?RFID Implementation in Wal-Mart s Supply Chain
How RFID Technology is Revolutionizing the way Wal-Mart s keeps Inventory
Company Background 4
Advantages of RFID 5
RFID Infrastructure Requirements 6
Paperless Inventory Tracking 7
RFID and Perishable Goods 8
RFID and Shrinkage 9
Works Cited 11
The short-term future at Wal-Mart in regards to inventory management will unquestionably contain of some forms of radio-frequency identification (RFID). Though the equipment for these methods of inventory management has been around for quite some time now, the costs per unit have fallen intensely. This allows for an exponentially increasing number of establishments to utilize this technology. In fact, passive RFID chips are now packaged into premade thermal transfer labels and can be sold for as little as seven to fifteen cents (RFID Journal, 2011). Though once the costs of the RFID hardware only permitted it to be used on expensive or principally sensitive inventory items, now it is becoming gradually more likely that will that this technology will approach ubiquitous levels in the near future as various sources have forecast that the costs will further fall to about three cents by late 2011.
The falling costs of the hardware are not the only reason the technology is becoming more practical for many companies. Another factor that was previously a limitation was also the physical measurements of the transmitters (size and weight). However, this restraint has also been bypassed with the advances in engineering and the manufacturing processes that produce the equipment. In a study conducted at one university, micro-transponders were actually produced to be small enough to be strapped to ants to allow the researchers to study their behaviors with a level of precision that was previously inconceivable (Xiaoming, 2007). Furthermore, an algorithm was developed based on the movements of the ants and applied to supply chain models.
The RFID chips also have a wide range of uses and configurations. It is presently being used in tasks involving everything from hospital records tracing, automated payments via cell phones, passports, ski lifts, to in some cases the chips are being surgically implanted pets as well as humans. The last case may cause some to worry over the potential dodging of privacy regulations, however there is little reservation that RFID technology will become part everyone s lives in one way or the other in the very near future.
Wal-Mart services customers across the planet with more than two hundred million times per week through its ownership of over eight thousand retail units. It operates under fifty five different banners in over fifteen countries. Wal-Mart can boast fiscal year 2010 revenues of over four hundred billion. Wal-Mart also employs over two million associates worldwide. It has been designated as leader in sustainability, corporate philanthropy and employment opportunity and Wal-Mart ranked first overall among retailers in Fortune Magazine s 2010 Most Admired Companies survey (Wal-Mart, 2011).
Saving people money to help them live better serves as the mission statement and this hasn t changed much since Sam Walton originally envisioned it; he opened the doors to the first Wal-Mart more than forty years ago (Wal-Mart, 2011). Wal-Mart s operations management and logistical systems represent some of the most advanced in the systems in the world. Their dedication to creating value through low cost leadership strategies has proven to a successful model. Wal-Mart has grown so financially powerful and ubiquitous in many areas of the world that it can dictate the terms of the relationships it creates with strategic partners. Wal-Mart represents the largest and most important account to many partners and often represents an overwhelming majority of their revenue streams. It is not uncommon for a strategic partner to have to redesign business processes to meet Wal-Mart s demands. Implementation of RFID chips represents one dictate that Wal-Mart is likely to give to all of its vendors throughout the supply chain in the near future.
Advantages of RFID
The ability to read without line-of-sight access is the primary advantage of RFID chips over the existing bar-code systems. RFID readers can read items from a distance even when the tagged items are buried behind other tagged items. This enables a great deal of automation potential in operations management. The challenging part of implementing RFID is that tagged items should not be missed by the reader due to interference, multipath fading, transient effects etc (Jeon, Chang, & Cho, 1999). Missed reads can cause havoc within RFID systems. However, the reliability of the readings is also something that has been improved upon as the technology continues to mature.
RFID uses a serialized numbering scheme such as EPC (Electronic Product Code). Each tag has a unique serial number that can be read by the scanner. Serial number information is a critical component in understanding and controlling the supply chain. It provides much more detailed information about the status of the supply chain than can non-serialized bar codes such as UPC (Universal Product Codes); which often have to be manually scanned with employees. Serial numbers with extended capabilities to store extended amounts of information have many advantages. This can allow for accurate and timely data regarding the full voyage down the supply chain. This technology can also mitigate some of the horrific results that occur when spoilage, food poising, or other illnesses emerge from retail products.
RFID Infrastructure Requirements
Many software systems used in enterprise resource planning (ERP) systems today are not designed properly to fully utilize serial number information as presented by the RFID systems. As a result there will be mismatch in capabilities and requirements by RFID system that are not synchronized with enterprise software properly. One solution to this problem is to introduce a layer between RFID readers and the application software commonly known as RFID middleware. It has two levels of functionality: a lower level device and data management and a higher level interpretation level.
Data management layers provide some additional functionality by filtering the data due in regards to intermittent appearances and disappearances by the radio frequencies. These problems can often be avoided by setting some threshold levels for minimal signal strength over time. For example, the middle ware could tell the software to report tags as missing only after they have not been read for a certain number of seconds. The importance of this lies in the fact that if the reader cannot read certain tags due to interference of certain objects, the software should not necessarily conclude that the tagged item is being sold or stolen. Such mechanisms can accurately limit the presence of false reads.
Device management is one of the most challenging parts of RFID implementation. RFID readers commonly interact with a slew of other devices such as motion sensors, programmable logic arrays and human interfaces. Therefore standardization of equipment poses another layer of complexity. If the devices are not programmed to communicate in exactly the same manner, in effect it renders the entire system useless. Wal-Mart s size offers puts in a position to help facilitate the transition to standardization however. Since Wal-Mart has an ample amount of buyers power it can simple dictate to suppliers the requirements for the systems. Wal-Mart has also made requests to ERP developers such as SAP and Oracle to increase the capabilities for RFID integration of the relevant logistical information right into the relevant enterprise system. This should further act to streamline RFID systems.
Paperless Inventory Tracking
Another advantage of using RFID in inventory management is opportunity to relieving many non-value added business functions altogether. This would include tasks such as counting, auditing, tracking, and ext. Records could automatically be generated whenever an asset is transported to another site. This would in turn inevitably update inventory numbers, and when coupled with an enterprise resource management (ERP) platform, this information could be nearly instantly transferred to other business functions such as accounting, procurement, and logistics for example. Theoretically, the CEO could have real-time access to information about any one item in any of the over eight thousand retail organizations from anywhere in the world.
This would allow inventory management personnel (as well as anyone else with the appropriate access) to have access to boundless arrangements of inventory data and consequent reports from anywhere in the world without having to rely on any manual data entry at all. The increase in efficiencies that would be intrinsic in the imminent inventory management systems could offer a company a numerous combination of various strategy opportunities. For example, if a company chose to pursue a just- in- time production method then they could do so even in a full customization environment in a manner that would rival the efficiencies found in even the best mass production environments.
RFID and Perishable Goods
Another interesting application for the use of RFID in both inventory and retail environments has been recognized to be in the tracking of perishable items (Chande, Dhekane, Hemachandra, & Rangaraj, 2005). Not only could the use of RFID chips are utilize the efficiency…