Wal-Mart suppliers consider RFID investment a throwaway so far

Summary:Wal-Mart may be single-handedly moving the RFID industry along with its ambitious project, but those 100 suppliers who have to meet the directive set by the massive retailer sure don't look convinced.

Wal-Mart may be single-handedly moving the RFID industry along with its ambitious project, but those 100 suppliers who have to meet the directive set by the massive retailer sure don't look convinced. According to AMR Research, those suppliers do not view RFID as a strategic investment and have merely patched systems together just enough to meet Wal-Mart's compliance deadline:

Many of Wal-Mart's suppliers are more convinced than ever that there is no ROI, and even worse, consider their technology investments to be a throwaway thus far. Because of this, they've only spent the bare minimum needed to comply.

Innovation is never easy, and you have to applaud Wal-Mart for taking the initiative, but if suppliers need to be dragged through it punching and kicking there is a lot of work to do. AMR says that it won't be until they cough up about 10 times what they've already spent to get the full benefit of the technology. And once they see benefits and continue to invest they should not count on declining tag prices, as Meta Group warns:

Many companies have flawed RFID business cases, assuming that RFID tag prices will decline rapidly and significantly. This assumption overlooks the fact that semiconductor manufacturers are in business to make money, and high volumes at low margins will surely drive suppliers from the market. Assuming RFID demand grows and RFID economics (i.e., low prices) drive suppliers from the market, prices will in fact go up, not down. This has the potential of creating supply/demand problems (i.e., shortages, unplanned disruptions in capacity), which will have impacts on companies adopting RFID.

Topics: Security

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Natalie Gagliordi is a staff writer for CBS Interactive based in Louisville, Kentucky, covering business technology for ZDNet. She previously worked as the editor of Kiosk Marketplace, an online B2B trade publication that focused on interactive self-service technology, while also contributing to additional websites that covered retail tec... Full Bio

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