RFID cuts store out-of-stocks 16% at Wal-Mart stores

RFID is starting to pay dividends, including a 16% reduction in out-of-stock products at Wal-Mart and Sam’s Club stores, Wal-Mart Stores Inc. says.

With five Dallas-area distribution centers, nearly 500 Wal-Mart and Sam’s Club stores, and 140 suppliers equipped to handle RFID-tagged shipments as of last October, the retailer reduced by 16% its number of product out-of-stocks on store shelves during a 29-week period last year, according to a study conducted for Wal-Mart by the University of Arkansas, a Wal-Mart spokesman says.

RFID, or radio frequency identification, is a web-based system of tracking inventory throughout the supply chain. Wal-Mart operates its system of RFID tags and readers on its corporate web-based Retail Link network, providing suppliers as well as its own managers and employees web access to data on the movement of shipments.

Wal-Mart also reports that the process of ordering and receiving RFID-tagged shipments is three times faster than for non-tagged shipments, and that RFID has helped to eliminate excess store inventory due to unnecessary replenishment by suppliers, Wal-Mart says.

As RFID tags move toward a sub-10-cent price this year, the RFID project will expand more quickly, Wal-Mart says. It expects to have more than 300 suppliers live with RFID this month and more than 1,000 Wal-Mart and Sam’s Club locations live by year-end.