You are on page 1of 15

Surname 1

RFID in Tesco and Wal-Mart
RFID is a developing system of Information technology in managing Supply Chain. The
reason for utilizing this innovation is to accelerate processes, enhance effectiveness and decrease
operational expenses. Taking a look at retail organizations that have applied such plans, we can
observe that however operational and implementation facts can be barriers, the technology of
RFID is useful to operations of Supply Chain. With regards to Implementation, the high expenses
and low initial Return on Investment (ROI) can make the utilization of RFID innovation seem
unattractive when initially deployed (Kelepouris, Katerina & Georgios, p.196).
With regards to Operations, RFID technical difficulties created by manufacturing
environments can also be a huge barrier. In spite of this, research showed that RFID gives
improvements to the core efficiency of Supply Chains, which absolutely affects after running
expenses (Suhong & John, p.422). It is proposed hence that in supply chain the utilization of
RFID can be considered as the long term procedure for diminishing expenses and enhancing
benefits. RFID works basically by the frequencies exchanges between a transponder and a
reading device, where the signals exchange is registers on the PC system. Such application is
utilized as a part of supply chains for a few tasks based around;

Access Control

Data basing

Item tracking


Surname 2
Successfully, RFID is utilized to add another automation dimension to retail businesses
supply chain operations. Therefore, it is easy to see that organizations have been excited to
consolidate these systems, as efficiency and potential speed advantages are obvious (Suhong &
John, p.420). Without a doubt the risks and Difficulties often connected with RFID based around
guaranteeing and implementing that the system of RFID is both applicable and appropriate to an
entire Supply Chain. In this research paper we are analyzing two retail organizations that how
this innovation is utilized as a part of Supply Chain environment as well as we will talk about the
reasonable benefits and risks of its utilization. Moreover, we will also observe how these two
companies have deployed RFID and how this technology can enhance efficiency in a supply
chain and at last we will discuss the requirements for RFID to enhance the performance of
companys supply chain (Gaukler & Ralf, p.35).

Answer 01
RFID in Operations Wal-Mart
Wal-Mart has become the world's biggest retailer. It always takes opportunities to make
its inventory supply chain simple and cut cost to live up its guarantee of "low pricing everyday".
The inventory management in supply chain is the most costly zone. Research has demonstrated
that the most accepted utilization of IT in the management of inventory is the stock
communication by clients to vendors or stock outs notification by organizations to their clients
(Huber, Katina & Luke). Wal-Mart mulled over this, and looked for pioneer technologies which
accomplish operational efficiencies around there, which bring savings ultimately to its clients.
One such innovation they hoped to implement in Supply Chain is the usage of Radio Frequency

Surname 3

However the plan at first kept running into usage problems, it in the end turned out to be
a win. In 2003 RFIDs first year of deploying in supply chain, Wal-Mart had sold the goods of
around the worth of $245 billion (Christopher). This was just a 1% enhancement in the out-ofstock-issue; it also generated about $2.5 billion in its profitable sales. By evaluation, Wal-Mart
would have saved around $6.7 billion in only labor costs from RFID usage. Wal-Mart in 2007
could reduce by just about one-third excess out-of-stock product and investment (Attaran,
p.253). Wal-Mart in 2003 asked its top suppliers like P&G and others to be compliant of RFID.
Therefore it can be said that implementation of RFID in Wal-Mart has had a huge financial effect
on its various small partners of Supply chain.

RFID in Operations Tesco

As indicated by Christopher, "the UK-based grocery, Tesco is considered as the success
story and they have figured out how to move beyond Wal-Mart. Ten years before they went to
Dan Jones and asked, "How might Toyota maintain the business of grocery?" And then they have
been striving hard to become grocery business of Toyota ever since." As per the ICMR (Indian

Surname 4
Council of Medical Research) study, one of the elements that helped Tesco to develop as a leader
in UKs grocery retail market was its successful Supply chain management. Solutions of lean
management were brought into its SCM (Suhong & John, p.417). It implemented frameworks
like POS (Point of Sale) data, primary distribution, continuous replenishment and implemented
RFID innovation to manufacture an efficient system of supply chain.

