Wal-Mart spills beans on groundbreaking RFID project

And asks suppliers to grin and bear Gen2

Uber-retailer Wal-Mart - which mandated its suppliers to start using RFID from the start of this year - has released the first results of how the tracking technology has affected its business.

Wal-Mart hired researchers from the University of Arkansas to investigate if the use of RFID tags in the supply chain had tangible benefits for the supermarket chain. The researchers found that the use of RFID resulted in a 16 per cent reduction in out-of-stocks.

The research - which compared 12 stores equipped with RFID and 12 using barcode equipment - also found that out of stock items in RFID stores were replaced three times faster than those in barcode stores.

The retailer also reported fewer over-orders put in by staff, with manual orders dropping by 10 per cent.

Wal-Mart CIO Linda Dillman said in a statement: "This is no longer a take-it-on-faith initiative." She added that the retailer will be unveiling more RFID initiatives soon.

Wal-Mart has also announced that it will be ready to accept the next generation of RFID tags, known as Gen2, from January next year. By the middle of 2006, the retailer will stop accepting Gen1 tags.

With a problematic first rollout behind it, Wal-Mart is telling its suppliers that the second generation of tags needn't be such a strain.

Among the benefits of the next generation tag, according to Wal-Mart, is the cost - Gen2 tags will break the all-important 10 cents per tag barrier.

By the end of this month, the supermarket chain will have 200 stores and five distribution centres using RFID technology. One hundred of Wal-Mart's top suppliers now use the chips, with that number increasing to 300 in January next year.