Wal-Mart Stores' push of radio-activated tags on suppliers has hit a standstill, as tests show radio frequency identification technology hasn't led to savings. Wal-Mart has installed the RFID technology at five stores, although original plans were to install the technology at up to 12 distribution centers by January 2006.
Wal-Mart Stores plans to make use of more RFID readers, including handheld devices and forklift readers, in an effort to further streamline its operations. The retailer also is gearing up to transition its RFID systems to next-generation Electronic Product Code standards.
More than 330 suppliers will be shipping RFID-tagged merchandise to some 1,000 stores and warehouses by January, according to Wal-Mart Stores CIO Linda Dillman. The roughly 500 stores that are now RFID-equipped have been able to reduce out-of-stocks by about 16%, Dillman told analysts this week.
Wal-Mart may spend up to $3 billion on its plan to have all suppliers use RFID technology by 2005 but could save billions in other areas. A report from A.T. Kearney says RFID could decrease Wal-Mart's inventory management costs by 7.5% and boost sales by avoiding sold-out items, while it could cost each store about $100,000 to read the data and cost product suppliers millions.
As one of Wal-Mart's top suppliers, Texas-based Kimberly-Clark announced a deal with IBM to implement RFID technology to automate its inventory. Wal-Mart has asked all its suppliers to use RFID tags by 2006.