RFID Advantages over the Bar-code technology

RFID has removed scanning of every item, rather than that you tag the product.
Employees can take a look at the labels and tags annotate products information for e.g.




Inside products condition (Gaukler & Ralf, p.41)

Surname 5

Supply Chain Efficiency with RFID

Supply chains various components are: Inventory Management, Logistics, Distribution
and Procurement.

As the core of both retailer businesses are continuous improving in their Supply Chain
adoption, they believe in "no-cooperation" in innovation and implementing strong
communication system and IT infrastructure as they have the essential connections in the
supply chain for smooth functioning the entire system (Attaran, p.253).

Both of the retailers have tapped the technology of RFID with a desire to enhance the
productivity of their supply chain. And this is because the implementation of RFID will
upgrade their supply chain transparency and consequently will assist them reduce labor
and cost and will reinforce inventory control (Suhong & John, p.411). As indicated by
venture Development Corporation, "Today, in current frameworks, you might know there
are almost 10 things on the rack, and that data is gathered in the software system of an
enterprise planning. You with RFID know there are almost 10 things, their warehouse
origin, expiration date, lot number and age." Cohen said that It is just like knowing that
there are around 1,000 individuals in a city." And "With the help of RFID, you can know
their names."

Surname 6

The above researches show that utilizing the technology of RFID will help in executing a
consistent supply chain and henceforth yield profits.

From the, the news article provides the evidence of the increase in
efficiency, where it expresses that RFID tags implementation in Wal-Mart and Tescos
inventory has supported in sales boosting by keeping racks and shelves better stocked

Additionally to enhance the accessibility of in stock, Wal-Mart and Tesco intends to

decrease the practice of placing the order manually and has accomplished 10% lessening
in the case (Attaran, p.253).

Recent studies demonstrated that around 130 huge suppliers ship stock to the distribution
centers of Wal-Mart with around 5.4 million tags (Huber, Katina & Luke). The Wal-Mart
hopes to increase the implementation of RFID by including another 200 suppliers which
are expected to supply to other 1000 stores.

Wal-Mart at present is at a beginning condition of RFID implementation. Additionally to

make supply chain strengthen, the biggest retailer is likewise investigating into various
dimensions where RFID is useful (Huber, Katina & Luke). As the pilot test, Tesco and

Surname 7
Wal-Mart is dealing with the information gathered by RFID to examine the behavior of

Challenges and Limitations of RFID

Various issues still exist regarding the RFID implementations that Wal-Mart and Tesco
might experience difficulty in addressing their decision to go ahead with new technologies.
In using RFID, current difficulties are;

Worldwide standards: A global standard of RFID is unlikely to evolve. Just like

barcodes, RFID standard will probably change between numerous locales of the world.
The multinationals such as Wal-Mart and Tesco might need to implement variety of
technologies and standards for RFID over their worldwide organizations (Chin-Boo &
Jairo, p.91).

Technology problems: Issues, for example, signal contortion, tag transmission, speed
and reader accuracy abilities persist making RFID not practical for broad use (Huber,
Katina & Luke). A few of the significant technical restrictions are:

Read-range distances for consumer surveillance are not adequate to allow: Many
RFID tags that are presently in use are reading ranges which are less than 5 feet. RFID
tags read range relies on upon the size of antenna, frequency, transmission and if they are
active or passive (Gaukler & Ralf, p.47).

Surname 8

Limited data contained on tags: Some analysts on supporting this part of the
technology of RFID by indicating that the tags connected with the most consumer items
will contain just a serial number. In any case, this number can disclose huge information,
which is usually utilized as the reference number that relates to data contained on more
than one Internet-connected database. This implies that the information connected with
the number is unlimited theoretically, and can be expanded as new data is gathered.

Poorly performing and defective RFID tags: manufacturers of RFID tag keep on
creating flawed tags. In previous RFID pilots, failure rates have very high i.e. around
30%. Tragically, "generally high reliability" is unsatisfactory if RFID mandate requires
100% read rate (Angeles, p.51).

