Wal-Mart is a leader in demanding supply chain management practices
from their vendors that will save money for Wal-Mart. Vendor Inventory
Management with a drive to just-in-time stocking of shelves and
reduced stockout is one of Wal-Mart?s methods for improved supply
chain controls. A more recent development is Wal-Mart?s mandate that
its top suppliesr must implement RFID tagging by 2005. The $6 billion
figure in your question is frequently quoted as the anticipated
savings per year as a result. The RFID tagging leads to better
inventory management and is a way to implement ?de-stocking? and
reduced stockout in the consumer packaged goods area like the cleaning
products you?ve referred to in your question.
Below I?ve included some articles on the trends in RFID tagging in
retail in general and by Wal-Mart in particular. Please don?t hesitate
to ask for clarification if you require additional information.
All the best.
~ czh ~
WAL-MART SAVINGS WITH RFID
September 30, 2005
RFID and price reduction in retail
According to Lee Scott, president and CEO of Wal-Mart, RFID will help
to improve visibility in the supply chain, which will reduce inventory
costs by $ 1 billion. According to analyst Erwin De Spielgelere,
Wal-Mart could save up to $ 8.35 billion. The elimination of manual
scanning at the pallet-level will result in labor savings worth $ 6.7
billion; reduction on out of stock will save $ 600 million; $ 575
million will be saved due to reducing shrinkage and better
RFID: The Time is Now
You've likely heard that Wal-Mart is requiring its top 125 suppliers
to implement RFID solutions at the case and pallet levels by January
2005. What you might not know is Wal-Mart will save anywhere from $6
billion to $8 billion per year by eliminating the need to scan bar
codes on pallets. Six to eight billion dollars.
RFID: Making sense of sensor-based technology
It's been estimated, for example, that retail giant Wal-Mart alone
could save $8.35 billion annually with RFID-that's more than the total
revenue of half the companies in the Fortune 500.
The estimated Wal-Mart savings breaks down as follows: $600 million
through avoiding stock-outs; $575 million by avoiding theft, error and
vendor fraud; $300 million through better tracking of a billion
pallets and cases; $180 million through reduced inventory; and a huge
$6.7 billion by eliminating the need to have people scan barcodes in
the supply chain and in-store. Small wonder, then, that Wal-Mart is
investing $3 billion in RFID over several years and is one of the main
drivers of RFID implementation.
Wal-Mart Extends In-Store Promos, RFID Tagging
Meanwhile, Wal-Mart reportedly will expand its RFID tagging system to
1,000 stores and 600 suppliers in 2007.
Wal-Mart's pilot program began in 2005 with 100-plus suppliers tagging
pallets and cases for 500 stores and five distribution centers, to
track inventory and cut down on out-of-stocks.
The tags have cut out-of-stocks by 16 percent, and items with RFID
tags are restocked three times faster than untagged goods, said
Wal-Mart's VP-Information Systems Carolyn Walton at an industry
conference last week.
By January 2007, Wal-Mart will equip 500 more stores to read RFID tags
and will begin adding up to 500 more manufacturers to its roster of
RFID taggers, per news reports.
how they did it
THE RESULTS OF WAL-MART'S RFID PILOT ARE NO secret?the world has known
about the 16-percent reduction in stock-outs and two-thirds drop in
replenishment times since October. Now we're learning a little more
about how they did it. In a white paper released late last year, the
mega-retailer identified specific process improvements that helped it
achieve those dazzling results.
Wal-Mart, P&G, Max Factor Lipfinity tracking test, USA
Oct 18, 2005
RFID and Working Capital Management
March 10, 2006, 1:26 pm
The March 6th Fortune shows just how critical my thinking is. Maggie
Overfelt reports that a University of Arkansas study shows that during
the first eight months of 2005, Wal-Mart's RFID equipped stores
reported stockouts declined 16%.
Lets do the numbers. Worldwide Wal-Mart reports $32 billion in
inventories. Say half the stockouts translate into inventory reduction
($2.6 billion) and that this flows to WMT's $11.3 billion bottom line.
That translates into $43 billion in market cap at WMT's current
multiple, a whopping 23% increase. Any questions?
INVENTORY CONTROL USING RFID
RFID & EPC in the Retail Vertical, The ?Quiet? Revolution
RFID solutions include readers to read the chip data, chips that are
placed as ?tags,? and the software and equipment used to read the data
and communicate the information to the retailer. Tags can be placed
on pallets, cases, and even on the product itself. Readers can be
handheld or mounted on a wall or door in a distribution, warehouse, or
The initial verticals that RFID is expected to impact are the retail
and consumer packaged goods (CPG) industries. Many of the retail
vendors have already adopted the technology and in fact Wal-Mart is
requiring its major suppliers to implement the RFID technology in 2005
(Top 120-150 suppliers) and 2006 (Other 20,000+).
walmart savings $6 billion reduced inventory
walmart supply chain management reduced inventory savings
Wal-Mart suppliers implement RFID
wal-mart OR walmart reduction stockouts