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Wal-Mart's Faltering RFID Initiative
itphobe writes "Baseline magazine has up an in-depth look at Wal-Mart's years-old RFID initiative. Things apparently haven't gone so well for the retail giant. 'The lack of any obvious concrete gains has raised questions as to whether Wal-Mart should delay or freeze its RFID plans. For now, however, Wal-Mart says it will stay the course ... By January 2006 the company hoped to have as many as 12 of its roughly 130 distribution centers fully outfitted with RFID. That effort stalled at just five distribution centers. Instead, the company is now focusing on implementing RFID in stores fed by those five distribution centers so it can gain a bigger window into its supply chain.' Overall the article focuses on the original intentions of the RFID project vs. their implementation. It also discusses several of the technical elements required to adapt RFID for the US juggernaut."
For now, however, Wal-Mart says it will stay the course ...
Ah, yes, because we all know how well "staying the course" works out.
The theory of relativity doesn't work right in Arkansas.
It's been predicted for years: the cost of an RFID tag will drop to 5 cents and the world will be revolutionized. I did some calculations years ago, and 5 cents seems to be about the point at which the cost of the tag on every item is worth the benefits gained in inventory tracking.
But the price seems frozen at 10 cents. And that is the cheapest tags in HUGE quantities. For a small business like mine, 20 cents seems to be the current rate.
My good friend works for the world's largest bicycle distribution companies, feeding Walmart amongst others. He has said a lot to me about RFID and the way it works in the field, as he has to deal with how everything works at a product distribution standpoint.
In a nutshell, he says it's CRAP, AND IT DOESN'T WORK.
That is all.
It is pitch black. You are likely to be eaten by a grue.
Bonk
Someone hates these cans.
I'm sure they gave plenty of slack in the schedules they arm-twisted thier vendors into.
No folly is more costly than the folly of intolerant idealism. - Winston Churchill
The real reason Wal-Mart hasn't gained anything from RFID quite yet is that the technology isn't being used the way it should be used and that is for convenience and loss prevention.
... next technology!
Convenient stores could make it really easy to find products with a proper RFID search system with kiosks in the store. That would work out in a way that could make it really easy for customers to find stuff. However the problem comes down in that you end up becoming too efficient... when you have a sale and you are retail giant you want the sale to bring in customers to buy the higher GM products... not the sale items! That loses you money when customers can actually FIND the stuff that is CHEAP. Far better to keep it the way it is there... so that doesn't work out and store giants like Wal-Mart are backpeddling.
The loss prevention use of RFID is great but theives can bypass any form of security and disgruntled employees don't usually care if someone is stealing 100% of the time... 70% of the time the employee will let even a theif leave the store when the excuse the theif gives COULD make sense... so it's lose/lose there... even with sophisticated loss prevention measures that would use RFID to track products leaving the store. Customers can come up with a valid-seeming excuse to get past so called last-chance methods for loss prevention like receipt checker employees. "Oh I bought this last week and I had a question about it..."
The best way to have loss prevention it seems is to move to a web or an ORDER ONLY system like you see at stores where employees bring out the products to the customer -- but even those types of stores suffer from theft. Customer can't get to products, customer can't steal em!!
RFID while it sounds good, and while it has great potential is stuck being a lose/lose... from the profit standpoint. Customers would profit from it, but they also stand to lose out... so w/e
The dangers of knowledge trigger emotional distress in human beings.
Why is the parent modded "flamebait"? Do you really think someone here is going to violently come to Wal-Mart's defense?
The promise was that waste and inefficiency in the inventory and shipping areas can be eliminated (or greatly reduced) by better tracking.
But we're talking wal-mart.
They already were running a really tight ship, keeping every possible cost down, tracking everything with keyboarding and bar codes already, plus any wasted time tracking pallets was mostly blue-vest people at $8 an hour.
At some point, the waste and inefficiency just isn't there anymore and spending billions of dollars to save millions is pure management stupidity.
there's nothing wrong with the ship, it's the captain that's messed up.
