Quantifying Wal-Mart's gain from RFID

A news article from 2005 assessing the effectiveness of RFID implementation

Wal-Mart Stores Inc has offered the first piece of quantifiable data that shows the benefits of its RFID rollout, which currently is one of the worlds largest.

Wal-Mart, which has mandated that its suppliers use RFID technology, commissioned the University of Arkansas to conduct a 29-week study to analyze out-of-stock merchandise at 12 pilot stores with RFID and 12 control stores without the technology. The study, which Wal-Mart stressed, was independent, found a 16% reduction in out-of-stocks and that out-of-stock items with RFID were replenished three times faster than comparable items using traditional bar codes. Wal-Mart also saw a 10% reduction in manual orders, which mean a reduction of excess inventory. This is no longer a take-it-on-faith initiative, said Wal-Mart CIO Linda Dillman, in a statement. The company also reiterated its intentions to use the newest hardware standard, known as EPCglobal Generation 2, which is expected to become the first RFID standard to be ratified by the International Standards Organization early next year. Gen2 truly makes the 'sub 10-cent' tag become a reality, Dillman said. Given the recent drop in price of Gen 2 tags, which has been 70% in some cases, Wal-Mart said it expects to begin accepting goods tagged with Gen 2 tags in January and expects to stop receiving older-generation tags by mid-2002. But don't wait - make the transition to Gen2 as soon as possible, Dillman said to suppliers. Her comment likely will set suppliers' eyes rolling. This year, Wal-Mart, the world's biggest retailer, began to install RFID equipment in more than triple the number of its stores where RFID technology already exists. By November, the company would have more than 500 retail outlets and five distribution centers equipped with RFID. By the end of 2006, more than 1,000 outlets will be RFID live. About 130 suppliers currently ship to Wal-Mart using RFID technology, and another 200 suppliers are expected to join then in January. By early 2007, the goal is to have more than 600 suppliers using RFID

Reference: news article from the Logistics Business Review, publiched 18^th October 2005