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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."
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.
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.
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.
The longest part about checking out for me is waiting for some luddite to stop futzing with writing a check and use a check card or cash instead. The second longest part is another luddite standing in the "self-check out" that doesn't understand what to do, especially when they have bulk items or fruits and vegetables that need to be weighed.
RFID isn't going to solve either of those problems.
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.