The PRW industry proves to be a mixed bag when it comes to RFID adoption.
RFID Reduces Out-Of-Stocks For Wal-Mart
Without a doubt, radio frequency identification tag adoption in the food supply chain wouldn't even be the basis of an article if it weren't for Wal-Mart's bold mandate to its suppliers back in 2004. At the time, Wal-Mart announced that by Jan. 1, 2005, it would require its top 100 suppliers to put RFID tags on shipping crates and pallets. The world's largest retailer expanded its efforts to its next 200 largest suppliers this past Jan. 1.
Each tag stores an electronic product code (EPC) and is used to track products as they enter Wal-Mart's distribution centers. The company then ships the products to its individual stores. The impact of the Wal-Mart mandate can't be understated—since it was announced, several large retailers have followed suit, including Target and Walgreen's.
As the first big retailer to require its suppliers to use RFID, Wal-Mart provides the standard against which all others are measured. So a bit more than a year into Wal-Mart's RFID program, how has it worked?
A recent white paper released by Wal-Mart sheds some light on the impact RFID has had on one big measurement, out-of-stocks. According to the white paper, since adding RFID technology to its supply chain, the company has been able to reduce out-of-stocks by 16 percent at 12 test stores. The paper suggests that the principal driver in reducing out-of-stocks is a new automated pick list that uses data collected from RFID technology.
The system works by employing a proactive pick list process, rather than a reactive one. Wal-Mart tested its new system with some 4,500 products containing RFID tags. Wal-Mart was able to trace the exact movement of cases of goods, from the DC, to shipping, to the store back rooms and finally to the store shelves.
With the RFID in place, store associates did not have to scan the shelves to determine out-of-stocks—the system did it for them automatically. Wal-Mart says in its white paper that the test has proven that RFID is making a difference and can make for process improvements. The data backs the claim up—out-of-stocks at Wal-Mart have dropped by 16 percent at its test stores.
The company plans to release future white papers that will detail other benefits from RFID, including a look at specific product categories and store departments within Wal-Mart. —A.L.