Wednesday, September 13, 2006

Ready, Set Go! Wal-Mart & the DoD Expand RFID Deployments

RFID Law Journal
Newsletter No. 10
September 13, 2006

Yesterday Wal-Mart announced its expansion of suppliers participating in its RFID deployment program, resulting in the effective doubling of such participants to more than 1,000 by year-end 2006. This announcement was foreshadowed during the winter of 2006, when Wal-Mart favorably announced its Dallas-Fort Worth pilot results (i.e., where it observed significant reduction in out-of-stock figures). Indeed, at that time, Wal-Mart made clear that it had placed a significant RFID hardware order aimed at facilitating a substantial expansion of the number of its stores and distribution centers with RFID wiring by year-end. Now that Wal-Mart has expended the funds to wire its facilities, it’s only rationale that Wal-Mart is now ratcheting up the participation percentage of its suppliers in an effort to start reaping the benefits of the technology deployment.

Military suppliers beware. The DoD ordered a sizeable deployment of RFID hardware and middleware during the spring 2006, and pursuant to those contracts, more than 20 CONUS (Continental United States) facilities will be wired for the receipt of passive RFID tags by the end of September, 2006. The DoD has been fairly explicit since the introduction of its interim RFID DFAR in May, 2006. In short, the DoD has been saying “we’re now entering the second year of a three year-rollout.” (Meaning: a significant percentage of you (i.e., suppliers) will soon be impacted).

A review of the DoD’s Final Regulatory Flexibility Analysis of Passive RFID (August 2005) makes clear that the Department of Defense views its deployment as taking place in tandem with other major initiatives, including Wal-Mart’s. Indeed, the DoD justifies its early stage involvement in RFID’s deployment based upon its ability to favorable impact on the rate of adoption (i.e., faster), the development of standards (i.e., meeting both DoD and major retail requirements), the contribution of R&D and the reduction in supplier costs. By way of example, in discussing Class VI goods, the DoD noted that since many Class VI suppliers ship to both Wal-Mart and the DoD, synergies can be gained by working together on the development of standards, etc.

While the DoD and Wal-Mart may not be intentionally scheduling the timing of their deployments together, this double shot is welcome news for many RFID industry participants. Although industry eyeballs are currently focused primarily on the first 1,000 companies, there are tens of thousands of firms which will be encountering RFID for the first time in the coming two years. Based upon the major deployment decisions of the past six months (of Wal-Mart and the DoD), it seems very likely that Wal-Mart and the Department of Defense will each reach their next 9,000 participants much faster than their 1,000th RFID program participant.

To read the Wal-Mart announcement, go to

You can read the DoD’s Final Regulatory Flexibility Analysis of Passive RFID (August 2005) at

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