Wal-Marts CIO Dishes on RFID at NRFTech Conference

Ford repeats the party line: Wal-Mart will continue to be aggressive with RFID.

SAN DIEGO—Wal-Marts philosophy for its stores is deceptively simple: right product, right place, right time.

Rollin Ford, the companys new CIO—he was assigned to the top tech job in April—reiterated that Wal-Mart plans to use RFID, in part, to help the massive retailer achieve its goals.

"As I took the helm of CIO I got a lot of phone calls; people wanted to know if we would stay the course, if we would continue to be as aggressive with RFID," said Ford, who delivered the keynote address Aug. 8 at the National Retail Federations NRFTech 2006 conference here in Carlsbad, just north of San Diego.

"We certainly will," he said.

Wal-Mart—arguably the worlds largest retailer with 6,601 stores and 240 distribution centers worldwide (221 are in the United States)—has been the standard bearer for RFID in the retail sector.

In 2004 the company put forth a back-handed mandate to its top 100 suppliers: RFID-enable cases and pallets of goods, or look elsewhere to do business.

Currently, the Bentonville, Ark., retailer has five distribution centers, 475 Wal-Mart Stores, 36 Sams Clubs and more than 300 suppliers RFID-enabled.

That means stores have the capacity to read incoming RFID tags, and track goods that have been tagged from suppliers from the back room to the store shelf. It also means having the infrastructure in place at the distribution centers to read the RFID-tagged cases and pallets of goods sent to Wal-Mart, and in some cases integrating with those suppliers to transmit RFID data back through the pipeline.

Speaking to a crowd of retail technology executives, Ford said Wal-Mart has seen some good initial results for all its investment around RFID: a 26 percent reduction in out of stocks in the stores with RFID capabilities, and out of stock items that are replenished three times faster than those items not RFID tagged.

/zimages/2/28571.gifTo read more about Wal-Marts RFID strategy in Canada, click here.

While Ford essentially reiterated what Wal-Mart has said publicly in the past about RFID, he did shed some light on the companys immediate plans, including a focus on speed-to-shelf, sensor tags, pharmaceutical pedigree enablement and track and trace capabilities.

Wal-Mart plans to invest in tags that sense the temperature of sensitive products, making sure products on the shelf are safe, rotated correctly and in the right place. The company will also look to track and trace goods, and to enable a pedigree, or manufacturer-to-shelf record, to its pharmaceutical products.

"As we look forward, tags are coming down 50 to 70 percent and readers are coming down," said Ford.

"We are pressing forward very aggressively to make sure our DCs can read [RFID] tags. Were sun-setting Gen 1 [readers], and Gen 2 is much better—its amazing the read rates were getting. Were keeping the price low. Our next 300 suppliers are tagging by January of 2007."

Ford said that from his perspective, others in the audience considering RFID should "start soon—start now."

"Start small," said Ford. "Embrace standards very passionately. Recognize this is a journey and not a destination. But youve got to forge a path to make the supply chain in this country as efficient as it can be."

To optimize its own supply chain and logistics network, Wal-Mart has a five-year planning process.

"If your logistics network isnt out five years, theyre behind," said Ford, who spent his formative years at Wal-Mart (the last 23) in supply chain and logistics.

"Theyre either in front, or all the sudden theyll find themselves chasing business."

To better facilitate supply and demand Wal-Mart is moving toward something it calls Remix—basically moving from a category-based network to a velocity-based one.

Wal-Mart grew up as a general merchandiser. In the late 1980s and early 90s it developed a grocery network.

In effect, it had two separate networks that were managed differently. With Remix, the company is looking to change that.

"Now were looking at the fastest moving items in the supply chain and combining them in a DC…we put them on a trailer and get them right out to the store floor," said Ford. "Its a Herculean effort."

About 50 percent done, Wal-Mart expects to finish the Remix project next year, according to Ford.

Companies have got to make sure "supply chains are unique and responsive," said Ford.

"In todays world something is going to happen all the time. Every day when I wake up something is happening from an infrastructure standpoint."

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