Wal-Mart positive about RFID

US retailer Wal-Mart announced that over a quarter of its US stores would be able to work with radio-frequency identification (RFID) tags within the next 18 months. Another 200 of its top US suppliers are expected to be using the tags by January 2006, while another 300 suppliers are expected to have adopted the system by January 2007. Currently, 100 of the company's suppliers are already using the system, despite initial resistance.

Wal-Mart hereby reaffirms its commitment to the new technology. To emphasize its belief in the system, it also released details of a study made in its stores by the University of Arkansas that showed that the use of RFID tags was likely to increase suppliers' sales.

The study - the first of its kind - was conducted in 24 Wal-Mart stores, of which half used RFID. It found that the use of RFID tags significantly decreased "out of stocks" and excess inventory. According to Linda Dillman, Wal-Mart's chief information officer, the study revealed that RFID "is no longer a take-it-on-faith initiative" and that it proved that the tags "increase how often we put products in the hands of customers who want to buy them." The study showed that RFID-enabled stores were 63 percent more effective in the refilling of out-of-stock items than traditional stores. With the system, sales at the cash register automatically communicate to the stockrooms to move goods out and to re-order products as they are sold.

According to the results of the study, products that are RFID tagged are three times less likely to be out of stock than those that are not at the same store. It also means that manual orders from the stores to the distribution centres were reduced by 10 percent. "Essentially, this meant fewer total out-of-stock items and fewer occurrences of empty shelves when the merchandise was in the backroom," said the head of the university's RFID research centre, Bill Hardgrave.