CGT Inside News - 10/19/2005
Wal-Mart Cuts Out-of-Stocks 16% in RFID-Enabled Stores
By Alliston Ackerman, News Editor, [email protected]
October 19, 2005 - At long last, there is quantifiable evidence proving that electronic product codes (EPC) powered by RFID technology can impact merchandize availability in stores. According to an independent study conducted by University of Arkansas, Wal-Mart experienced a 16 percent reduction in out-of-stocks at 12 RFID-enabled pilot stores versus 12 control stores not equipped with the technology. In addition, the study commissioned by Wal-Mart concluded that RFID-labeled products were replenished three times faster than items marked with standard barcodes.
"This is no longer a take-it-on-faith initiative," says Linda Dillman, EVP and CIO for Wal-Mart. "This study provides conclusive evidence that EPCs increase how often we put products in the hands of customers who want to buy them, making it a win for shoppers, suppliers and retailers."
Wal-Mart is also making inroads in overall inventory reduction using RFID. According to Rollin Ford, EVP for Logistics in Wal-Mart, manual orders placed by stores were reduced by approximately 10 percent.
By the end of 2006, more than 1,000 Wal-Mart stores and distribution centers (DC) will have installed RFID systems. The retailer is currently working with its Top 100 suppliers to put EPC codes on more SKUs and deliver tagged products to stores and DCs throughout the United States.
Will the emergence of quantifiable benefits and recent tag price cuts be enough incentive for suppliers to consider the technology as more than just a cost of doing business? According to Ed Matthews, director IS for Pacific Cycle, "Cost is still higher than most of the ROI calculations, but [this news] does give good hope that RFID will soon be within the range of good ROI." Pacific Cycle is currently tagging 100 percent of its products with EPC technology.
Despite Wal-Mart's in-stock victory, skepticism still exists within the market. A recent study conducted by Consumer Goods Technology and Forrester Research reveals that only 34 percent of retailers and 24 percent of manufacturers have identified key areas of business benefit around RFID. The complete results can be found in the 2005 Consumer Goods/Retail Shared Strategy Study, within the November issue of CGT.
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By Alliston Ackerman, News Editor, [email protected]
October 19, 2005 - At long last, there is quantifiable evidence proving that electronic product codes (EPC) powered by RFID technology can impact merchandize availability in stores. According to an independent study conducted by University of Arkansas, Wal-Mart experienced a 16 percent reduction in out-of-stocks at 12 RFID-enabled pilot stores versus 12 control stores not equipped with the technology. In addition, the study commissioned by Wal-Mart concluded that RFID-labeled products were replenished three times faster than items marked with standard barcodes.
"This is no longer a take-it-on-faith initiative," says Linda Dillman, EVP and CIO for Wal-Mart. "This study provides conclusive evidence that EPCs increase how often we put products in the hands of customers who want to buy them, making it a win for shoppers, suppliers and retailers."
Wal-Mart is also making inroads in overall inventory reduction using RFID. According to Rollin Ford, EVP for Logistics in Wal-Mart, manual orders placed by stores were reduced by approximately 10 percent.
By the end of 2006, more than 1,000 Wal-Mart stores and distribution centers (DC) will have installed RFID systems. The retailer is currently working with its Top 100 suppliers to put EPC codes on more SKUs and deliver tagged products to stores and DCs throughout the United States.
Will the emergence of quantifiable benefits and recent tag price cuts be enough incentive for suppliers to consider the technology as more than just a cost of doing business? According to Ed Matthews, director IS for Pacific Cycle, "Cost is still higher than most of the ROI calculations, but [this news] does give good hope that RFID will soon be within the range of good ROI." Pacific Cycle is currently tagging 100 percent of its products with EPC technology.
Despite Wal-Mart's in-stock victory, skepticism still exists within the market. A recent study conducted by Consumer Goods Technology and Forrester Research reveals that only 34 percent of retailers and 24 percent of manufacturers have identified key areas of business benefit around RFID. The complete results can be found in the 2005 Consumer Goods/Retail Shared Strategy Study, within the November issue of CGT.
[PRINTER FRIENDLY VERSION]