- July 30, 2006, pffc-online.com
RFID technology has turned out to be more effective at minimizing out-of-stocks than Wal-Mart initially thought. Last October, the retailer announced that an RFID pilot program in place at 12 stores had resulted in a 16% decrease in out-of-stocks. At the annual meeting of the Warehousing Research & Education Council, however, however, Kerry Pauling, Wal-Mart's vice president of information systems, told attendees that the 16% figure was too low. In fact, RFID technology has resulted in a 30% reduction in out-of-stocks on average. And with items that sell at a rate of six to 15 units a day, RFID has cut out-of-stocks by a full 62%.
"The preliminary results released late last year were conservative by design in that we did not want to overestimate RFID's impact," says Bill Hardgrave, director of the RFID Research Center at the University of Arkansas. Hardgrave notes that for extremely slow-moving items that sell one unit every 10 days, RFID made no difference. "Those items typically will not be out of stock," he says. "Similarly, RFID didn't make a difference for items selling greater than 15 units a day, since associates stay on top of those items" to make sure they're replenished.
The use of RFID technology at the retail level could help to solve a $69 billion headache for retailers, according to Pauling, who says that's the dollar value of sales lost annually by the nation's top 100 retailers due to out-of-stocks.