Inventory system in Walmart revolutionized via RFID technology

1. RFID Systems at Walmart
By (Johannes) Severin Glade, Derek Humphreys, and Tyler McFarland

2. What are RFID
- RFID (Radio Frequency Identification)
- Consists of a micro chip and an antenna
- When it is scanned by an RFID scanner, important information
can be read
- They do not need a battery to function

3. RFID effect on SCM
-> SCM (supply chain management)
+ Completely autonomous
warehouses via automatic
filing through RFID
+ Can remove human error by
making physical listings
obsolete
- High initial costs on
restructuring (Roughly 25
cents per tag)

4. Importance of Efficient Inventory Systems
● Helps retailers locate where
goods are
● Allows suppliers to recognize
when inventory levels are low
● Minimizes SCM delays
● Decreases overtime cost of
inventory management

5. Inventory System Decisions
● Walmarts “Top 100 Suppliers” are required to have RFID on their shipping crates
○ Each RFID contains an Electronic Product Code (EPC)
● Walmart RFID breaks down inventory into categories:
○ Finished Goods Inventory
○ Transit Inventory
○ Buffer Inventory
○ Anticipation Inventory
● Reduces misplaced inventory & out-of-stock products
● Allows companies to easier track what items are selling at which rates. (Precise analytics)

6. How Can RFID Help Efficiency
● Allows suppliers to recognize when inventory levels are low so they can send goods before the
store sells out
● Product location in seconds
● Employee Productivity
● RFID does NOT require a “direct line of sight”
● Significantly faster inventory deliveries

7. Privacy concerns with RFID
- As long as RFID is solely used for warehouses
and distribution centers there is no need for
concern
- RFIDs can be read remotely without the
owners knowledge
- The EPC can identify an object and retrieve
origin, production date, and more from that
particular item
- RFID is also used in credit cards

9. Porter's 5 forces model
Competition - Strong
- Large number of firms in the retail market
- Large variety of retail markets
Threat of substitution - Weak
- Higher cost of substitutes
Bargaining power of suppliers - Weak
- Large population of suppliers
Bargaining power of customers - Weak
- Large population of consumers
Threat of new entry - Strong
- Brand development is relatively easy
- Low cost of brand development

10. Supply chain at Walmart
- 2 levels of distribution centers
- Shipments arrive in consolidation
centers
- Consolidation centers distribute to
regional distribution centers
- Regional distribution centers distribute
to stores
- Stores only have small storage spaces,
because restocking happens very
frequently

11. Competitive Advantage Analysis of Walmart
- Low-cost leader by minimizing costs
- Market penetration via explosive expansion
- Diversification by offering a large variety of products
- Incredibly fast restocking of items

12. Walmart and RFID

13. Challenges
● Implementation cost and time
● More Self Checkout = More Theft
● Backlash of laying off employees

14. Solutions to challenges
● Hire additional customer service
● Security (RFID reader
above exits)
○ Higher additional
security
● Long term value for both
consumers & company
○ Promotes brand
loyalty

15. Connection to Chapter 11
Analyse Information for business decision making
● Restock Efficiency
● Identify complementary products
● What products are selling well

16. Question 1
How does RFID improve the efficiency of
Walmart's Supply Chain Management?

17. -Helps retailers locate where goods are
-Allows suppliers to recognize when inventory levels
are low
-Minimizes SCM delays
-Decreases overtime cost of inventory management

18. Question 2
What does Walmart do that sets it
apart from its competitors?

19. - Walmart decreases their prices to become a low cost
leader
- It is very convenient because its massive expansion
makes Walmart almost omnipresent
- Huge selection of goods
- Saving expenses by outsourcing their storage into
distribution centers that restock stores frequently

20. Question 3
Which challenges is Walmart facing in
implementing RFID?

21. - The amount of time and money it takes to
implement them is huge
- Higher amount of theft due to self checkouts
- Social repercussions due to firing of many employees
in need

22. Sources
Greenspan, Roberta. “Walmart's Inventory Management.” Panmore Institute, 21 Feb. 2019, http://panmore.com/walmart-inventory-
management.
Neil Mathews. “Improving Supply Chain Visibility through RFID.” Warehousing | Supply Chain Digital, Neil Mathews, 6 Feb. 2015,
https://www.supplychaindigital.com/warehousing/improving-supply-chain-visibility-through-rfid.
Lowry Solutions. “The 3 Biggest Benefits of RFID Asset Tracking in the Supply Chain.” Lowry Solutions, 13 June 2018,
https://lowrysolutions.com/blog/the-3-biggest-benefits-of-rfid-asset-tracking-in-the-supply-chain/.
Rosenblum, Paula. “How Walmart Could Solve Its Inventory Problem And Improve Earnings.” Forbes, Forbes Magazine, 2 Sept. 2014,
https://www.forbes.com/sites/paularosenblum/2014/05/22/walmart-could-solve-its-inventory-problem-and-improve-earnings/#3153cb1f5db1.
Kaplan, Deborah Abrams. “The Rise, Fall and Return of RFID.” Supply Chain Dive, 2019 Industry Dive, 21 Aug. 2018,
www.supplychaindive.com/news/RFID-rise-fall-and-return-retail/530608/
contributor, Guest. “RFID and Its Effect on Supply Chain Management.” Fronetics, 16 June 2016, https://www.fronetics.com/rfid-and-its-
effect-on-supply-chain-management/.
Ferguson, Edward. “Walmart's Generic Competitive Strategy and Intensive Growth Strategies.” Panmore Institute, 22 Aug. 2018,
http://panmore.com/walmart-generic-competitive-strategy-intensive-growth-strategies.

23. Sources 2
Malone, Robert. “Can RFID Invade Your Privacy?” Forbes, Forbes Magazine, 13 July 2012, https://www.forbes.com/2006/12/05/privacy-rfid-
tags-biz-logistics-cx_rm_1207rfid.html#aa19d685b22
Hoffman, Chris. “What Is RFID, and Is It Really a Security Concern?” How, How-To Geek, 22 Sept. 2016,
https://www.howtogeek.com/189936/htg-explains-what-is-rfid/.
Greenspan, Roberta. “Walmart Inc. Five Forces Analysis (Porter's Model), Recommendations.” Panmore Institute, 22 Feb. 2019,
http://panmore.com/walmart-five-forces-analysis-porters-model-case-study.