I'm not quite sure how RFID is supposed to make the checkout person bag my items any faster. Or is that not the slowest part of the whole process? It's not like we're losing a whole lot of time waiting for barcodes to be scanned, unless you're buying pears and they have to key it in manually.
On an unrelated rant, I'm pretty sure the idea with utopia is that you can't get there. And I can think of a lot better utopia than a Wal-Mart checkout line.
"Anyone who [rips a CD] is probably engaging in copyright infringement." - David O. Carson
I've read here on \. that the RFIDs were going to be used by the government to track my sneakers from space and that the second I walked into the Gap I was going to get bombarded with ads based off the stuff I was wearing.
...
After reading that, I became extremely paranoid and started wrapping myself in tinfoil every day. But then I realized the RFID could be in the tinfoil itself. So I rewrapped that tinfoil in other tinfoil. They told me I could kill it with microwaves, so I took the tinfoil I was wrapping the other tinfoil in and put that in the microwave. That didn't really work out to well. Now I've been walking around looking like some 1950's space alien comfortable that my previous purchases of BVDs would be safely hidden beneath my shorts and you're telling me that these guys can't even read an RFID out in the open?
You guys are just big jerks you know that?
It really is
it's great
it can help locate and tell me how old everything in the store is this helps for perishables - without having to get people to act like basic humaniods and go and count things... to find out how much is spoiled and been stolen
it can help move things from one store to another
BUT it needs to be easy to destroy (privacy reasons) so it will not help you prevent thieves !
regards
John Jones
In the beginning, Walmart bulldozed over the retail landscape. That was then. Now, other companies have learned to compete with Walmart. So, Walmart has some distractions in addition to the RFID technical challenges.
In college, friends of mine would occasionally get harassed by loss prevention when trying to exit our local Wal-Mart.... Mysteriously there would one or more RFID stickers stuck on their backs (or in their jacket pockets, etc...) -Oddly enough I could be found chuckling off to the side. Strange what you can find stuck to the outside of the more expensive items in a Wal-mart. -I generally bought the first couple of rounds/pitchers at the bar to regain favor, but it was all the more funny.
Sure, they are evil, but this is beyond their ability. Shoot, the distribution business can't even get the manufacturers to put barcodes on cases in a uniform way. There are untold millions that could be saved in the distribution business if the cases had barcodes on them that could be scanned in an effective manner. Forget it. The market is too chaotic and not even Wal-Mart can bring it to order.
2: doesn't matter if anyone responds or not, flamebait's flamebait.
3:
Why not make many containers that are reusable (by attaching a different label and mouth) and tag the reusable container with a RFID chip, and track the container against a database of ownership and contents by chip ID. Have an extra bin on the recycling truck to separate out those containers and bring back to suppliers and charge people after a month when the container has not been returned and scanned.
You get recovering crack addicts!!! You must be in a much wealthier part of the country.
Linux Zealots: Smarter than Mac Zealots, but still zealots.
There was a good article in yesterday's WSJ article about the era of Wal-Mart waning.
Basically, other competitors are now starting to be able to compete on price. But what is more important is the other retailers are providing higher quality goods and better service.
I believe that Wal-Mart's service is actually a big game in limiting reagents. The do not hire enough people to police up the shopping carts and do not hire enough checkers. The are able to maintain an uneasy equilibrium by putting just enough carts out to make sure that the lines are filled to where you are insured of a half hour wait to check out... It must be hard. This schedule is delicate but they are able to maintain it with surprising efficiency.
Also, their meat and produce are at a quality level that makes me crave the good old days of soylent green.
Anyhow, it is a nice article that I gave you the quick overview of, but does talk about their failed RFID initiative. Partly because they do not have the influence of their suppliers that they once had. They also talk about how CostCo has some of the best employee benefits in retail, people are more willing to give their custom to companies with better images.
Either give it away or get top dollar, but never sell yourself cheap.
Welcome to Wal-Mart, get yer crap and get out!
