Asda, the UK subsidiary of US supermarket Wal-Mart, is about to
follow its rivals Tesco and Marks & Spencer and begin trials of
radio frequency identification (RFID) tags.
Simon Langford, manager of Wal-Mart's global RFID strategy, who
was in London for last week's Global RFID ROI Summit, said, "We are
currently going through the final details of an RFID trial."
Langford said Wal-Mart, which has pioneered the deployment of
RFID technology in the US, has required a second group of 100
suppliers to tag their goods and is beginning to move to
second-generation technology.
Wal-Mart, the world's largest supermarket chain, started its
RFID trial in January last year when it told its 100 largest
suppliers to tag a range of products.
The retailer's 300 largest suppliers will all take part in the
trial by January 2007 and the number of supermarkets receiving
tagged goods will double during 2006 from 500 to 1,000, said
Langford.
Wal-Mart is deploying mobile RFID readers at the first 500
stores involved in the trial. Using a proprietary application, the
devices will direct staff to boxes of products that need to be
replenished.
Langford talked up the benefits of RFID tagging, citing one of
Wal-Mart's suppliers that was able to cover the cost of the trial
by being able to more effectively prevent the loss of goods.
"That discovery paid for their whole year's tagging. They were
able to get their products out in a timely way to our stores," he
said.
However, Jeff Woods, research vice-president at analyst firm
Gartner, questioned the benefits RFID had brought to Wal-Mart's
suppliers.
"Although RFID probably helps Wal-Mart in its in-store
operations, we know it mostly does not pay for itself," he
said.
Packaged goods companies could realise efficiencies by deploying
RFID tags, but the benefits were generally less than the cost of
the tags, said Woods.
Wal-Mart's RFID deployment
Wal-Mart's deployment of RFID has produced a 16% reduction in
out-of-stock merchandise at stores taking part in the trial.
Wal-Mart commissioned the University of Arkansas to compare the
number of "stock-outs" in RFID-equipped stores with stock-outs in
control stores.The study showed that RFIDout-of-stock items were
replenished three times faster than items with standard
barcodes.
Global RFID spend
2004
- Retail £95m
- Logistics £120m
- Manufacturing £395m
2005
- Retail £165m
- Logistics £200m
- Manufacturing £652m
Source: Datamonitor