Wal-Mart's top 100 suppliers have collectively invested only about $250 million on radio frequency equipment to meet the retail giant's January 2005 mandate deadline. A study by AMR Research found that the top 100 suppliers "do not view RFID as a strategic investment and have patched systems together just enough to meet Wal-Mart's compliance deadline."
Wal-Mart suppliers individually have spent $1 million to $3 million on RFID-just enough to buy tags, readers, and basic software. To see significant benefit, though, they must integrate RFID into "their applications, change existing software, and enable large volumes of data to be stored." AMR estimates that such a shift would cost each supplier $13 million to $23 million.
"There were too many hurdles to overcome in too short a period," said Kara Romanow, AMR research director.
AMR's study found that the cost of hardware, software, and tags is still higher than the industry expected, keeping to a minimum supplier spending on the technology. Low-value products in particular have suffered from the lack of a return on RFID investment. Romanow said retailers and manufacturers should look instead at "high-value product areas, such as consumer electronics, DVDs, pharmaceuticals, high-end apparel, or sporting goods, where there is a strong, positive business case."
