Wal-Mart, Tesco and Metro Group Present a Glimpse into the RFID Future

Jan 18, 2005

By Bill Bittner

In the Monday morning Super Session at the National Retail Federation conference sponsored by Intel, three retailers in the vanguard of RFID implementation discussed their efforts
and their vision for the future. The audience was offered a different perspective on the benefits of RFID from each of the retailers. Linda Gillman, CIO of Wal-Mart spoke about
the change in business processes, Colin Cobain of Tesco focused on improving supply chain integrity to reduce shrink, and Zygmunt Mierdorf of Metro Group talked about the consumer

Wal-Mart’s Gillman led off by bringing everyone up to date on the status of their implementation. She reviewed their holistic approach to the technology beginning in 2003 when
they set their goals and brought their technology vendors and merchandise suppliers on board. So far, they have installed 230 miles of cable and 14,000 pieces of hardware. They
have three DC’s live, 104 Wal-Mart stores and 36 Sam’s Clubs. Fifty-seven vendors are live and January is not yet over. (You’ll recall the target was 100 by the end of January.)

Read rates are nearly 100 percent for pallet tags; 90 percent on cases from vendor pallets; 95 percent on single cases; 98 percent on compactor waste; and 66 percent on mixed
warehouse to store pallets.

The biggest impact has been in the area of process monitoring. Automatic backroom pick lists are generated for RFID tagged items. Exception reports on manual ordering ask why
an item had to be ordered and then didn’t leave the backroom. One third of the store inventory is in the backroom and RFID is starting to provide visibility for these items.

Tyson chicken was the first item to be put on automatic sales area replenishment. Merchandise vendors are notified within 30 minutes when their items move from warehouse to store.
The goal is to have 600 stores live in a short period of time.

Colin Cobain discussed Tesco’s implementation of RFID as a way to improve the integrity of their supply chain. He included a live demonstration of a store receiving dock detecting
an attempt to deliver a pallet of merchandise to the wrong store. It showed the detection of a pallet which had been pilfered, and the confirmation of a good pallet. Tesco monitors
the pallets from their creation at the end of the pick line, through shrink wrapping for physical integrity, to the shipping door for transport, at the store receiving dock, and
into the store cage area. By tracking the RFID’s, they are able to ensure everyone along the supply chain that their receipts are accurate. At any point, the operator can inquire
into the exact contents of a pallet or tote using supporting applications that detail the individual units.

Metro Group focused their RFID efforts on customers. In their innovation center, where they test new store concepts, they have built special equipment to exploit the possibilities
of RFID. One such apparatus is an RFID Case Label tester. Workers place a case of RFID tagged merchandise in the tester and the machine maps its RFID characteristics to ensure

There’s also a special store hanger conveyer that detects the location of a particular unit and then runs the conveyer to bring it to the unload point. Use of the RFID on clothing
in the store allows it be monitored in the dressing room. By combining the RFID data with frequent shopper data, the retailer is able to offer the customer alternative products
and accessories for the product they try on.

RFID was also used to speed the checkout process. Stacks of items piled on the counter can be read simultaneously. The RFID’s are removed from the products as they are bagged
so that the consumer has no concern over privacy issues.

Moderator’s Comment: These leading edge retailers emphasized process change, security, and customer service as primary benefits of RFID. What do feel
will be the most beneficial aspect of RFID?

My personal belief is that the process benefits will far exceed all the others for the foreseeable future. Only when consumer privacy fears have been allayed
enough to allow RFID’s to stay on the items leaving the store will consumer benefits approach those of the process benefits achieved by retailers. With more visibility to their
processes, retailers will be able to confirm their execution and even create incentive programs based on non-financial targets that can be monitored in real time. The net result
will be reduction in the retailer’s number one controllable expense — labor.

Bill Bittner – Moderator

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