Wal-Mart has been implementing an advance in inventory control namely Radio Frequency Identification (RFID), which utilises tiny chips embedded on packaging to automatically recognise goods being bought. RFID eliminates the costly and time-consuming process of controlling inventory for giant retailers like Wal-Mart. Instead of tagging prices and barcodes on items’ packaging, sales and purchases can now be tracked digitally to avoid losses through out-of-stock merchandise. For the retail industry, RFID allows customers going through checkout counters while a sensor identifies all goods in their shopping cart and automatically charge their bank account with a single touch screen, without them stopping to scan each item. More convenient shopping experience brings more sales and enhances customer loyalty.
In fact, Wal-Mart lost $3 million because of imbalance inventory management: a range of products was sold out swiftly and others’ inventory grew at faster rate than their sales. And consequently Wal-Mart implemented the RFID tech in their supply chain back in 2003, quite early, followed a collective effort to improve supply chain effectiveness. Wal-Mart required their suppliers to also utilise RFID to gather and track the product in-store movement. An in-depth track on inventory level also reduces vendor fraudulent activities and theft.
Obstacles lay in every endeavour to systematically improve the supply chain, especially for a giant retailer like Wal-Mart. Cost obtains the very first concern when implementing RFID: the RFID tags are expensive, along with their sensor readers. Some suppliers even argue that the movement solved no discernible issue, and simple technology like barcode serves the same purpose with less cost. Furthermore, radio frequencies are blocked by metal and liquids; hence the tech does not seem reliable as anticipated.