RFID tags damaged: Since reading of tag happens naturally without human interaction
and no line of sight, it can be hard to know when specific tags have not been read
(Krkkinen, p.529). This turns into a main problem for business applications worked
around RFID if the read rates are 100% implicit as the core business part of application

Information management: Lack of improvement of right data management tools to deal

with the information successfully, is making it hard to understand the maximum capacity
of RFID in creating an abundance of data (Christopher). "Organizations wanting to
embrace RFID face technical problems identified with successful information capture (or
reading), as well as to information volume (in transmission and database management)".

Surname 9

Cost: Any growing technology is connected with high expenses so is RFID as it is

exceptionally costly to implement (Chin-Boo & Jairo, p.88). "Singular tags cost around
30 cents each; which will drop to somewhere around one and five pennies for each tag
once billions of them are produced". Additionally, relying upon usefulness, tag readers
cost anywhere from a few hundred to a few hundred thousand dollars. However, the
biggest cost issues live in the databases required size, their integration with an
organization's present frameworks and the viable transmission of data (Krkkinen,
p.531). Related expenses can approach the many dollars; however they can be
unavoidable if RFIDs full advantages are to be figured out.

Industry Standards: Various privacy advocates are demanding the organizations to

express their expected utilization of the technology because of absence of industry
standard in regards to the utilization of personal information which can be encoded on
chips (Bottani & Antonio, p.562).

Civil liberties and privacy: for RFID technology one major confrontation would be to
manage the threats to civil liberties and consumer privacy (Bottani & Antonio, p.559).
RFID tags are implanted into/onto documents and objects without the information of the
person who acquires those things.

Answer 02
Deployment of RFID in Wal-Mart

Surname 10
Wal-Mart in 2003 required a new system in order to support its supply chain management
and therefore deployed the system of RFID (radio frequency identification) at the distribution
centre (Jones, David & Jeff, p.31). Moreover, because of the fact that business area of Wal-Mart
expanded, they expected to monitor their cargos that were sent to various regions. Likewise, the
fact that they now needed to keep up a ton of distribution centers over the world has become an
essential matter for Wal-Mart. They also expected that out-of-stock reduction could possibly be
made by developing the system of RFID. In this sense the RFID system was suitable for WalMarts business because RFID can manage the entire procedure from sales of the items to
production with a little chip and this chip is tracked b the radio frequency (Bottani & Antonio,

RFID as such was viewed as a new framework to replace the framework of barcode.
Moreover, one notable RFID feature is that this could be tagged on each item (particularly on
those which permits this framework to be broadly applied) (ibid), below is the picture of RFID
tag. After RFID system was deployed, the inventories tracking turn out to be significantly more
viable as RFID could interface into the Electronic Data Interchange (EDI) and POS systems
(Krkkinen, p.535). As a consequence of this interaction set, joint effort between frameworks

Surname 11
was fundamentally improved. Likewise, through the interrelated components, synergies are
generated in supply chain.

Although, the new system introduction additionally realized a negative impact for WalMart. Wal-Mart with its vendors have managed a long-term relationship. In view of this
relationship, Wal-Mart in 2003 recommended its supplier to utilize RFID tag on its items when
suppliers deliver their merchandise to distribution centers. Regardless of the fact that they kept
up a good association with its suppliers, it was difficult to bring every suppliers' into agreement
(Attaran, p.251). As per Christopher, the management of supply chain has brought a new
relationship in between supplier and traditional buyer. Wal-Mart invested a lot of energy and
time meeting with its vendors trying impress and negotiate them the need of the new framework.
Yet a few organizations would not have liked to change their system as they would have needed
to learn new innovations and those they would have included extra expenses for them. Hence,
the improvement of the new framework made them lose their some traditional partners.

