Walmart expands its RFID tag system

Walmart Inc. is requiring suppliers in more product categories to attach RFID tags to their items, which helps the retailer ensure appropriate inventory levels in stores.

Suppliers have until September 2 to comply with the new mandate, the company said. Walmart’s decision was first reported by RFID Journal on Jan. 28.

Walmart has been using radio frequency identification, or RFID, tags to track clothing items since 2020.

Since then, “we have seen dramatic results in our ability to ensure product availability for our customers, leading to improved online order fulfillment and customer satisfaction,” said Shelly McDougal, Senior Director merchandising at Walmart.

Expanding the technology to more categories “will further improve inventory accuracy across the business, provide a better in-store shopping experience for customers, and drive more online and in-store pick-up capabilities.” , said McDougal.

Donnie Williams, executive director of the University of Arkansas Fayetteville’s Supply Chain Management Research Center, said that simply put, RFID uses radio frequency wireless technology to identify items. .

RFID tags that are applied to products have tiny chips containing digital identifiers for each specific item, Williams said. The tag also has a thin, built-in antenna so it can share that information with an RFID reader, he said.

Unlike barcodes, which must be scanned one at a time, up to a thousand RFID tags can be read at once, without direct line of sight and from a distance of up to 30 feet, Williams said. .

Justin Patton, director of the RFID lab at Auburn University and former chief executive of the University of Arkansas RFID lab, said RFID is used in many everyday items, such as keys. room codes, pet tags, keyless entry for cars and mobile payment systems. .

But for retailers, the technology “significantly improves inventory accuracy,” Patton said.

“It allows us to track items through the supply chain, increases efficiency, reduces waste and emissions, helps sort recycling, increases sustainability, enables faster and safer product recalls and allows us to authenticate products to prevent counterfeiting or even theft,” says Patton.

Williams said this increased ability to identify an item’s exact location in the supply chain and ultimately in the store “has become more important than ever in the world of omnichannel shopping, where customers can shop online. online and collect in store.

“Without real-time visibility of total inventory, it’s impossible to be successful in e-commerce,” Williams said. And “shipping from store and picking up in-store is key to making e-commerce profitable.”

However, because a store’s products are constantly changing, it’s difficult to keep accurate inventory information, Williams said. RFID provides that level of accuracy, he said.

Williams, who is also an associate clinical professor at the university’s Walton College of Business, noted that Walmart has been experimenting with and testing RFID since 2004.

McKinsey & Co. found proven benefits of the technology, including more than 25% improvement in inventory accuracy and a 10% to 15% reduction in inventory labor hours.

The research firm also found that the price of RFID tags has fallen by around 80% over the past 10 years, making the technology more attractive to retailers and other industries.

Walmart’s expanded mandate, however, “will definitely come at a cost to suppliers,” Williams said. But he doesn’t think any of them are surprised by the move.

Target and other retailers have been using RFID for several years, Williams said.

“In fact, they are in many ways ahead of Walmart in adopting RFID,” he said. “However, due to Walmart’s size and influence, this could be an even bigger game-changer in the retail landscape.”

Williams said an Accenture study published in 2020 showed that in North America, 47% of retailers had fully adopted RFID and 45% said they were “source labeling”. This means retailers are engaging with their suppliers to perform RFID tagging, he said.

“The question has always been whether the business case and return on investment makes sense,” Williams said. “In today’s omnichannel world, I think that’s the case, and I think vendors recognize that as well.”

“Ultimately, I think this will benefit vendors by providing real-time visibility,” Williams said. “In the world of retail where [on time and in full] metrics rule, I think strong vendors could use visibility to demonstrate where their products are and use that information to their advantage. »

“It can reduce penalties for not meeting parameters,” Williams said, “while providing data to support their performance.”

Patton said the September 2 deadline might be difficult for some suppliers to get up to speed so quickly, “they’re all going to be getting there soon for all of their retail customers anyway.”

Most retail RFID programs have a lead time of around six months for tagging, Patton said. And fall “is generally a good go-live date for RFID tagging in retail.”

“It happens just before the holiday rush and gives suppliers most of the calendar year to get up to speed and get started,” he said.

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