Wal-Mart leads the way for RFID

In the first week of April 2004, Wal-Mart launched its first live test of RFID tracing technology. Using one distribution centre and seven stores, 21 products from participating vendors were used in the pilot test. In the pilot application, passive RFID chips with small antennae were attached to cases and pallets. When passed near an RFID reader, the chip is activated and its unique product identifier code is transmitted back to an inventory control system. The major objectives of the RFID are to lower operating costs and reduce out-of-stock incidents. Watch this video for more information on the use of RFID with Wal-Mart.



Wal-Mart set a January 2005 target for its top 100 suppliers to place RFID tags on cases and pallets destined for Wal-Mart stores. According to Linda Dillman, CIO at Wal-Mart, the company’s RFID strategy was a success in that by the end of January the required RFID systems were in place and many of Wal-Mart’s suppliers were collecting data on the delivery of their products. By January 2007, Wal-Mart had 600 suppliers on the system, nearly doubling the 330 in January 2006. In addition to requiring RFID from its suppliers, Wal-Mart is installing the technology internally. Procter & Gamble says that after “validating” the benefits of RFID in merchandising and promotional displays, it is ending its pilot program with Wal-Mart for those displays, implying Wal-Mart is not acting on the information to improve store execution.


The RFID initiative is an integral part of improving the company’s supply chain (Scherago 2006) The RFID, along with a new EDI, will improve the collaboration with the suppliers and help reduce inventories. According to Renee Boucher Ferguson,RFID for Wal-Mart is a long-term journey that has just begun. The retail giant plans to add more suppliers and double the number of stores and clubs that are RFID-enabled.