By Mark Roberti

Apr. 1, 2005—By most accounts, Wal-Mart has one of the most efficient supply chains on earth. But even Wal-Mart’s supply chain has inefficiencies. The only way for a store manager to know that some shelves are empty is to have employees (or “associates,” as Wal-Mart calls them) walk the aisles. If an associate spots an empty shelf, he or she scans the bar code on the shelf. A screen on the associate’s handheld bar code scanner indicates how many items are in the store’s back room or in transit to the store.

Often associates spend 15 or 20 minutes looking for items in the back room. If they don’t find them, they sometimes use their handheld computers to change the on-hand inventory to zero and order more cases of the product—even though several cases may be tucked away somewhere.

When the associate orders more products, cases are picked at the nearest distribution center, put on Wal-Mart–owned trucks and sent to the store (deliveries are made daily). When the cases arrive at the store, an associate does not scan them into inventory using a bar code scanner, because that would take too long and slow operations to a crawl. Instead, Wal-Mart assumes that each pallet, case or item ordered has arrived at the store.


“We update perpetual inventory with the quantity shipped to the store, once we receive that trailer,” says Simon Langford, manager of Wal-Mart’s RFID strategy. “But we still don’t know what’s in the back room and what’s gone out to the sales floor and back again. We have no visibility of that.”