Investing in RFID

By Renee Boucher Ferguson  |  Posted 2006-03-06 Print this article Print

This is not Wal-Marts first foray into RFID technology. Apparently the company became interested in RFID as a potential solution "years back," according to Walton, when officials did some work with the Auto ID Center, a group initially formed with funding from the government, industry and EPCglobal to develop a standard architecture for creating a network of physical objects. (That effort, now headed by EPCglobal, resulted in the Electronic Product Code, a numbering system used in identifying items with RFID tags).
Then, two years ago, Wal-Mart put together a formal team and started a pilot program around RFID, requiring its top 100 suppliers to tag cases and pallets of goods being sent to certain distribution centers.
By January 2005, "things were live in prime time," said Walton. "Weve continued to ramp up ever since." Walton said the company has found some "good surprises" with RFID to date—particularly as it relates to process change at the store level. There are 1.5 million associates that work in Wal-Marts stores across the nation. Already challenged with training issues, Walton said it "just becomes overwhelming" to consider the training needed for RFID. "But we saw return on investment in some areas without having to go through process change, and having to train thousands of associates," said Walton. A 29-week study done at the store level to record when items on the shelf were in stock, and when they were out of stock, found that those stores that were RFID-enabled reduced out-of-stocks by 16 percent—without having to make a process change. The study also determined that if an item was tagged with RFID, it was put on the shelf three times faster than it normally would be. At the same time, manual orders—which relates to safety stock in inventory—were reduced by 10 percent. "Its pretty simple," said Walton. "I stocked some shelves myself when I came to Wal-Mart two years ago. I found my favorite brand of shampoo was not on the shelf. I looked at my handy wireless device, it said the product is in back of the store, but I couldnt find it. I gave up and re-ordered more." Walton said that what Wal-Mart is able to provide with RFID is the same information—where a product is in the store—and its accurate. "Just think what its going to be like when were able to get to the big ah-has," she said. Check out eWEEK.coms for the latest news, reviews and analysis on mobile and wireless computing.


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