Report Shows How Wal-Mart Did It

The report analyzes the effect of the auto-generated pick lists and notes that when compared with pick lists manually generated by store associates, they contain more items, signifying they identify more low-stock items than associates see. The report also notes that over time, stock levels of SKUs from tagged cases improved and the amount of these SKUs on the daily auto-generated pick list fell, indicating the SKUs were consistently better-stocked.

It also notes that along with the reduction in out-of-stocks, the use of auto-generated pick lists saves time because store associates no longer have to scan empty shelves manually to generate pick lists. Tracking the savings in time, however, was not part of the research study, and the report contains no quantifiable proof of time reductions. However, the researchers who carried out the study postulate that Wal-Mart and other retailers could realize significant operational efficiencies through this and other effects of using RFID technology.

During the 29-week study, which ran from February to September, the researchers conducted daily inventories of 4,554 different (SKUs), representing products from all store departments, looking for out-of-stocks. Cases of these SKUs at the control stores were received and processed using bar codes affixed to the cases—which sometimes contained a single unit of the SKU. RFID tags affixed to the cases of the same SKUs were used to receive and process those cases at RFID-enabled stores. Prior to the 29-week study, the out-of-stock rates at both the test and control stores were measured for a period of time before RFID applications were enabled, in order to establish a baseline.

The report was written by Bill Hardgrave, research lead and director of the university's RFID Research Center, and executive director of its Information Technology Research Institute (ITRI), along with Matthew Waller and Robert Miller, Walton School of Business professor and doctoral student, respectively.

The University of Arkansas study is one of a number of studies looking into the use of RFID in the retail supply chain. "Current and future efforts are focused on rigorous statistical modeling, which will better isolate the RFID effect so that the magnitude of the change caused by RFID can be determined," says the report, adding that RFID is one of many factors, such as weather and personnel fluctuations, that affect out-of-stock rates.