The first major study into Wal-Mart's use of radio frequency identification (RFID) tagging has shown that it significantly improved supplies, although manufacturers remain to be convinced of the advantages.
Researchers at the University of Arkansas, who completed a 29-week study at 12 Wal-Mart stores in the US, found shortages were reduced by 16% and products with RFID tags were replenished three times faster than those with standard barcodes.
Meanwhile, research by the US-based consultant ARC Advisory Group found that more than 95% of suppliers using RFID labels for Wal-Mart, Metro and others expected to wait more than two years before seeing a return on their investment. It also revealed that suppliers felt they were unlikely to gain any real benefit until most of their other customers switched to RFID.
Asda's chief operating officer Dave Cheesewright said Asda was still monitoring Wal-Mart's progress with RFID before embarking on UK trials. He said: "All resources are being pumped into the US at the moment. You can waste a lot of time duplicating efforts."
The University of Arkansas study found that Wal-Mart experienced a "meaningful reduction" in manual orders and less excess stock, said Wal-Mart's chief information officer Linda Dillman. "This is no longer a take-it-on-faith initiative. This study provides conclusive evidence that EPCs [electronic product codes contained in RFID labels] increase how often we put products in the hands of customers."
She said that the study showed RFID-enabled stores were 63% more effective at replenishing shelves.
Rollin Ford, executive vice president for logistics at Wal-Mart, said: "We are also using the technology to reduce our inventory in the whole supply chain. With little effort, we have been able to make inroads into this area. Manual orders placed by stores were reduced by approximately 10%."
RFID is used by more than 100 Wal-Mart suppliers, 500 stores and five distribution centres. By early 2007, more than 600 suppliers will be delivering RFID-tagged cases.