Wal-Mart Grapples with Rfid
The first question asks how RFID is related to Wal-Mart’s business model. No insight is given in the text as to what that business model is. I believe the answer can be summed up in their slogan “always the low price”. Wal-Mart is so huge that they dictate to their suppliers how the supplier will run their own businesses and what Wal-Mart will be charged. For more insight on Wal-Mart and how they do business see “The Wal-Mart You Don’t Know” at . http://www. astcompany. com/magazine/77/walmart. html The case study indicates that the largest reason Wal-Mart wants RFID tags is to insure that merchandise is on the store shelf instead of the storeroom in the back of the store. Wal-Mart already insists merchandise is delivered to stores on time, every time. Suppliers are benefited if their product is available for sale when a customer wants it. Suppliers are not benefited when a tag costs 40 to 50 cents each and Wal-Mart expects the vendor to absorb the cost.
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I don’t think suppliers are benefited, just another cost of doing business with Wal-Mart. Wal-Mart suppliers had several problems implementing the RFID systems. First was cost, as mentioned above. Next, the tags did not work well with all merchandise. Certain liquids, metals and porous material interferes with the radio waves. Being new technology, standards have not been written and equipment to use the tags has not been fully developed. Suppliers’ biggest problem was Wal-Mart itself demanding the technology be used, even though it was yet to be proven reliable.
Suppliers have been unable or unwilling implement what Wal-Mart requested. With Wal-Marts’ clout, there are probably technical and cost issues that just could not be overcome. Otherwise Wal-Mart’s vendors would have been forced to adopt RFID. The tags are being used in Wal-Mart stores on a limited basis and the phrase “baby steps” is being attached to the technology. The case study questions are three to four years out of date. A better question today would be if the technology will ever live up to it’s potential in the Wal-Mart environment.