March 16, 2008
start:Wal-Mart Readies 2008 RFID Roadmap
University study demonstrating RFID benefits in stores could drive this year's deployment plans.
Researchers from the RFID Research Center at the University of Arkansas released findings recently on the benefits of a RFID-enabled automated inventory management system. The project relies on
software to continually update inventory counts for shaving creams, toothpastes and razors in stores, receiving data from
RFID readers and point-of-sale registers to keep store shelves stocked full of these fast moving items.
The study could form the basis for the company's RFID deployment plans this year because it validates benefits from RFID that executives just couldn't quantify, until now. "It's clear that Wal-Mart's plans in the United States will differ from those at Sam's Club, but nothing has been finalized," says John Simley, Wal-Mart spokesman. "The end result will be similar, but we'll carry it out in different ways. Sam's Club RFID deployment is smaller and far less complex."
For years, studies conducted by the University of Arkansas highlight ways RFID can improve inventory replenishments cycle times and accuracy, as well as reduce out-of-stock merchandise in stores. The most recent study examines RFID systems at 16 Wal-Mart locations. The stores have RFID readers and antennas installed on receiving dock doors, and doorways that connect storerooms to stockrooms and store floors.
The university used eight test stores and a matching set of eight control stores. Test stores were selected from the existing set of approximately 1,000 RFID-enabled Wal-Mart stores.
Stores were chosen based demographics, square foot of store, annual sales and the absence of known impacts such as annual inventories, remodeling or resets, market trials and other disruptions. The research sample contained a mixture of Supercenter and Neighborhood Market stores.
A group audited the inventory for 23 weeks, from May through October, counting items by hand. The chosen products, about 300 in the air freshener category from a variety of consumer packages goods manufacturers, provided the opportunity to tag all cases in that category.
The daily inventory count began at approximately the same time each day, and the auditors followed the same counting pattern, starting at bottom left and working to the right and then up. Stores were counted between the hours of 4 p.m. and 8 p.m.
Store employees keying in wrong data into the inventory software application; stolen products; unaccounted damaged, spoiled or returned products; incorrect shipments from distribution centers and cashier error are the major causes of inventory inaccuracy, which can lead to out-of-stock items or excess inventory. Inventory inaccuracy can cause automatic replenishment systems to order unnecessary product or fail to order needed items.
The study determined RFID reduced inaccurate inventory counts by 13 percent at stores with an automated replenishment system, compared to the others.
The university released a white paper titled "Does RFID Improve Inventory Accuracy? A Preliminary Analysis." It is available on request from the university's Webs site. (Enter RFID as the keyword.)
