(Note: to hear our RFID Retail Supplier Podcast with Mike Graen, click the “play” button above. Don’t forget to request a FREE consultation about your RFID issues.)

Suppliers and retailers alike are working to improve supply chain. Better packaging, more accurate inventory, shrink reduction, and improved tracking are just a few ways companies seek to cut costs and sell more product.

All of the aforementioned goals can be reached with RFID. While RFID is not a new technology, it is one seeing a big resurgence in retail. Companies like Walmart are investing more in RFID for the first time or expanding it to more categories in their stores.

RFID stands for Radio Frequency Identification. RFID technology is simply tags or labels encoded with digital data on store product. This data can be read, monitored, and captured via radio waves.

When an RFID tag or label is placed on an item, it does three things:

1. Identify the item
   
2. Collect data about the item (location, specifications, purchase information, etc.)
   
3. Transfer information to a database
   

All of this is done through radio waves with little or no human intervention at all. Each RFID tag is created with an integrated circuit and antenna. The data collected from the tag is sent to an RFID interrogator (a device that reads the data). The interrogator converts the data into information sent to a master database where it is stored, analyzed, and communicated to other parties if necessary.

On the surface, this does not even seem like an argument. RFID is an advanced technology, a barcode is yesterday’s identification and tracking. What’s to discuss?

Depending on the manufacturer, a case can be made for the superiority of RFID or barcode. High-ticket suppliers in electronics lean toward RFID while suppliers of lower-priced food and perishables are satisfied with barcodes. Both tools help companies track their product and store information. Aside from that overlap, there are key differences between RFID and a barcode:

Barcodes win with suppliers in reducing initial production costs. Black and white printed lines and numbers are easier to create than inventing in radio frequency technology. However, as will be noted in the following differences, results may out way the beginning cost.

Data collected on individual items happens through the item being scanned. Barcodes must be scanned individually, which is a time-consuming process. Adding to the process is the fact that the barcode must be in the line of sight of the scanner. The requires a small scanning range from the product.

RFID allows multiple tags to be scanned multiple tags at once. Not only is the process faster, but more efficient. RFID reads each individual product, preventing the error of scanning the same item twice. Multiple scans of one item are possible with barcodes. An RFID does not require a line of sight for scanning. Tags and labels can be read a long distances.

This is where the technology really separates the two. RFID is capable of storing not just more information, but more complex information (SKU details, individual units in a SKU, product maintenance, expiration dates, etc.). All of the data in the RFID tag can be encrypted.

Barcodes are only able to store a small amount of information. The data held in a barcode is more generic (manufacturer, product name, SKU, etc.).

As stated above, the supplier gets what they pay for upfront. Barcodes are commonly printed on paper or adhesive. They can easily be damaged through any step in shipment. A barcode that has been damaged or rendered unreadable can not transfer data, resulting in supply chain misinformation.

An RFID tag is not only more durable but it can be reused. They are also sturdier in shipment and can withstand harsh temperatures.

Walmart began experimenting with RFID technology in 2003. The experiment proved successful. Using RFID tags on select items, Walmart saw cost savings and a more efficient supply chain. Based on these results, Walmart went on to invest almost $500 million in its RFID technology in 2004.

After years of monitoring and tweaking, Walmart decided to expand the program. The company announced plans in 2010 to use RFID tags on individual items of clothing. During these years, supply chain efficiency and security grew, but so did concerns about RFID tags.

The first concern was cost. As with any new technology, the first rollouts are expensive. Once more security tech companies entered the field, RFID became more affordable, but investment, in the beginning, was a hard sell to suppliers.

The second concern was over privacy. Tracking a sale was one thing; tracking the personal information of the consumer seemed too invasive. Changing shopping habits and a new generation of consumers soon put this concern to rest.

By 2020, Walmart had expanded RFID tagging and labeling to all of its Apparel products. The company saw a dramatic improvement in on-hand accuracy, online order fulfillment, sell-through, and (most importantly!) customer satisfaction.

Walmart continues to launch initiatives to improve the shopping experience. Programs like On Time in Full (OTIF) and the Supplier Quality Excellence Program (SQEP) help keep suppliers accountable for getting product to the shelf. To better monitor where the product is and how much is in the store, Walmart is once again expanding the RFID program.

In January 2022, Walmart announced new supplier expectations for RFID. Companies selling to Walmart in the areas of Toys, Entertainment/Electronics, Sporting Goods, Home (bedding, furniture, bath, storage, etc.), Automotive Batteries, and Wireless are now required to include RFID on all item tags or packaging.  This goes into effect for any item in these categories arriving in a Walmart store beginning September 2, 2022.

Any Walmart supplier not currently using RFID technology should begin planning today. As Walmart begins to see more success and savings with the program, expansions to more categories are inevitable.

Before making adjustments to current inventory or supply chain processes, Walmart suppliers need to contact their buying team. Ask for specifics on RFID implementation in the category with dates and requirements. Other questions about the Walmart RFID initiative can be sent to walmartRFID@walmart.com.

Walmart benefits from the RFID initiative in all the ways mentioned previously: on-hand accuracy, consumer data collection, better tracking, shrink reduction, and more. One added bonus of RFID is how Walmart supports its online shoppers. RFID helps the in-store experience of the online shopper.

In-store shopping is not going away. Gen Z shoppers are bringing new life to the in-store experience, but more shoppers still like to research online before venturing to the brick-and-mortar store. RFID technology with Walmart.com lets the shopper see if the product they want is in their local store. Improving inventory accuracy with RFID is allowing Walmart to truly be an omnichannel retailer.

Walmart is constantly changing policies and processes to meet consumer demand and provide a better shopping experience. Many changes require suppliers to update their supply chain practices from shipping to packaging. RFID can be a costly change when first intergrading, but the overall benefits to the supply chain will pay off in the future.

If you have questions about Walmart’s systems and process updates, our team is here to help. Request a free consultation with a Walmart advisor from 8th & Walton.

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