Here! The technology can still help, but it doesn't make up for stockers and floor employees who can identify problems before they occur. POS and tracking reports will never help make up for an employee who knows how important it is to keep these items in stock. Then again, when your employees are saying "I don't care; If Wal-Mart doesn't care for me, why should I care?" you might have bigger problems than keeping tabs on your stock turnover.
import system.cool.Sig;
IIRC, RFID nowadays has failure rates between 10% and 40% - and even though it would be incredibly revolutionary if i could get an exact tally of my inventory by just walking through the aisles with an RFID reader once, a failure rate of even 5% would be way to high - people's jobs (HOW much was stolen in the store you manage?!?), long term supply planning and stuff like that are on the line with this, so people are doing anything to reduce the error rate to the bare minimum, and as long as nothing fundamentally changed since the last time i looked into RFID, it's still nowhere close to being viable. Just imagine that nice "instant checkout by driving you cart through some antennas" scenario - but with a 10% failure rate.
So if it doesn't matter if anyone responds then what's the point? This sites post rating system is the worst ever.
never let a man put his dirty how-do-you-do into your bajingo
Walmart didn't implement RFID themselves anyways. They force their suppliers to. We did a job for a company that was forced (by Walmart) to implement RFID tagging or they would lose their right to sell their products at Walmart. It cost that company (roughly) $250,000 to make the change, then an additional $5,000/mo for the RFID labels. Then their "no read" rate went through the roof to about %8 failure.
So I'm not surprised that it's not helping Walmart save money. Frankly I don't see how it could. Actually, it could only make it worse since they're not as reliable as barcode scanners.
BTW - this is why you'll NEVER see that magic RFID purchasing method in a retail store. Companies would be risking giving ~5% to 8% of their merchandise away for free because the RFID reader didn't pick it up.
Barcodes are going to be around for a long time.
I read it as "Wal-Mart's Farting RFID Initiative" ...
Carbon based humanoid in training.
..."rfid (tagging beta)"
:-)
Okay, so I'm a sad case.
... give me some evidence why 5 out of 6 mods are "petulant cock-gobblers"? Or at leas a reason why they're "fucking morons"? It wouldn't be because, perhaps, you don't agree with some (or a lot) of their decisions, or because you've expressed extreme views before, and been modded flamebait, would it?
You know, there is a difference between trolling and pointing out the flaws in your reasoning. Just saying.
The KEY to getting out of Wal-Mart checkout lines in 30 seconds.....
Find out the DAY the REGIONAL MANAGER will be there !!!
I am serious, my wife experienced this as she stood there and talked to the regional manager afterwards.
Every checkout line was manned.
Me, I go to Publix, it might cost more, but the employees are very friendly and cheerful and I never have to wait in line more than a minute.
They Live, We Sleep
I used to install passive RFID tagging system. To say that the technology sucks is being generous. Tag read rates are not anywhere near 100% and they will never be. Unlike the read rates on barcode labels, this is not a case of needing better quality control to get darker and straighter lines, but a case of the underlying physics being flawed. In particular, it is very difficult to get a read from a box containing a large amount of water or metal since both scatter radio waves. And, you can absolutely not get a read if a box is turned sideways. These things were true when RFID was introduced and they will continue to be true as long as the technology is being pushed. RFID is not ready for prime time yet and probably never will be.
People have been expecting the cost of tags to drop, allowing greater implementation of RFID. But this thinking is backwards. It is expanded implementations that will cause the price of tags to drop...Economics 101. Prices stabalize at the supply/demand equalibrium. They will tend to fall with more vendors in the mix because of a loss of price setting power.
The only RFID implementations I can see that are feasible:
1) Active tag tracking of very valuable assets.
2) RFID on conveyor where you can have a photo-eye detect when a box passes a point without a read. However, the same functionality is available with barcodes and there isn't a great deal of advantage to adding a tag.
3) Single tags at a pallet level coupled with Advanced Shipping Notices (ASN) to do automatic receiving. Again, the advantages over barcodes is not sufficient to warrant new tech.
