Chapter 9. Mandates As Business Catalysts

Wal-Mart and RFID 143

Wal-Mart Mandate 144

Implications for Suppliers 146

Implications for RFID Component Vendors 147

U.S. Department of Defense and RFID 147

Details of the Mandate 149

Implications for Suppliers 151

Recommendations for Suppliers of Wal-Mart, Other Retailers, and the DoD 153

RFID Initiatives at Other Organizations 155

Summary 156

Five Questions This Chapter Will Answer

• What is the role of mandates in business advancement?

• What is the Wal-Mart mandate and how can I comply with it?

• What is the U.S. DoD mandate and how can I comply with it?

• What are some of the other key retail mandates from around the globe?

• What does the U.S. Food and Drug Administration (FDA) say about RFID adoption in the pharmaceutical industry?

A mandate is a broad-reaching initiative that catalyzes and, on occasion, jump-starts an entire industry. A mandate finds its inception within the business world or from a government agency and is driven by motives ranging from economics and profitability to services, safety, or even legislative requirements. Mandates can unite consumers and vendors toward a common goal. In many instances, that results in rapid technological advancement and the adoption of strategic policies and standards. For example, barcoding technology gained wide acceptance after Wal-Mart issued a commercial mandate requiring its suppliers to use barcode systems in labeling all their products during the 1980s. Soon after Wal-Mart and its suppliers proved the value of barcoding, it was widely adopted as a worldwide standard method for labeling. This type of mandate is the subject of this chapter. Here, we will focus solely on commercial mandates that have influenced the emergence of RFID technology and catapulted it to the forefront of supply chain and asset management. Note that some of the commercial mandates may be issued by government agencies such as the Department of Defense (DoD), but for commercial reasons as opposed to legislative.

Several mandates have accelerated the use of RFID technology. In 2003, the world's largest military organization, the United States Department of Defense (DoD), and the largest retailer, Wal-Mart, instituted mandates for the adoption of RFID in various applications. They called for their suppliers to adopt RFID in order to continue doing business with them. Several other retailers, including Albertsons, Metro, and Target, require the same of their suppliers. In this chapter, we look at the following:

• Focus on the mandates issued by the DoD and Wal-Mart, evaluating and analyzing their impact on suppliers

• Provide recommendations for the DoD and Wal-Mart suppliers

• Outline RFID adoption guidelines issued by other organizations such as the U.S. Federal Drug Administration and several retailers

As discussed in previous chapters, those suppliers who leverage the work done to meet mandates to also improve the efficiency of their own operations will benefit the most from their efforts.