RFID Keeps Wal-Mart in Stock
By George Anderson
The results of a study conducted by the University of Arkansas show that using radio frequency identification (RFID) technology has helped Wal-Mart reduce out-of-stocks (OOS) and decrease the amount of time it takes to get products restocked.
According to a report on the Information Week Web site, researchers discovered that stores using RFID labels with EPC codes were able to achieve a 16 percent reduction in OOS.
Dr. Bill Hardgrave, director of the RFID Research Center at the University of Arkansas and executive director of the Information Technology Research Institute, said, “Our analysis consistently found, throughout the test period, that the RFID-enabled pilot stores statistically outperformed the control stores without RFID technology in terms of providing improved on-shelf availability of items for customers. Essentially, this meant fewer total out-of-stock items and fewer occurrences of empty shelves when the merchandise was in the backroom.”
The use of RFID enabled Wal-Mart to get product to empty shelves faster than stores that do not use the technology.
Simon Langford, strategy manager for RFID at Wal-Mart, told Information Week, “An RFID tagged item made it to the shelf three times quicker than a non-tagged item. These items were identified as being in the back room three times quicker than those without RFID tags.”
According to Information Week, the University Arkansas study is the first to compare how RFID with embedded EPC on merchandise impacts product availability in stores serving customers. The study was conducted over a 29 week period with researchers analyzing OOS at 12 pilot stores (Wal-Mart Supercenters, Discount Stores, and Neighborhood Markets) with RFID and 12 control locations not using the technology.
Moderator’s Comment: Generally speaking, how does Wal-Mart compare to other retailers when it comes to OOS? Will others achieve the same type of results
using RFID labels with EPC codes? What other insights do you have on this study and what Wal-Mart and others are doing with their RFID trials?
By the end of next year, Wal-Mart plans to have more than 1,000 stores, clubs, and distribution centers using RFID. Beginning January 2007, 600 suppliers
will be shipping cases and pallets with RFID tags to the retailer. –
George Anderson – Moderator