RFID: Possibly Passe, But Not Going Away

In spite of the many challenges retailers trialing RFID have faced, and in spite of the "wait and see" attitude the majority of retailers are taking, RFID continues to make progress within the retail vertical. Though some retailers sigh nowadays when the subject of RFID is raised, or roll their eyes, when two of the world's largest retailers continue to focus their efforts on RFID, can we afford to ignore the technology? Recently, two of the largest proponents of RFID have again pushed their RFID initiatives forward. European megastore Metro recently initiated the largest ever rollout of RFID in Europe. In the United States retailing goliath Wal-Mart confirmed its belief in the power of RFID to improve supply chain efficiencies and took a significant step toward in-store RFID during a demonstration at the 2nd annual Entertainment Supply Chain Academy conference.

Initially encompassing approximately 200 locations of Metro Cash & Carry, Real stores and Metro Group distribution centers, Europe's largest RFID rollout is designed to enhance the company's distribution and store receiving processes by using accurately located tag data for more efficient operations and improved inventory management. "We are moving RFID out of the innovation labs and into working retail stores," says Dr. Gerd Wolfram, managing director of IT at Metro Group. The rollout incorporates technology from several RFID vendors including Reva Systems, Sirit, Intermec and Checkpoint Systems.

Several years ago Wal-Mart got the US RFID ball rolling with its infamous RFID mandate. Since then the mega-retailer has continued to trial and use RFID in its warehouses and distribution centers, but recently its focus has turned toward in-store use as well. At the 2nd annual Entertainment Supply Chain Academy conference held at the end of June in Los Angeles, Myron Burke, strategy manager of Wal-Mart's store innovations and supply operations indicated that the company wants to expand its use of RFID for item-tracking ââ€å¡Ã‚¬" not just in the warehouse, but on the sales floor as well. As quoted in a CNN Money article Burke says "We need efficient delivery of merchandise for that last 100 feet to the shelf. That is a critical part of the supply chain."

Specifically, Burke indicates that Wal-Mart is looking to reduce the impact out-of-stock items have on sales. According to Burke it typically takes Wal-Wart associates hours to discover out-of-stock items. The CNN Money article cites research from the Grocer Manufacturers Association that states that the average out-of-stock rate for promotional items is 8.3 to 17.1 percent. Another study cited, from the Sam Walton College of Business, states that the DVD and videogame industry loses about one percent (or $330 million) in annual out-of-stocks. Wal-Mart intends to utilized RFID to mitigate the effect such out-of-stock scenarios result in. "With RFID, there is complete supply chain transparency, where you can report info on (tagged) items every 30 minutes," CNN Money quotes Burke as saying. "There is an overall opportunity to apply a tag at the point of its manufacturing and see that product until it leaves the store."