Wal-Mart, Suppliers Affirm RFID Benefits

The RFID team is not being disbanded, Langford explains, but is instead playing a supporting role. "The core team is still here and is interacting with operations to ensure that the knowledge that we've gained over the past five years is passed on to operations as they create the roadmap for where they would like to see this initiative taken," he says. "We are identifying lots of new opportunities and are prioritizing those. The operational side has dedicated teams to step up and deliver the process changes enabled by the technology to the stores. So we are working on the same priorities in lockstep."

The Wall Street Journal article deemed the RFID effort a failure because it hasn't reduced costs. However, Langford points out that the focus of the retailer's RFID efforts has been on improving on-shelf availability and creating value not just for Wal-Mart, but also for customers, who benefit from finding the items they want to buy, and suppliers, who benefit from the increase in sales.

"We've really been focused on changing the service we give to our customers and driving value for suppliers and ourselves," he says. "That's been our primary goal—to focus on collaborative benefits right from the outset, rather than focus only on internal efficiencies. We understand that there are some suppliers out there, if you go looking for them, that don't understand our vision, but that's just an educational process."

Wal-Mart is seeing some inventory reductions due to EPC RFID. Manual orders are down 10 to 15 percent in stores utilizing RFID, which means that staff are not overriding the system and ordering goods that might, in fact, be in the back of the store. But the real benefits will likely come as more cases are tagged and more data is available. Working together, Wal-Mart and its suppliers can use the data to improve replenishment based on the improved visibility RFID provides.

Wal-Mart is sending data from RFID-enabled stores back to each of its 600 suppliers tagging pallets, cases and promotional displays within 30 minutes of a tag being read. This data has enabled such suppliers as Campbell Soup Co., Kimberly-Clark and Procter & Gamble (P&G) to measure the execution of promotions and boost sales.

"We're already seeing value," says Campbell Soup CIO Doreen Wright. "It's hard to dispute the value of this technology." She says Campbell Soup has been tagging displays for large-scale promotions, analyzing the data it gets back from Wal-Mart to determine which stores are executing properly, then working with Wal-Mart to get displays out to the floor at those stores that haven't gotten them out on time.