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RFID Driving Big Retailers' Tech Efforts

NEW YORK -- The future of retail technology hinges on the adoption and execution of radio frequency identification, according to the top information executives at three of the world’s largest retailers.

The IT executives -- Linda Dillman, chief information officer of Wal-Mart, Colin Cobain, U.K., information technology director for Tesco, and Zygmunt Mierdorf, cio and member of the management board of Metro Group–made this point at the Monday morning main session of the National Retail Federation conference here.

Dillman stressed that RFID implementation is still in its early stages, but she said reported impressive accomplishments have been made in the two years since Wal-Mart first set a 2005 target date for implementation to begin.

She said she was proud to report that Wal-Mart was "live" with three distribution centers, 104 Wal-Mart stores, and 36 Sam's Clubs reading radio frequency tags on pallets shipped by 57 suppliers. She noted that Wal-Mart's top 100 suppliers, plus a few dozen others that volunteered to be part of the initial RFID implement, are targeted to go live by the end of this month.

Early results, she said, show that read rates are nearly 100% for pallet tags; 90% on cases from vendor pallets; 95% on single cases; 98% on compactor waste; and 66% on mixed warehouse to store pallets. In total, 1.5 million electronic product codes have been read in the first two weeks of the program.

So far, the biggest impact of RFID has been felt in the area of process review. Wal-Mart associates previous used manually generated pick lists telling them what products needed to be brought from the stockroom out to the sales floor. Now, backroom pick lists are generated automatically for RFID tagged items. RFID is providing visibility of what's really in the back room and what needs to be reordered. Dillman noted that typically one-third of a Wal-Mart store's inventory sits on risers in the stock room, making it a challenge for associates to find that one case of hair spray they need for the shelf, which often leads to unnecessary reordering. Hand-held wands now act like a Geiger counter, emitting beeps that help an associate locate the needed item.

Dillman was also proud to note that a product from Wal-Mart's Arkansas neighbor, Tyson chicken, was the first item to be put on automatic sales replenishment via RFID. Merchandise vendors are notified within 30 minutes when their items move from warehouse to store. The next goal is to get 600 more stores live on the program.

Cobain discussed Tesco's implementation of RFID as a way to improve shrink on high value items. He showed a live demonstration on stage of an RFID reader at a store receiving dock detecting an attempt to deliver a pallet of merchandise to the wrong store. He then showed how the reader would detect if a pallet had been pilfered, and then showed the confirmation of a good pallet. Tesco monitors the pallets from their creation at the end of the pick line, through shrink-wrapping, the shipping door, the store receiving dock, and into the store cage area. At any point, the retailer can check a computer screen to see the exact contents of a pallet. Such monitoring can more easily detect problem spots in the supply chain. Tesco is tracking high value items at 1,400 stores and 30 distribution centers.

Mierdorf of German retailer Metro Group showed a live remote video from the retailer's innovation center outside Dusseldorf, where new store concepts are tested.

RFID applications being tested include a case label machine that maps RFID characteristics to ensure accuracy, a store hanger conveyer belt that detects the location of a particular unit and runs it through the conveyer to the unload point for its appropriate store and a checkout counter that reads all RFID labels simultaneously for to make payment quicker.
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