When Wal-Mart corporate wants to change a policy or procedure, it's fond of trying it in a small way in an out-of-the-way place to see if it works.
After all, even a small pilot for the $312 billion retail empire can be fairly massive by mere mortal standards.
So it was with interest that I was watching this week Wal-Mart Canada's new RFID program, which they are billing as entirely optional and?this is telling?without an announced firm deadline.
First, let's set aside the philosophical question of just how voluntary any program can be when it comes from the world's largest retailer to its list of highly-replaceable suppliers. This one does indeed seem to be different.
To woo suppliers to participate, Mississauga, Ontario-based Wal-Mart Canada has invited 16 companies to attend the Retail Council of Canada's annual STORE Conference in Toronto this week, according to a report Monday in IT World Canada.
The pilot is expected to start this fall in southern Ontario and run into 2007 as a small controlled experiment with a two-man RFID team overseeing it, the story said. Tagging will be at the case and pallet levels, using Electronic Product Code (EPC) standard Gen 2 tags -- the technology Wal-Mart is standardizing on. Currently, there are no readers in place in Canada to read data from the RFID chips.
Many of the suppliers involved in the Canadian program and already participating in the U.S. program, which may alleviate the need for additional muscular mandates.
But John Fontanella, an RFID analyst with the Aberdeen Group, sees it as the latest in a series of Bentonville hints that new CIO Rollin Ford is taking a slightly more laid-back approach to RFID than did his predecessor, Linda Dillman.
Dillman is perhaps the U.S. executive most identified with pushing RFID and there's no question that her efforts?along with those from the U.S. Department of Defense, consumer goods leaders Phillip Morris and Procter & Gamble as well as European retailers Tesco and the Metro Group--are a huge reason RFID is as well-established as it is today.
That last sentence, to put it bluntly, cuts both ways. By forcing suppliers to deliver, Dillman used the incredible influence and power of Wal-Mart to force an industry to a place it might not have been ready for. Suppliers had to comply and, as a practical matter, other large retailers ignore what Wal-Mart does at their own peril. That doesn't necessarily mean that they have to copy the moves, but they must at least study them and do so seriously. With RFID, anything approaching serious study requires a very serious financial investment.
Dillman's efforts forced the industry to make the move, but much of the industry today is still struggling to make RFID work consistently, accurately and effortlessly. Those words are simply not in the lexicon of the typical RFID tag, whether it's active, passive or it-appears-to-be-in-a-comma.
Was Dillman's new assignment--as executive vice president of risk management and benefits administration at Wal-Mart?a promotion as a reward for doing a great job? Or was she shifted aside for, as some critics have charged, overreaching with RFID and putting Wal-Mart in an uncomfortable technological position where backing away from the not-always-perfectly-operating RFID strategy would have been difficult?
One of the first things Ford did when he took over the reigns back in mid-April was to try and comfort suppliers with a "no change in direction" statement. ""Like Linda, I view RFID as a strategy that offers tremendous competitive advantage," Ford said. "There will be no slowing down."
But Wal-Mart observers such as Fontanella?and he's not alone, but getting industry people to speak candidly about Wal-Mart on-the-record is none too easy?say that a "slowing down" may be quite close to what Ford is doing. Maybe not so much "slowing down" as lightening up.
When it comes to RFID, "Wal-Mart is today taking a much softer approach," Fontanella said. "It's being done more with a velvet glove than with a sledgehammer."
Although some might see that as little more than good judgment and prudent diplomacy, that was not Wal-Mart's way under Dillman. "As recently as a year and a half ago, they were dictating. If you don't do this, in a year-and-a-half, you won't be a supplier to Wal-Mart," Fontanella said.
Asked if Ford is indeed backing off of RFID, Fontanella said that he didn't think he was, but that the two execs have such different management personalities that he feels like a sharp change, in attitude if nothing else.
"Linda was tough. This guy [Ford] is coming at it in a different way," he said. "This CIO is taking a different approach. If you look at the European experience with mandates, it was done very similar, on an almost voluntary basis. Guys like Tesco and Metro talked about a value proposition."
This is all going on with the background that Wal-Mart is still quietly struggling with its RFID efforts. "Wal-Mart is having significant problems. There are problems inside of Wal-Mart," such as distribution centers that "can't handle" Gen2 communications, Fontanella said. "They're looking to replace those readers. They can't comply with the latest standards."
On the other hand, it's quite easy to be Mr. Nice Guy when you're maintaining a program that tons of your suppliers have already been forced to join. A huge amount of investment has already been made so sheer momentum?and the human nature resistance to giving up and conceding that tons of investment was a waste?so it's not difficult to gently persuade people to keep on going.
In other words, if the roles had been reversed and Ford had been the one who had to force an industry to comply and then Dillman had the luxury of coming in a couple of years later to transition it to the next phase, the personality approaches might have also been reversed.
But in case Fontanella is right and we are starting to see a kinder, gentler Wal-Mart, that's pretty scary. The world may or may not have been ready for RFID a few years ago, but there's no way that world of retail is ready for a kind, gentle and polite Wal-Mart. That's like McDonalds healthfood or Costco convenience. Certain concepts simply can't mix without violating the laws of nature.