Wal-Mart made a business model out of streamlining distribution networks. Now Wal-Mart is about to implement item level RFID tagging beginning with jeans (see the article from RFID Journal). Wal-Mart has had difficulty in the past implementing RFID for inventory control. Previous efforts appear to have been hamstrung by poor cross-functional coordination and the immaturity of the technology.
Here’s an example of the kind of problem that can face a poorly implemented RFID system. At one industry meeting I attended, an RFID vendor I met claimed that one retailer’s financial team was appalled to learn the inventory team had begun implementing pallet level tracking with real time in-store inventory control. “But we don’t WANT to know what we have in the store,” finance team members allegedly told their inventory team colleagues. “We tell our vendors we can’t pay them until an item is actually sold to the end customer because we can’t confirm their stock was actually received at the store. Do you have any idea how much it will cost us if we have to pay vendors based on store delivery instead of sitting on the money until consumer sale of their products?” The story seems a bit contrived, so I won’t vouch for it. But certainly real-time inventory control can be a double edged sword not only enabling new and potentially better business methods, but also potentially disrupting old methods, if not properly coordinated. More: WSJ
