Wal-Mart making steady if slow progress with RFID, Forrester says
Although not all of the suppliers in Wal-Mart Stores Inc.’s pace-setting RFID pilot will be ready next month as originally planned, the project has made important gains in turning RFID adoption into a reality, Forrester Research Inc. says.
Forrester, based on a recent interview with Wal-Mart CIO Linda Dillman, says the world’s largest retailer is showing improved performance in the ability of RFID tags and readers to capture product data at checkpoints in three Texas distribution centers, where Wal-Mart and 137 suppliers are testing the use of RFID to track the movement of cases and pallets.
Among the proven benefits cited by Forrester:
• While testing the ability of RFID readers to capture product and shipment data from tags, read rates have climbed from 40-60% into the high 90s at key points of distribution.
• RFID has improved several store activities, such as generating picking lists for items out-of-stock in stores.
• Wal-Mart can read RFID data to see if stocking carts have been cleared from selling floors before stores open for business.
Wal-Mart had set a January 2005 deadline for its 100 top suppliers (who have been joined voluntarily by 37 others) to begin shipping all cases and pallets into the three distribution centers—one each for Wal-Mart general merchandise, grocery products and Sam’s Club merchandise.
But some suppliers are behind in getting ready, due to lack of ready equipment. “Unfortunately, there have been suppliers who waited too long to place orders for tags. That means that they will be shipping in late January or even early February,” Carolyn Walton, vice president for RFID at Wal-Mart, says in the Forrester report.
Broader roll-outs of RFID—including the transmission of RFID data over the Internet-based EPCglobal Network for visibility by retailers and their authorized trading partners—will require further evolution of RFID and support technology, Forrester says. The prices of tags, now about 40 cents to $1 each, and readers, now about $3,000 each, will have to come down before they become more widespread, particularly for high-volume, low-margin products. And companies must be willing to pay the cost of software systems that can connect RFID data to the Internet as well as integrate it with back-end ERP systems, Forrester says.
Nonetheless, Forrester credits Wal-Mart for pushing RFID beyond conceptual plans to a real situation, where the strengths and weaknesses of RFID can be proven. Wal-Mart and other companies pushing RFID deployments have also accelerated the move toward international data standards to support wide-scale RFID deployments, Forrester says.
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