As the RFID World Turns, written by Dan Gilmore of Supply Chain Digest

OK, now this is getting interesting. There are a number of tension points growing in the RFID/EPC movement. Last week's meeting of Wal-Mart's top 300 or so suppliers, on the one-year anniversary of the original announcement around its RFID plans, serves as a nice backdrop to highlight these issues. There's a little bit of "soap opera" developing in all of this, which at the least is putting some human interest in the RFID hype machine. Here's what's going on in my opinion:

Wal-Mart is caught in its own initiative: The world's largest retailer supposedly has been surprised by the intense focus on its RFID initiative. It shouldn't have been - there's a potentially very large industry hugely dependent on its program moving forward. Wal-Mart's public statements, however, increasingly have the feel of a company under pressure to deliver on any previously announced plans and schedules - which is of course ridiculous, as it can roll this out at whatever pace it wants. While its vendors and the world need to have some idea of its timetable and success, Wal-Mart frankly should stop publicly acting like a politician trying to justify its actions, be more frank about the very real issues at its vendors in making this happen, and stop worrying about losing face if things change.

Vendors are not finding ROI: Wal-Mart's initial stance was that vendors needed to find their own ROI from EPC tagging. It isn't there - jeez, what a surprise! Was there really one person who thought there would be? Can Wal-Mart have really not understood this? There is no RFID from compliance, there can be no ROI at current tag costs, it is hard/impossible to find ROI if you have a strong bar code-based WMS system in place, and there can be no ROI until many enterprise systems are RFID enabled, which will take years.

An increasing number of CPG vendors are telling Wal-Mart the internal ROI story is not going to happen - and wisely rebelling against bearing the high cost of compliance themselves. I talked to one well-placed consultant who told me that several CEOs of large CPG companies are saying they will support these initial pilots at their expenses, but they simply can't roll this out across all cartons/shipments without raising prices.

Intermec's intellectual property (IP) claims: Last week, Intermec sued Matrics over alleged violation of four patents, two specific to EPC, two around more general RFID. Intermec's RFID IP dates in large part back to an acquisition the company made of certain assets from IBM several years ago.

This week, I spoke with Intermec Vice President Mike Wills, who in so many words said that it will be almost impossible for any tag and reader manufacturer to produce product that did not use patented Intermec technology. This may or may not turn out to be accurate. While the company has said it will freely license this IP to any and all companies at "reasonable" royalties, there is no question this action could change the entire dynamics of the industry. From several sources, I have heard Wal-Mart has revoked some access privileges to Intermec in a snit over the turmoil this may cause, especially as Matrics is supplying Wal-Mart's readers. The suit caught a number of people off guard; particularly because many statements from MIT's Auto ID center could easily have been erroneously interpreted as saying EPC technology was going to be free of any IP issues. More on this topic later.

All of this is very interesting, and I believe a sign that the very real issues in making RFID work in the consumer goods-retail value chain are finally starting to surface - which is a good thing.

Does Wal-Mart seem to be too caught up in meeting its previously announced schedules? Do you think that the industrial intellectual property issues will further slow things down? And does anyone - ANYONE - see how CPG manufacturers are going to get ROI in the short run?