's RFID plans haven't worked out so well for suppliers

Wal-Mart Stores, Inc. (NYSE: WMT) issued a pretty strong set of marching orders five years ago to its top 100 suppliers: adopt RFID in your business practice or suffer the consequences of doing less business with the world's top retailer. RFID was supposed to make logistics easier by allowing automated tracking and shipping of inventory as quick and efficient as possible. Out with the barcode, in with the radio microchip.

It hasn't quite worked out that way. Reportedly, "many" of the retailer's top 600 vendors use RFID "to some degree," but the startup costs can be easily felt by most of Wal-Mart's small suppliers. Outside of the "many" vendors who are using RFID, the rest many not "be using it at all." Apparently, Wal-Mart has backed down from the mandate that all vendors use RFID in their shipments to the retailer.

Wal-Mart is the only customer requiring RFID to be used in shipments. Is it worth the bother just to placate one customer? Well, Wal-Mart's RFID edict was launched at the birth of the technology. Prices and implementation were high, standards weren't in place and the RFID industry seemed completely fragmented. Of course, it's not that way now, but the damage may have already been done. Will Wal-Mart soon drop the requirement that its vendors implement RFID programs into their pallets and shipments? Might as well, since the retailer is really not enforcing its own rules.