Oct 05, 2007At EPC Connection 2007, the fourth annual member conference of the industry standard-setting group EPCglobal, Carolyn Walton, Wal-Mart's VP of information technology, unveiled three new initiatives that are part of what she dubbed a "change of focus" in the retailer's RFID program. "We're coming at [RFID] from a different angle," Walton told conference attendees. Rather than just rolling the technology out across the company, she explained, Wal-Mart is concentrating on using RFID to improve specific business processes.
The RFID program at Sam's Club, a Wal-Mart-owned warehouse retail chain, is set to grow significantly. The company has begun asking 700 of its suppliers to attach an EPC Gen 2 RFID tag to each pallet of goods headed for the Sam's Club distribution center (DC) in DeSoto, Texas. Sam's Club has affixed location RFID tags to store shelving, and is using RFID interrogators mounted on forklifts to track the placement of tagged pallets by associating each pallet tag's Electronic Product Code (EPC) number with the nearest location tag. The retailer currently has 73 suppliers shipping tagged pallets to the DC, Walton said, which services about 40 Sam's Club locations.
The retailer's second program being rolled out is designed to help it accurately execute weekly product promotions. To support this initiative, Walton said, Wal-Mart has begun asking its suppliers to tag cases and pallets of products to be featured in upcoming promotions. Wal-Mart spokesperson John Simley explains that the company is embedding RFID tags into flooring at what it calls "hot spots"—highly visible locations in the store, such as the ends of aisles. The tagged shipping pallets, loaded with items to be promoted, will be brought onto the sales floor and placed in hot spots.
Associates will regularly walk past all hot spots and use RFID-enabled handheld computers to read both the location tags in the floor and the pallet tags. Through a wireless link with Wal-Mart's back-end system, the handheld will consult the promotions schedule and send an alert to the associate if a hot spot does not contain the correct product—that is, if the appropriate items are not on the floor in time to coincide with a product promotion, or if promotional goods are in the wrong hot spot or on the floor after the promotion has concluded.
"We may have a sale on a specific item that is advertised in a [sales circular] on a Friday," Simley says, "and that product needs to be in its designated hot spot on the sales floor by the date that the sale begins." If products are not on the sales floor as scheduled, then Wal-Mart and the supplier stand to lose a significant number of sales on that item.
The goal of the third Wal-Mart initiative, Walton explained, will be to determine whether the retailer can improve sales across an entire product category—the test category is air fresheners—by asking all suppliers in that category to tag cases and pallets of products sent to the pilot locations. Walton noted that the pilot is not yet complete but going well so far. "We are seeing significant improvements in inventory [in the test category]," she said.
Studies have shown that tagged cases of items shipped to RFID-enabled stores are less likely to experience out-of-stocks, relative to items not shipped in tagged cases. Workers can quickly identify tagged cases of replenishment product as they enter a store's loading dock, and use RFID-enabled handheld readers to quickly locate the cases in the back of the store. Improving the availability of all items in a category should enable Wal-Mart to capture sales from customers who are brand-loyal and would likely go elsewhere for a specific product if it were not available on the shelf.
According to Simley, 600 of Wal-Mart's 61,000 U.S. suppliers are already tagging cases and pallets of some of the products they ship to the retailer's RFID-enabled distribution centers. The hot-spot tracking and category-saturation initiatives, he says, will not require many retailers outside of the 600 to begin tagging.
