Last June, Wal-Mart Chief Information Officer Linda Dillman announced the company wanted its top 100 suppliers to start using radio frequency identification (RFID) on pallets and cases by 2005 and all suppliers to use the technology by 2006. Wal-Mart will use RFID tags based on Electronic Product Code (EPC) protocol.

The Wal-Mart mandates mean one thing for converters: Get ready now. The process of integrating RFID tag application into your services requires research. Converters who take time now to learn about the technology will win market share later, experts predict, as the technology grows in demand.

The U.S. Department of Defense, Target, Albertson's, and Sears, among others, have followed suit in asking their suppliers for EPC-based tagging. Wal-Mart's mandate has single-handedly sped up the implementation of RFID and EPC, bringing the technology from the back burner in to the open in swift fashion. Wal-Mart is actually lagging behind some of its international competitors. UK-based Tesco, Britain's largest retailer, plans to implement the technology next month, and German Metro AG will begin using it in November.

The use of RFID is not new. The 15-year-old technology has been used in car anti-theft devices, toll collection, building security, and library systems. Even marathon runners carry RFID chips on their shoes for accurate finish times.

Wal-Mart will take a phased approach to rolling out RFID technology. The company's top 100 suppliers had to present implementation plans by February. Wal-Mart's first implementations will be at three distribution centers and 150 stores in Texas this month. The company plans to add another 100 distribution centers and 3,000 stores by the end of 2005. According to a Venture Development Corp. report, 4,500 pallets and cases have been successfully read in the current Texas pilot.

At first, Wal-Mart will require tags at the case and pallet level only, but in the future, tags will be required for each individual consumer product item. Wal-Mart will not proceed with item-level trials until 2007 or later.