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.
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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
- Retail £95m
- Logistics £120m
- Manufacturing £395m
- Retail £165m
- Logistics £200m
- Manufacturing £652m