The First Attempt at Walmart RFID
In the middle of 2003, Walmart announced to suppliers that the organization was looking to require them to add fancy new Radio Frequency Identification (RFID) tags to secondary packaging and pallets shipped to their warehouses. These new tags needed to be encoded with data to the Electronic Product Code (EPC) standard – which would be a unique ID for each container, box and pallet in the supply chain.
This was to become mandatory for the top 100 Walmart suppliers by the end of 2005 and all suppliers by the end of 2006.
The idea was that since RFID tags can be read faster and over a longer distance than barcode labels, their introduction would simplify and speed up the supply chain and improve inventory control.
During this period, Walmart was busy installing RFID infrastructure into its distribution centers and stores to handle all the new data the incoming RFID tags would provide.
As you would imagine, this caused a lot of concern for those Walmart suppliers and excitement for those of us in the label and RFID industry.
What Went Wrong?
Walmart’s initial RFID introduction was not a success.
The RFID technology was still in its infancy and was not in a position to meet Walmart’s demands, especially at competitive prices.
From the testing I was involved with, there was a large failure rate when attempting to encode the EPC data into the tags, and it was rarely possible to attain the read rates for each item that Walmart was demanding.
In 2007, an article in the Wall Street Journal stated:
Wal-Mart’s Radio-Tracked Inventory Hits Static.
Wall Street Journal 2007
Wal-Mart Stores Inc.’s next leap forward in ultra-efficient distribution is showing signs of fizzling, given a lack of internal progress in rolling out the technology and a lack of value for suppliers.
By the end of 2007, Walmart had scaled back the RFID mandate, making it mainly focused on items being shipped to Sam’s Stores warehouses, and also began to start chargebacks to suppliers who were not in compliance.
Not long after this, with pressure from suppliers (who never saw the savings from RFID that Walmart originally suggested could be achieved), the program largely faded away, with a focus more on barcoding.
RFID After Walmart
In the years since the Walmart failure, RFID technology has continued to make inroads.
A program for the US Department of Defense (DoD) has been successful, with a huge range of items being tagged with EPC RFID tags every day.
The technology is also widely used in asset-tracking applications and bag tracking for airlines.
It has also made a successful return to retail.
Retail RFID Since Walmart
While the original Walmart RFID mandate was focused on secondary packaging and pallets, the more recent success has been for item-level tagging, starting in the garment business.
Being able to accurately keep track of the inventory of clothing in retail stores has always been a challenge.
Items don’t always have fixed locations, and customers tend to move the clothes around anyway. If the garments contained a unique RFID tag, an associate would be able to quickly scan a rack or shelf of clothes to capture the information for every item at that location.
This has proven to be a time and cost saver for retailers, helped by cost reductions in RFID technology and performance improvements in the tags and the reader infrastructure.
Walmart’s Return to RFID
Walmart’s return to using RFID technology was, like other retailers, with item-level tagging for clothing products.
This program has proven to be successful, and the company has been rolling out the mandate to more product classes.
The current mandate requires suppliers to tag their products with Gen 2 UHF RFID tags, operating at a frequency of 902-928 megahertz, with tag dimension requirements varying depending on the type of goods being tagged.
In early 2023, Walmart expanded its RFID tagging initiative to more departments, setting a compliance deadline of February 2024 for suppliers, although early planning and adoption of the RFID technology are encouraged.
The categories of products that now need to be tagged include home goods, sporting goods, electronics, toys, apparel, bath and shower products, bedding, furniture, kitchen and dining items, storage and organization products, among others.
The RFID tags must be encoded using GS1’s Electronic Product Code (EPC) standards, which combines a product’s GTIN (Global Trade Item Number) with a unique serial number (the Serialized GTIN or SGTIN format), facilitating standardized label reading across different retailers and speeding up the process of getting products onto the retail sales floor.
The primary aim of this mandate is to improve ‘store level’ inventory accuracy, which is crucial for both in-store and online shopping experiences. The RFID technology has enabled Walmart to achieve better On Hand Accuracy (OHA), which has enhanced Walmart’s Online Order Fulfillment processes.
Furthermore, the mandate is expected to strategically impact the economics of RFID manufacture as the volumes of RFID tags will surge, potentially reducing the costs due to economies of scale. It’s estimated that the volume of shipments from its top 100 suppliers could reach 1 Billion tags per year, significantly affecting the RFID industry’s volume and cost dynamics.
This RFID mandate showcases Walmart’s proactive approach to leveraging technology to optimize operations, enhance customer satisfaction, and stay competitive in the retail market. The initiative benefits Walmart and sets a precedent in the retail industry for adopting RFID technology on a broader scale, likely inspiring other retailers to follow suit.
Do You Have to Comply With Walmart’s RFID Mandate?
If you provide products to Walmart and need to add RFID tags, you will be provided with a playbook that covers the detailed requirements of the department that handles your products.
You can also find general information on Walmart’s RFID program in the Secondary Packaging Supply Chain Standards guide that Walmart publishes.
It’s essential that you need all the requirements in the playbook to ensure your shipments don’t get rejected and leave you open to the dreaded chargebacks.
Note that there are limitations on which types of RFID tags you can use, and you also have to submit examples of your tagged products to the RFID lab at Auburn University for testing and approval.