Retail Report: Speeding from Truck to Shelf
Wal-Mart’s push for RFID may offer you a return on investment, too.
by Daphne Allen, Group EditorWal-Mart’s requirements for radiofrequency identification (RFID) may have originally been intended to improve the retailer’s inventory tracking. But they may also help manufacturers of health and beauty aids sell more products at Wal-Mart, the retailer claims.
“We want to make sure that products consumers want to buy are on the shelf at the right time and at the best possible price,” says Carolyn Walton, vice president of information systems for Wal-Mart Stores Inc. “Getting items to shelves drives the sale of those items.”
During RFID World in Dallas in March, Walton participated in a keynote roundtable discussion titled “Early Adopters Discuss RFID Evolution.” Wal-Mart first required 100 suppliers to RFID tag cases and pallets in early 2005, and now Walton says that some 300 suppliers are tagging their cases and pallets.
Walton says that Wal-Mart’s goal is to speed products “from truck to shelf.” The average Wal-Mart supercenter receives seven truckloads of products—a total of 7000 boxes—per day, says Walton. As associates pick up boxes, wearable devices can tell them which cases to “speed to the shelf,” she says.
Wal-Mart is working on its ability to “execute time-sensitive and promotional items, like the latest and greatest razor for Father’s Day, for more sales,” she adds.
RFID is already making a difference. A 29-week pilot study at 12 Wal-Mart locations showed that RFID technology reduced out-of-stock items by 16%, Walton reports. “If tagged, products were replaced three times faster,” she says. “All this without having to retrain employees.” Training is overwhelming, she says, so Wal-Mart sees “ROI without having to retrain thousands of associates.”
Walton speaks from stocking experience. A few years ago, she spent some time stocking shelves with health and beauty aids, so she saw firsthand some of the problems with understocked shelves and overstocked backrooms. “Inventory said an out-of-stock item was in the back, but I couldn’t find any, so I just said to myself, ‘Well, I’ll just order more.’”
To realize Wal-Mart’s ultimate vision—and to help health and beauty aid product companies move their products to and from store shelves—RFID technology may need to move beyond pallet- and case-tagging. Item-tagging may be in order. “With our trading partners, we are focusing on precise execution,” she says. “We need to sit down with our partners and look at sales by store per item. RFID can help us determine whether we had specific products on shelves on the right day of the week. It would help us better prepare for next year.”
Part of these partnerships is to share data on the products that are selling off the shelves. “The value of this data is huge, and our mindset should be that we are willing to share it with each other,” Walton says. “If Wal-Mart were to look at it as a closed process and not talk to trading partners, our partners would ship us fewer products simply because we sold less last time. We need to analyze our actions and share the data with our trading partners.”