Deployment of RFID in TESCO

In Tesco the whole in-store inventory is at present handled by the supply chain
department of Tesco. ADT developed the RFID helped Tesco to manage the problems regarding
supply chain such as out of stock, decreasing the harmful effects on customer service and late

Surname 12
deliveries. RFID was the main thing that has made the organization such a major hit in the retail
market of grocery (Delen, Bill & Ramesh, 620). ADT built up the RFID solution to transport,
count and receive the accurate amount of per item at the definite time to a store. ADT helped
them to apply the quick solution which helped Tesco to observe the delivery through supply
chain. And this involved installation 16000 antennas and 4000 readers all through the Tesco UK
stores and distribution centers (Jones, David & Jeff, p.39).
Tesco is using this strategy for the advantage of clients. This will make staffs and
customers life much less demanding through enhanced accessibility of highly requested items.
Even though the system of RFID was presented for quite a while however not every company
used this innovation (Angeles, p.51). Because of the RFIDs cost effective nature, other
companies could not find it economical to present this innovation in supply chain. Other
companies that use the technology of RFID are organizations like Wal-Mart, Dell.

Answer 03
RFID requirements to improve Supply Chain performance
RFID offer various commitments to supply chain by their advanced properties such as
distinctive product identification, ease of real-time and contact. Through RFID the development
can be appeared in different supply chain types, for example, asset management system,
inventory management, order management, product scheduling, transportation management and
warehouse management (Christopher). RFID can get the traceability of items and the visibility
better all through the supply chain, furthermore can speed up and make reliable operational
processes for example, counting processes, checkout, shipping and tracking, which directs to
more correct information and better inventory flows. Organizations set up together and store
more right information got over RFID in their system of information technology for enhanced

Surname 13
supply chain management and scheduling. Thus, there is a huge association among RFID
technologies and IT applications (Angeles, p.60).

Over these different gains, RFID innovations can offer cost diminish, expanded income, process
upgrade, service quality and so forth. The reason for implementing RFID is not simply to
improve current systems. Rebuilding procedures with this most recent technology can also guide
to high aims in the entire effectiveness in supply chain. Bottani and Rizzi analyzed that models
reengineering help in boosting possible advantages received from RFID for the procedures of
retailers and distribution centers. RFID fuse over new business architectures provides more
advantages as compared with the existing businesss technology integration process.

Surname 14
Work Cited
Angeles, Rebecca. "RFID technologies: supply-chain applications and implementation
issues." Information systems management 22.1 (2005): 51-65.
Attaran, Mohsen. "RFID: an enabler of supply chain operations." Supply Chain Management: An

International Journal 12.4 (2007): 249-257.

Bottani, Eleonora, and Antonio Rizzi. "Economical assessment of the impact of RFID
technology and EPC system on the fast-moving consumer goods supply
chain." International Journal of Production Economics 112.2 (2008): 548-569.
Breitbart,. "Breitbart News Network". N.p., 2016. Web. 26 Jan. 2016.
Christopher, Martin. "Logistics and supply chain management: Strategies for reducing cost and
improving service." (1998).
Delen, Dursun, Bill C. Hardgrave, and Ramesh Sharda. "RFID for better supplychain
management through enhanced information visibility."Production and Operations
Management 16.5 (2007): 613-624.
Gaukler, Gary M., and Ralf W. Seifert. "Applications of RFID in supply chains." Trends in
supply chain design and management. Springer London, 2007. 29-48.
Huber, Nick, Katina Michael, and Luke McCathie. "Barriers to RFID adoption in the supply
chain." (2007).
Jones, Michael A., David C. Wyld, and Jeff W. Totten. "The adoption of RFID technology in the
retail supply chain." The Coastal Business Journal4.1 (2005): 29-42.

Surname 15
Krkkinen, Mikko. "Increasing efficiency in the supply chain for short shelf life goods using
RFID tagging." International Journal of Retail & Distribution Management 31.10
(2003): 529-536.
Kelepouris, Thomas, Katerina Pramatari, and Georgios Doukidis. "RFID-enabled traceability in
the food supply chain." Industrial Management & Data Systems 107.2 (2007): 183-200.
Li, Suhong, and John K. Visich. "Radio frequency identification: supply chain impact and
implementation challenges." International Journal of Integrated Supply Management 2.4
(2006): 407-424.
Soon, Chin-Boo, and Jairo A. Gutirrez. "Effects of the RFID Mandate on Supply Chain
Management." JTAER 3.1 (2008): 81-91.