Wal-Mart's batting a thousand

It may have suffered setbacks in its plans to expand into Germany and South Korea, but when it comes to RFID, Wal-Mart seems unstoppable. Last month, the retail titan announced it was on the verge of reaching another RFID milestone. Wal-Mart confirmed that it would finish rolling out the technology to another 500 stores by January, bringing the total number of RFID-enabled stores to more than 1,000 and setting the stage to bring the rest of its approximately 3,000 North American stores online as early as next year.

"I think they'll attempt to complete the job [in 2007]," says Russ Klein, research director of enabling technologies at Aberdeen Group. "Once you get to 1,000 stores, it's just a matter of scaling. There is strong incentive to roll it out to all the locations so they can get the business intelligence across the entire chain."

Wal-Mart will not reveal its schedule for future store rollouts, but the retailer appears to be ahead of schedule. In May, Kerry Pauling, Wal-Mart's vice president of information systems, had told attendees at the Warehousing Education & Research Council's annual conference that the chain wouldn't reach the 1,000-store goal until sometime in 2007.

In addition, Wal-Mart continues to work with its next 300 largest suppliers as they prepare to begin shipping RFID-tagged cartons and pallets to Wal- Mart's DCs. These suppliers are expected to go live with RFID in January, bringing to more than 600 the number of suppliers using RFID technology with Wal-Mart.

In the meantime, Wal-Mart is phasing out its use of Gen 1 RFID tags. Rollin Ford, the retailer's executive vice president and CIO, confirms that Wal-Mart is in the process of converting all of its systems to read Gen 2 tags only. The retailer expects the last of the pallets and cases carrying Gen 1 tags to make their way through the distribution network this fall.

Wal-Mart believes the use of RFID technology has enabled it to achieve significant reductions in out-ofstocks and excess inventory. This spring, Wal-Mart revealed that studies conducted by the RFID Research Center at the University of Arkansas showed that RFID had led to a 30-percent reduction in out-of-stocks on average, with a 62-percent reduction for products that sell at a rate of six to 15 units a day.