Wal-Mart's effort to get suppliers to tag cases and pallets with RFID chips has been slow going. Many food and consumer goods companies live life on slim profit margins, and still can't justify investing in RFID with no guaranteed pay back.

In an April interview, Wal-Mart IT managers said that 600 suppliers were using RFID; that's just 3% of the company's 20,000-strong supplier base. A few deep-pocketed suppliers, like Procter & Gamble and Kimberly-Clark, have rallied on behalf of Wal-Mart, sending executives to industry conferences to proclaim the future in retail is RFID. Yet it's an endorsement that's failed to calm the doubts of many small and midsize Wal-Mart suppliers.

Pacific Coast Producers, which has been complying with Wal-Mart's RFID mandate since January 2006, thinks those laggard companies should reconsider. The California company sells $400 million a year worth of fruit and tomatoes that it dices, stews, packages, or cans to Wal-Mart and other grocery chains that are then resold under store brands (at Wal-Mart, it's the Great Value brand). "Other small and midsize companies haven't really embraced this technology like we have," said Peter Wtulich, the company's CTO and VP of IS, in an interview. "While we met the Wal-Mart mandate, we did things above and beyond what was expected."

Wtulich said the investment has resulted in better information about how its products move through the supply chain, letting the company improve the rate at which it keeps products in stock at stores, and that ultimately increases product sales. It's also enjoys a better relationship with the world's largest retailer. "The biggest benefit we've gotten is visibility, but it's also put us in a more preferred standing with Wal-Mart," Wtulich said. "Ultimately, that's the most important thing for us." He thinks additional grocery chains will put in similar RFID programs. "We are doing this in advance of more mandates from other customers, and we believe eventually everything will go in this direction," he said.

There's a cross-functional team at Pacific Coast Producers involved with the RFID initiative, including people from IT, sales, its distribution center, and customer service. The company started tagging with RFID in January 2006, and earlier this year a group met with Wal-Mart to review the progress of the initiative and discuss ways to further improve inventory control. In terms of return-on-investment, that's hard to put into numbers, Wtulich said. "We didn't go into this trying to get some dollar return on investment, but we did this in mind that our ROI would be an improved relationship with Wal-Mart."