Wal-Mart Grapples With RFID
May 14, 2008
The first question asks how RFID is related to Wal-Mart’s business model. No insight is given in the text as to what that business model is. I believe the answer can be summed up in their slogan “always the low price”. Wal-Mart is so huge that they dictate to their suppliers how the supplier will run their own businesses and what Wal-Mart will be charged. For more insight on Wal-Mart and how they do business see “The Wal-Mart You Don’t Know” at . http://www.fastcompany.com/magazine/77/walmart.html
The case study indicates that the largest reason Wal-Mart wants RFID tags is to insure that merchandise is on the store shelf instead of the storeroom in the back of the store. Wal-Mart already insists merchandise is delivered to stores on time, every time. Suppliers are benefited if their product is available for sale when a customer wants it. Suppliers are not benefited when a tag costs 40 to 50 cents each and Wal-Mart expects the vendor to absorb the cost. I don’t think suppliers are benefited, just another cost of doing business with Wal-Mart.
Wal-Mart suppliers had several problems implementing the RFID systems. First was cost, as mentioned above. Next, the tags did not work well with all merchandise. Certain liquids, metals and porous material interferes with the radio waves. Being new technology, standards have not been written and equipment to use the tags has not been fully developed. Suppliers’ biggest problem was Wal-Mart itself demanding the technology be used, even though it was yet to be proven reliable.
Suppliers will be able to use the tags more effectively if price, consistent standards and the reliability of the tags themselves improve.
The articles sited for the case study where written in 2004 through 2006. At the time of writing the case study 500 stores had equipment to read the tags and 500 more where slated to get the equipment. It appears Wal-Mart...