How is Walmart Using Rfid Technology to Improve Supply Chain Transparency?

How is Walmart Using Rfid Technology to Improve Supply Chain Transparency?


Walmart is at the forefront of the application of information technology and implements the "RFID" strategy to improve the transparency of the supply chain.

 the popular application of RFID technology in the Winter Olympics
Walmart has always played the role of a technology pioneer, always seeking a competitive advantage by adopting various new technologies, and has always been at the forefront of information technology applications. In the 1980s, large retailers led by Walmart promoted the application of barcode technology, which greatly improved the efficiency of sales channels and created new profit growth points for the retail industry.

In the post-industrial era of the 21st century, Walmart is once again at the forefront of information technology applications and implements the "RFID" strategy, hoping to seek greater competition with competitors through the implementation of "RFID".

Technology trends: RFID replaces barcodes

At present, the identification technology widely used in the retail industry is barcode technology. When Walmart promoted its implementation, it greatly improved work efficiency, reduced a large number of manual operations, improved the circulation efficiency of goods, and created new profit growth for the enterprise. point.

Barcode technology has the advantages of low label price and low implementation cost, but the technology itself has insurmountable defects. For example, after the label is damaged, there is no specific error correction function, that is, the scanner cannot scan the content of the label, and thus cannot correctly identify the item.

Moreover, the amount of information contained in barcodes is small, and only product manufacturers and commodity categories can be recorded. Moreover, with the large increase in commodity types, the phenomenon that barcodes cannot meet commodity coding has occurred.

Driven by social needs, RFID technology has emerged to replace barcode applications, that is, radio frequency identification technology is a kind of non-contact automatic identification technology, that is, the identification of targets through non-contact two-way data communication through radio frequency is also often used. Known as contactless cards, electronic labels, electronic barcodes, etc., it is a hybrid technology that transmits and exchanges information through radio waves.

Radiofrequency identification technology is not a new technology. It was first used in the management of military materials during World War II, and it has only achieved large-scale development in civilian use in recent years. Usually, a typical RFID system is generally composed of RFID tags, readers, antennas, and computer systems.

In practical applications, the support of other software and hardware is usually required. Each RFID tag has an "Electronic Product Code" (EPC) similar to UPC. RFID technology is a new type of item identification technology for automatic identification.

Compared with the barcode technology widely used in the current supply chain, RFID technology has many advantages, so it has broad application prospects.

The application of RFID technology in supply chain management is mainly for logistics tracking and positioning. The implementation model is to stick RFID tags on pallets, boxes, or components, and the tags record the relevant information of the materials.

Through the automatic information transmission between the label and the reader, the manual hand-held barcode reader scans the barcode of the components and the WIP one by one, which reduces the occurrence of omissions to a certain extent greatly improves the work efficiency.

Walmart RFID strategy implementation case

In June 2003, when Walmart announced a January 1, 2005 deadline for suppliers to complete RFID innovation, suppliers were taken aback, and some didn't even know what RFID was. As of July 2007, Walmart has applied RFID technology in 1,000 of its 6,500 stores, covering 200,000 items, involving 600 manufacturers.

Walmart has been applying RFID technology in the logistics supply chain since 2004. After on-site inspection, after applying RFID technology in Walmart's retail malls and distribution centers, its shortage rate and product out-of-stock rate have been reduced by 16%, and the efficiency of commodity inventory management has improved by 10%. % and the replenishment speed of goods is about 3 times faster than before.

Replenishment efficiency in malls (supermarkets) is 63% faster, and the average inventory of goods in retail malls and distribution centers is reduced by 10%.

Before that, the supply update cycle was half a month or a month, which resulted in a long-term backlog of goods for sale in the warehouses of shopping malls or chain stores; now, Walmart requires suppliers to shorten the supply cycle, Increase the frequency of supply of small-batch, multi-variety, and large-scale products, and only provide goods with no more than 5 days of sales volume.

Walmart gains the following benefits from RFID applications:

1. The cost of commodity management/warehouse management is reduced, and the management accuracy is increased; the work efficiency of employees is greatly improved;

2. The real-time degree and transparency of the supply chain are further enhanced; the timely response capability is improved;

3. Significant improvement in customer satisfaction.

For the retail industry, Walmart has found the "first pot of gold" in RFID; at the same time, Walmart's gold nuggets in the field of RFID applications have also led to the "actions" of other retail giants, including corporations such as Metro and Best Buy.

Increased supply chain transparency

The implementation of the RFID strategy has brought many competitive advantages to Walmart, among which the biggest advantage is: improving the transparency of the supply chain, making the entire supply chain process more transparent and precise, and strengthening the control of the supply chain.

For how RFID can improve the transparency of the supply chain, the process can be described as follows:

1. The supplier sorts the products according to the orders from the distribution center, and then delivers them immediately;

2. At the entrance of the distribution center, the RFID reader on the door automatically completes the inventory and transmits it to the database when the shipping equipment passes through;

3. The distribution center distributes goods according to the type and quantity required by each store;

4. On the way of the goods being loaded and sent to the store, with the help of the GPS positioning system, we can accurately understand the location of the goods, and at the same time know the arrival time;

5. After arriving at the store, the vehicle directly passes through the entry port where the RFID reader is installed, and the goods are counted and put on the shelves directly;

6. Commodities that are placed randomly due to customers changing their purchasing decisions can be accurately found and returned to their positions through the RFID reader in the store;

7. With the sale of goods, it can be automatically reminded for replenishment; after the purchase, just push the cart through the channel equipped with the RFID reader, and the statistics of the goods will be completed automatically;

8. The system can quickly feedback the information of commodity changes to the supplier, and the supplier can arrange the production plan according to the sales of the goods, and actively prepare the goods.

9. With the wide application of RFID, the application of RFID automatic deduction will appear in the future, which also solves the problem of queuing up payment after shopping, which we usually see, improves efficiency, and facilitates customers.

Thoughts on Walmart's RFID strategy

As the above case describes, the results achieved by Walmart's RFID strategy are impressive. The success of Walmart is considered to be due to the ingenious combination of cutting-edge technology and high-quality services, that is, the construction of an efficient supply chain and logistics management system, which enhances its core competitiveness.

The supply chain management system built by making full use of modern information technology not only gives Walmart a cost advantage, but also deepens its understanding of customer demand information, improves its market response speed, and thus gains its competitive advantage.

RFID provides Walmart with a powerful tool to integrate the supply chain, improves the transparency of the supply chain, weakens the common "bullwhip effect" in supply chain management, and improves the efficiency of cooperation between enterprises in the supply chain. The trend of RFID as a future identification technology is irresistible. Only by actively participating in it, we can take the lead in new market opportunities.

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