Base Technologies Wal-Mart's Applications, Products, and Suppliers

By Mel Duvall  |  Posted 2007-10-03 Email Print this article Print
 
 
 
 
 
 
 

In 2003, Wal-Mart became the great hope of a new technology. But things haven't worked out exactly as planned.

Wal-Mart Base Case

HEADQUARTERS:
702 Southwest 8th St.,
Bentonville, AR 72716

PHONE:
(479) 273-4000

BUSINESS:
The world's largest retailer, operating 1,100 Wal-Mart stores, 1,900 Supercenters, 575 Sam's Clubs, and 100 Neighborhood Markets in the U.S. alone

CEO, PRESIDENT:
H. Lee Scott

CIO:
Rollin Ford

RFID PROGRAM CHIEF:
Simon Langford

FINANCIALS:
Earns $12.6 billion on $350 billion in sales in 2006, with a profit margin of 3.6%

CHALLENGES:
Use RFID to lower operating costs and reduce out-of-stock incidents.

BASELINE GOALS

  • Use RFID to reduce out-of-stock incidents in stores by 30%, creating an additonal $3.4 billion in sales.
  • Limit inventory growth to half of sales growth through better use of RFID systems.
  • Increase the number of RFID-enabled Wal-Mart stores, Supercenters and Sam's Clubs from 1,000 in April to 1,400 by end of 2007.
  • Boost sales through lower prices, fewer out-of-stocks and faster checkouts and regain sales momentum against rival Target.

Base Technologies

Application Product Supplier
Daily sales and RFID-generated reports Retail Link Propietary Wal-Mart System
4-petabyte data warehouse HP Neoview, Teradata Hewlett-Packard, Teradata
Product information transmitted wirelessly through RFID Wal-Mart suppliers choose own provider of Gen2 RFID tags Alien Technology, Avery Dennison, Texas Instruments, Impinj, Omron, STMicroelectronics
Reading of information from RFID tags RFID Readers Impinj, Alien Technology, Intermec, and Symbol Technologies (now a division of Motorola)
Promotions tracking and analysis T3Analytics T3Ci
Promotions tracking and analysis Real-Time Promotion Execution OATSystems

Next page: Player Roster: Who's Who in Wal-Mart's RFID Initiative

Player Roster: Who's Who in Wal-Mart's RFID Initiative

Insiders

ROLLIN FORD
CIO
Ford has had to defend Wal-Mart's RFID efforts following reports in the media earlier this year that the program was "fizzling" due to lack of supplier support and few concrete results. Ford, who took over as CIO from Linda Dillman in April 2006, has staunchly defended the program, saying it is helping the company reduce out-ofstocks, which in turn helps drive sales. Ford says there is no danger the company will halt or delay its RFID plans. "The train has left the station," he says.

LINDA DILLMAN
Executive Vice President, Risk Management
Dillman was thrust into the spotlight in 2003, when, as CIO, she announced that Wal- Mart would embark on an ambitious program to use RFID technology throughout its operations. As CIO of the world's largest retailer, she carried significant influence and used that power to force the company's largest suppliers to come on board. Dillman was shifted into another challenging role in April 2006, when she was tasked with heading up Wal-Mart's controversial health-care initiatives.

SIMON LANGFORD
Manager, RFID Strategies
Langford has day-to-day responsibilities for ensuring Wal-Mart's RFID initiatives move forward. Over the past year, Langford has had to switch gears, focusing more on implementing RFID in stores and away from trying to RFID-enable all the company's distribution centers.

H. LEE SCOTT
CEO, President
In the most recent quarter, Wal-Mart found itself in the unfamiliar position of trailing its major rival, Target, in sales growth. Scott is unhappy with that performance as well as increases to operating costs and inventory—problems RFID was meant to address. No word yet on whether he will require the RFID program to be reevaluated.

Outsiders

CHRIS ADCOCK
President, EPCglobal
EPCglobal is a not-for-profit standards organization instrumental in developing standards for RFID tags, readers and software. In particular, EPCglobal helped the industry reach consensus on the more powerful Gen2 RFID tags and earlier this year ratified a standard for low-level RFID readers.

JONATHAN GOLOVIN
CEO, T3Ci
T3Ci has been working with a number of large Wal-Mart suppliers including Procter & Gamble, Kraft and Colgate-Palmolive to implement systems that let them better track product promotions at the store level. Earlier this year, T3Ci read and analyzed its onebillionth RFID tag, a milestone for the industry.

BILL HARDGRAVE
Director, RFID Research Center, Sam M. Walton College of Business, University of Arkansas
Hardgrave has been instrumental in educating businesses in the potential of RFID technologies as well as in conducting research into the benefits. He headed an exhaustive study in 2005 that showed RFID systems could reduce out-of stock incidents in stores by an average of 26%.

JAMES GLEGHORN
Supply Chain Manager, Hanna's Candle Co.
Hanna's Candle, based in Fayetteville, AR, about a 20-minute drive south of Wal-Mart headquarters, established a working RFID lab in its plant. Hanna's and other companies use the lab to test new RFID tags, readers and software, and Gleghorn is responsible for integrating lessons learned in the lab into Hanna's operations.

Next page: Baseline Comparisons: Wal-Mart's Faltering Results

Radio Interference?
The Wal-Mart juggernaut has faltered since RFID was introduced

Looking for its next big breakthrough in getting products to stores faster and cheaper, Wal-Mart introduced its RFID initiative in 2003. The technology has not made the impact Wal-Mart expected and competitors are making up ground.



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Contributing Editor
Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.

 
 
 
 
 
 

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