![]() ![]() After all, there’s a lot of metal in those rooms. I don’t think fixed readers would completely solve Walmart’s back room problem. This in itself is a HUGE opportunity, but I also saw a pretty big application for the back rooms of large-box retailers like Walmart. Smaller footprint stores could achieve full coverage in the store at a very reasonable price point and ultimately eliminate the need for physical inventories (an incredibly costly exercise). Tag prices have already come down to reasonable levels for most products, especially apparel. Impinj, in particular makes a reader called Speedway xArray that allows for wide-area monitoring (approximately 40-foot-diameter read coverage) and provides continuous reporting of what’s in its “sights.” From a pure technology standpoint, this is exactly what retailers have needed to make RFID effective. Reader technologies have come a long way (translation: they’ve gotten a LOT cheaper). However, yesterday I had a briefing with a company named Impinj Inc, a maker of RFID chips and readers, that triggered a whole set of new thoughts. Otherwise, I couldn’t see how a financial auditor would approve the counts. ![]() My opinion has always been that full benefits of RFID would only come when you could achieve full coverage in a store. Early pilots have achieved some excellent results. Since that time other retailers, most notably Macy’s, have experimented with item-level RFID for apparel and footwear. So we were back to square one, requiring line-of-sight. Unfortunately, radio frequencies don’t pass through liquids and metal well, so you couldn’t get the kind of reliable read rate originally anticipated. The argument for RFID was that it didn’t require line-of-sight to be read. Other simpler technologies, specifically bar codes, served the same purpose more or less. The reason was pretty obvious to retail observers: It solved no discernible problem. By early 2009, the project was abandoned. The rest of its suppliers were expected to do the same by the end of 2006. Linda Dillman, then CIO of the retailer, issued the now-infamous mandate to its top 100 suppliers requiring that all cases and pallets be RFID-tagged within eighteen months. Walmart itself implemented the technology in its supply chain back in 2003. That technology is Radio Frequency Identification (RFID). Given that Walmart was an early adopter of the technology, it’s surprising they haven’t given it another look. While Walmart hopes to solve the problem by adding payroll hours back into the stores, there is a technology that could help the company manage what it has in its back rooms much better. A combination of poor procedures and too few payroll hours allocated to managing the space make it almost impossible to find product when needed. While I advocated a change in technology and processes to improve its inventory management in April ( Walmart’s Out Of Stock Problem: Only Half The Story?), the comments posted by thoughtful Walmart employees after the fact revealed store back rooms are out of control. Even though the company cited poor weather, higher than expected tax rates, and an economically challenged customer base as its chief challenges, the inventory problem certainly contributed to its lower earnings for the quarter ending April 30. ![]() In April, Walmart executives acknowledged it has an inventory management problem: the company lost $3 billion in 2013 sales due to out of stock merchandise while its inventory grew at a faster rate than its sales. ![]()
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