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Article | December 31, 2005
High-volume retailers pile demands on packaging (sidebar)
Data says RFID helps Wal-Mart cut out-of-stocks by 16%
One of packaging’s purposes is to help retailers solve logistics problems. Radio-frequency identification (RFID) is helping packaging fulfill that purpose.
Wal-Mart for example saw out-of-stocks drop by 16% in stores using RFID tags on cases. That number comes from a study by the University of Arkansas that assessed a dozen Wal-Mart stores in the retailer’s RFID initiative. The study covered a 29-week period. Wal-Mart commissioned the study which was done independently and led by Bill Hardgrave director of the university’s RFID Research Center.
The research showed that out-of-stock items in cases with RFID tags were replenished more quickly than similar items in cases that had only bar codes. The research also concludes that Wal-Mart reduced manual orders and inventory levels in stores with RFID readers.
The study compared stores set up with RFID capability against the same number of stores without the capability. “The retail industry has typically seen an 8 percent out-of-stock level and has not been able to break that with other methods” says James Higgins vice president at Unified Bar Code & RFID. “But with RFID and the 16% drop that translates to an out-of-stock rate of under 7%. And Wal-Mart is getting a reduction in inventory levels too because they are better able to track goods.
“After seeing a success like this and being able to quantify how they are saving money internally they are going to start integrating RFID into their operations” Higgins concludes.
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