RFID leader Wal-Mart Touts Technology27 Jun, 2007 By: Chris Tribbey
Myron Burke, strategy manager for Wal-Mart's store innovations and operations group, relayed a nightmare story for retailers June 27 at the Entertainment Supply Chain Academy conference in Century City, Calif.: He once visited a Wal-Mart in a major urban area and found more than a quarter of the electronics products were not on the shelves.
Consumers who might have bought a DVD or DVD player just wandered by, even though what they were looking for was nearby, in a box somewhere in the store's storage area.
Jack Talley, VP of sales expansion for Sony Pictures Home Entertainment, joked that his company has done extensive research on this topic: “Product that's on the floor sells 100% better than product that's not on the floor.”
Empty shelves are not seen nearly as often at Wal-Mart nowadays, Burke said. Not since Wal-Mart began using radio frequency identification technology (RFID).
“RFID cuts a three-hour task into a 15-minute task” when it comes to stocking store shelves, Burke said.
RFID is similar to bar code technology but more versatile and not reliant on line-of-sight scanning, capable of carrying relevant information and instruction along all avenues of the retail supply chain, from the warehouse to store shelves to the checkout counter. RFID information can also be scanned from across a room.
RFID goes beyond parcel tracking, Burke said. Keeping track of inventory and identifying it quickly are huge benefits of RFID.
For DVDs, RFID can carry promotion details, street dates and other pertinent information. RFID has its uses on the retail floor as well, allowing sales associates to automatically locate a retail item at any time and keep details about every retail item. Retailers can use the technology to track a customer's purchases over the long term as well, and use that info when dealing with suppliers.
Currently, without RFID, packaging and tracking returned product requires a lot of manual labor, “with room for error at every step,” said Kori Belzer, COO of merchandizing services company SPAR Inc. But with RFID, “we'll know at all times where that box is,” she said. “The benefits here are tremendous.”
Basically the only thing RFID doesn't do is pitch the item for sale to the consumers.“[RFID] may have an unprecedented impact on supply chains,” said ESCA Chairman Devendra Mishra. “If Hollywood is synonymous with films, I believe Wal-Mart is synonymous with supply chain management.”
Wal-Mart pushed RFID to the forefront in 2005 when it announced that within a year it would require its top 300 suppliers to use the technology for all shipping endeavors, with further implementation as the technology became familiar. The mandate sparked a ripple affect, pressuring suppliers to convert.
Burke said now Wal-Mart is looking at further RFID uses inside its stores, from tracking how much a certain associate has sold, to quickly discovering the most valuable items that should be displayed out on the store floor based on demand, Burke said.
“It's changing the way we do business,” Burke said. “A lot of our [current] planning is based on bad data … not only does [RFID] help drive sales, as we get back to planning, we get an idea what marketing really looks like.”