None of these are what Wal-Mart is doing. Big surprise that their plan isn't working. Bigger surprise that none of their vendors are thrilled about spending yet more money to sell through Wal-Mart.
Parent AC has an ANGER PROBLEM.
Went to Wal-Mart last night. Excellent prices, excellent quality. Sometimes items are available for less elsewhere, but for many items Wal-Mart is the best.
Barcodes need to be visible; it's become a well-known part of the plan.
If an RFID has to be _visible_ in order to work, doesn't that betray the POINT of an RFID? The usefulness of an RFID is that a pallet load of them leaving a dock can be identified, counted, etc by machine, and not by hand.
If we've reached a point where an RFID needs to be visible, we've wasted more than a decade and billions of dollars on an idea that's failed. Cost per unit and other issues aside, if visibility is necessary (at all) then this is a dead idea that won't soon be back. Nor should it!
--- For a good time mail uce@ftc.gov
MOD PARENT UP! Excellent information.
... As it turns out,
Wal-Mart's distribution centers are extremely well run, says Simon Ellis, head
of the RFID program for Unilever USA, which supplies Wal-Mart with such
products as Dove soap and All detergent."
... The
positive interpretation of those findings, Hardgrave says, is that RFID isn't
as expensive to implement as initially thought. The negative interpretation is
that companies are not yet investing in systems such as business intelligence
and analytics software that would allow them to capitalize on the data being
returned by RFID tags and readers. "
The title is foolish: The title, "Wal-Mart's Faltering RFID Initiative" was apparently written by an editor who wanted to get attention. Also, the writer of the article obviously has little technical knowledge.
As usual, Slashdot editors did not read the article before they posted the story. The title of the article, written by someone with no technical knowledge, I suppose, is not supported by the somewhat confused information in the text of the article.
Quotes from the article: "Tags, in particular, remain at 10 cents to 15 cents-a price retailers find too steep for investments in item-level tagging."
Misleading: "The biggest lesson Wal-Mart and its suppliers have learned to date is that benefits gained from just RFID-enabling the company's giant distribution centers are not that great.
This is the writing of someone who doesn't thoroughly understand the technical challenges. Integrating RFID tags is a far bigger challenge than management thought, I'm guessing. That's the problem, not any problem with RFID tags, which can be re-used. However, the technology for re-use has not been developed, apparently partly because top managers are somewhat ignorant.
Better results when finished: "This exemplifies both the power and the problem with Wal-Mart's RFID initiative. Suppliers are keen to get that window onto the sales floor through RFID, but until late 2006, Wal-Mart had only installed RFID systems in about 600 of its 4,000 Wal-Marts, Supercenters and Sam's Clubs in the U.S."
Excellent improvements: "Out-of-stock incidents decreased 26% in the stores using RFID autopicklists. On items with high turnover, the improvement was closer to 60%."
Not nearly finished, not expensive: "Dallas-based consulting firm Incucomm surveyed 137 initial Wal-Mart suppliers and found that average spending is closer to $500,000, and median spending is about $200,000.
"Mass adoption is not right around the corner, but perhaps another five to 10 years away."
Biggest problem -- Top executive ignorance: 'Wal-Mart CIO Ford also insists the company is commited to the technology. "The train has left the station," he says. "Imagine in the future being in a checkout line at Wal-Mart and you're out in 30 seconds. Now that's utopia-- and we'll get there." '
First, that was a foolish thing to say because it increases the problems with technically ignorant writers saying that it is taking too long to move to RFID tags because the writers are anticipating the development. Second, it is too soon to know what will happen. No one can predict the development of technology. Third, the improvement that can confidently be expected is fewer out-of-stock items in retail stores. That's Wal-Mart's biggest problem, in my opinion.
Yes, WalMart is better. WalMart has a problem with top managers who can't handle all the challenges. However, in general the company is doing a good job. Other retailers play more games with customers.
Walter rulez.
Well said that man !
How many beans make five, anyhow ?