Customers in Charge

Who’s in charge here? That question is at the root of the often-strained relationship between vendors and customers. On one side of the chasm of expectations are the technology requirements of customers in fulfilling their business missions; vendors grumble that those needs are too often poorly defined, not completely revealed and promise too little profit to be worth their attention. On the other side are vendors eager to push products and services that customers often view as hastily concocted, one-size-fits-all solutions geared to fulfilling quarterly sales goals rather than solving their problems.

However, the balance is tilting in this stalemate. If the economy continues to revive—a big if—and if, as some forecasters predict, technology purchasing finds a new upward cycle, one result will be an increase in control for customers.

In no place is evidence of the new power wielded by customers stronger than in the case of Wal-Mart. The company, already the largest force in the U.S. retail economy, is driving the technology and deployment of RFID (radio-frequency ID) tags in a way no vendor or consortium could hope to emulate.

Two weeks ago, Wal-Mart hosted a meeting of nearly 200 suppliers and laid out its expectations for a pilot RFID deployment project to begin this year. Greg Gilbert, project manager for RFID at Atlanta-based consultancy Manhattan Associates and a meeting atendee, described the scope of the pilot in an interview.

The project is aimed at tagging pallets and boxes, but not individual products, in one region and is expected to consume more than 1 billion ID tags per year. The deadline for the completion of the pilot is January 2005, and as Gilbert said, “This is the real deal, not some academic exercise.” The project, if successful, could result in savings of 10 to 20 percent in distribution labor costs while increasing in-store sales.

This time around, the chasm between customer needs and vendor expectations will give rise to one group—customers and vendor partners—on one side of the divide and an abandoned group of vendors on the other.

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Eric Lundquist is the editor-in-chief of eWeek. He can be reached at eric_lundquist@ziffdavis.com.