Wal-Mart's Radio Tracked Inventory Hits Static by Gary McWilliams in the February 15, 2007 edition of the Wall Street Journal details the well-known litany of problems that the world's largest retailer is having with RFID. Not a lot of new news here--no savings for suppliers, difficulty with roll outs because of technology problems, human reluctance to figure out out the hard bits to make the programs work--we have all heard these before many times. We already have the boo birds saying that RFID is doomed and Wal-Mart is going to abandon the program.
Not.
As Mark Roberti points out in a follow-up article in the RFID Journal, Understanding the Wal-Mart Reality, the article may have missed some important developments at Wal-Mart. He notes that Wal-Mart buying teams are now working with suppliers on which SKUs to tag, and that suppliers are anxious to cooperate with Wal-Mart to use RFID data to increase sales.
Wal-Mart buyers are now working with suppliers to tag product as a way of improving on-shelf availability, looking at ways to predict emerging stock outs and get product from the back room or DC to the store in time to avoid stock outs. I suspect that the TrueDemand pitch about managing shelf-back supply chains is finally getting more attention from Wal-Mart and its suppliers.
In addition, a number of suppliers, especially Gillette (recently added to P&G's stable of superb brands), who was an early adopter of the technology, but even Campbell's Soup, are leveraging the RFID data to improve sales at Wal-Mart stores. Campbell's, a low-value product company, initially thought that RFID was too expensive and had few benefits. Now, Campbell's is tracking promotions and seeing a sales rise when using RFID data to better plan and restock products at RFID-enabled stores.
RFID is hear to stay. There is not "better" technology coming available in the near term to replace RFID. Sure, there are technical problems, like there are with any new technology. Wal-Mart needs to reduce supply chain expenses. There are precious few technologies out there today that can do this and none have more of a longer term cost promise than RFID.
So, don't believe the boo birds on this one. But don't go whole hog on exotic RFID investments like a number of suppliers have, only to discover that Wal-Mart is only using the tags in a few facilities. Have the guys slap on the tag in the warehouse for now, adding only a marginal labor cost.
Trust me, Wal-Mart has no Plan B on this one. They will make it work and when it does everyone will be saying how great this stuff is.
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