RFID in Walmart
Submitted By: Kritika Goyal (22) & Molshri Bhati (61)
INTRODUCTION: In June 2003 Wal-Mart first announced its plan to implement RFID technology in its supply chain by January 2005; this caught many of the suppliers unawares. Though the plans envisaged compliance from the top 100 suppliers, around 129 suppliers jumped into the fray, afraid of being left behind in the race. RFID technology was invented in 1969 and patented in 1973; after thirty long years WalMart has demanded its implementation. Expectations are high, unfortunately RFID technology is still in its infant stage.
In November 2003, Wal-Mart once again asserted its requirements. The following were explicitly spelt out: 1. What the EPC (Electronic Product Code) would be, 2. What class of chips they would accept, and 3. Which distribution centres would start accepting RFID deliveries. Much has happened since then. To its suppliers, Wal-Mart has spelt the requirement of 96-bit EPC with a Global Trade Identification number, which is an international standard. The tags are expected to operate in UHF spectrum (868 MHz to 956 MHz). The plan is to standardize the Class 1 Version 2 of the EPC specification [RFIDJournal.Com]. The EPC global, a joint venture between Uniform Code Council and EAN (European Article Number) International, is developing this particular standard. This tag will carry the 96-bit serial number and will be field-programmable. This will enable the suppliers to write serial numbers to the tags, when they apply the tags to the products. The EPC-compliant tags in UHF band consists of 1. EPC data format on 2. One of the existing communication protocols, Class1 or Class0 two main the parts: chip
Note: Class0 and Class1 specifications differ. Class0 is a factory programmable tag while Class1 permits the end users to write a serial number on it. They are not interoperable. A multi-protocol reader is required to read both tags. The Class1 Version2 that is being pursued is expected to incorporate both specifications of Class0 and Class1. This Version2 will be a globally accepted protocol. As of now Wal-Mart is already tracking pallets and cases from suppliers coming to one distribution centre. The plan is to expand to other suppliers soon and roll out the technology
regionally across the US . By the end of this year, the intention is to track all pallets, and cases of all products from the top 100 US suppliers, and by late 2006, from all US suppliers. Wal-Mart will then begin rolling the technology out internationally. The increased demand has already set Manhattan Associates working on new software that will allow companies to plug RFID technology to warehouse management system, on all platforms. Wal-Mart dreams of achieving a great RFID enabled, fool proof, error free, transparent supply chain. To this end, RFID readers are being installed at distribution centres and stores and buying equipment for printing tags. The expense of investments in new technology every year will be covered in the normal capital budget
Why WalMart is adopting RFID? The application of RFID deeper into retail operations than case or pallet-level tracking is not really an Asset Protection driven proposal. The ability to better track SKU level items, smooth out merchandise flow, and prevent out-of-stocks while eliminating non-productive, profit-draining overstock situations is a main tenant of retail. The better Walmart, or anyone can get at doing that, the more control they have in their merchandise investment and the more profit can be squeezed from each dollar invested. With improved profit to investment ratios along with cost-controlling measures such as improved productivity for store level associates, a company can use the gain to pass on in savings to their customers, which is the real secret to success. Asset protection will benefit from the improved operations as well. Shrink is unaccounted for invested dollars. A retailer invests in...
Please join StudyMode to read the full document