Retailer Wal-Mart Stores continues to build momentum around its radio frequency identification (RFID) tag initiatives, adding new uses for the supply chain technology and getting more suppliers and partners to comply with its RFID mandates.
Wal-Mart first went live with RFID in January 2005 after doing pilots at distribution centres in Dallas, Carolyn Walton, vice president of information systems at Wal-Mart, told the RFID World conference in Grapevine, Texas, in February.
At first, she said, Wal-Mart had more than 100 suppliers tagging products. It now has more than three times that number involved, feeding RFID-tagged goods to 500 Wal-Mart facilities through five distribution centers. The company expects the number of stores capable of handling RFID-tagged items to double to 1,000 by January 2007, with 600 suppliers employing the technology by then.
RFID pays its way
There is some scepticism about Wal-Mart's plans (for instance "Wal-Mart's RFID plans will fail"), particularly around its use of passive RFID tags. However, Walton noted that Wal-Mart has seen a return on investment - even without any extensive process changes. Among the benefits: Out-of-stock items that are RFID-tagged are replenished three times faster than before, and the amount of out-of-stock items that have to be manually filled has been cut by 10 percent. We see this as a continual process in an effort to focus on bringing our customers what they want, she said.
One of the ongoing projects in the proof-of-concept phase, which is still under way, involves adding sensor tags to perishable items such as fruit. With a special tag, Wal-Mart can track just how long a crate of bananas has been in transit and can ensure that its sold when the fruit is ripe. That means the company does not have to discount the fruit as often or toss it out altogether.
Another project Wal-Mart intends to pilot this year involves boosting the efficiency of unloading boxes from trucks. Each Wal-Mart truck carries about 7,000 boxes that have to be organised and unpacked, a time-consuming task made more onerous by the fact that some items need to go right to store shelves. To address that issue, the company plans to equip associates with wearable devices that will detect a high-priority box of goods that can be unloaded immediately.
Working with partners
Collaboration with the partners using RFID data is key, especially with promotions that rely on time-sensitive goods, said Walton. Wal-Mart can look at the sales of a given item, store by store, and determine whether something didnt sell well because it wasnt on the floor on the best day of the week or timed with an advertising campaign. That makes it incumbent on Wal-Mart to sit down with its partners and plan how best to move products, she said.
Data and management is crucial
Other users at RFID World discussed data and its management. The value of RFID data depends on the type of product involved, said Kevin Brown, director of IS at Daisy Brand, a maker of sour cream products. Brown, who also spoke at the RFID event, said his company uses an RFID system based on gear from Alien Technology. He explained that companies that sell perishable goods will want to know how long an item has been in the supply chain. Companies making higher-cost items will be more interested in preventing theft. Still other firms that may be launching new products will want information about how the new items are selling, Brown said.
The important issue is to determine what data a customer will want, said Bob Berg, senior business systems manager at DHL Worldwide Express. The carrier is rolling out RFID systems to help its customers comply with mandates from Wal-Mart. For instance, tagged items can create duplicate readings and sometimes give redundant information, a problem that can be solved by configuring tag readers to query data intermittently.
Properly gleaning information will require customizable processes specific to a particular company, Berg said.