1.1. INTRODUCTION TO WAL-MART:Wal-Mart Stores, Inc.

, branded as Wal-Mart since 2008, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company was the world's largest public corporation in 2010 by revenue. The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. Wal-Mart, headquartered in Bentonville, Arkansas, is the largest majority private employer Wal-Mart is also the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business. It also owns and operates the Sam's Club retail warehouses in North America. Wal-Mart has 8,500 stores in 15 countries, under 55 different names. Technology is inevitable in every sphere of life today; it has always made things easier. Wal-Mart works on the same strategy, from the above description; we can

understand how diversified Wal-Mart is and the volume of cargo it needs to handle for each of its businesss. Traditionally, it had started with computerization of individual stores with small billing machines and had then led to centralized billing for record keeping. The technology has grown by leaps and bounds and has become increasingly challenging to maintain large databases of information and maintain records. Powerful computers networked with high performance clusters maintain and store this data. This gives a picture as to how technology plays a vital role in todays businesses. Traditionally, technology has been upgraded in billing systems and for storage purposes. A new area where technology could be applied to, where many expenses could be saved was in inventory management and logistics. Wal-Mart being so huge needed to keep track of men and material sent across different countries and had to maintain hundreds of warehouses across the world. Bar-codes have been initially identified as a suitable technology to meet the purpose. But due to the limitations of
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barcodes, a new emerging technology called RFID has been identified to meet the demands. RFID is low cost Radio Frequency Identification system which requires minimum human intervention to carry out tasks ranging from billing to materials tracking and supply chain management. It is a small wireless device which can store good amount of data and can virtually be tagged to anything. RFID is an electronic tagging technology as shown in figure 1 that allows an object, place, or person to be automatically identified at a distance without a direct line-of-sight, using an electromagnetic challenge/response exchange.

1.2. OBJECTIVES OF THE STUDY:

To understand the impact of Radio frequency identification (RFID) on the supply chain. To find out the outcomes of RFID from a case study. 1.3. DATA COLLECTION: Secondary data is collected from various sources articles, journals, reports over the internet.

2.1.

OVERVIEW OF SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) is the coordination of a network of facilities and distribution options that performs procurement of materials, processing the materials into finished products, and distribution of the products to customers. SCM is seen as involving five core processes. These include planning, sourcing, making, delivering, and returning. SCM exists in both service and manufacturing environments. A typical supply chain consists of many interactions between suppliers, manufacturers, distributors, retailers, with the ultimate goal of providing either a service or a product to customers. This also works in reverse with the customer at the head of the process when returning a product.

Fig: Typical supply chain showing interrelations between all involved parties.
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SCM exists in both service and manufacturing environments. A typical supply chain consists of many interactions between suppliers, manufacturers, distributors, retailers, with the ultimate goal of providing either a service or a product to customers. This also works in reverse with the customer at the head of the process when returning a product. SCM is used as a means to integrate planning, purchasing, manufacturing, distribution, and marketing organizations that normally do not work together to achieve a common goal. Each works toward goals specific to their own organization that accomplish narrow objectives. SCM is a way of integrating these varying functions so that they work together to maximize the benefits for all involved. Inventory decisions and management is critical. Some inventories are necessary to hedge against uncertainty, but this comes with a cost. Managing these inventories efficiently will be of benefit to the corporation. Transportation decisions include cost versus benefit. Air transportation is costly, but fast and reliable. Other modes of transportation may be cheaper, but the sacrifice is having to hold inventories due to delays that may occur. If the above decisions are made with careful and strategic thought as well as with concern for integration, the supply chain should be efficient and successful.

The overall goal of SCM is to optimize supply chains in an attempt to provide more accurate and time sensitive information that can be used to improve process times and cut costs. Supply chains have been around for decades and a constantly being improved. The newest opportunity for improvement is the introduction of radio frequency identification (RFID) tags. RFID technology will provide real-time

information that will allow manufacturers to get better readings of customers and markets thus further improving supply chains. RFID will help retailers provide the right products at the right places at the right times. Ultimately, maximizing sales and profits.

2.2. RFID IN WARMARTS SUPPLY CHAIN:-

Wall-mart is well known to adopt IT infrastructure since 1974 began using computers for inventory control. In 2003, Wall mart is one of the major drivers behind the RFID was they announced a three year technological compliance plan for its suppliers. Therefore adopting RFID technology will significantly improve control over the supply chain to meet customer demands. WHY RFID OVER BARCODE? The ability to read without line-of-sight is the best advantage of RFID over bar-code systems. RFID readers can sense items even when the tagged items are hidden behind other tagged items. This enables automation. The challenging part of implementing RFID is that tagged items should not be missed by the reader due to interference, multipath fading, transient effects etc. Missed reads are an unfortunate reality with RFID systems. RFID uses a serialized numbering scheme such as EPC (Electronic Product Code). Each tag has a unique serial number. Serial number information is extremely powerful in understanding and controlling the supply chain and provides much more detailed behavior of the supply chain than can nonserialized bar codes such as UPC (Universal Product Codes) and EAN (European Article Numbering). Serial numbers have many advantages such as food freshness/expiration. This can tell how for how long an item has been in the supply chain where as such information is not captured in bar code system. Hence items can be reached the right place at the right time. Furthermore RFID implementation monitors theft too. For example if number of items reached at the retailers outlet is less than that was departed from suppliers location, it can be easily tracked for. In all these ways, RFID systems have stronger sensor networking system or monitoring system than bar code systems. Wal-Mart has been leading the charge with RFID technology. Having the largest retailer adopt and begin to use RFID technology has given strong backing to the technology and will only further and quicken the expansion of RFID. They have
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begun requiring all their major suppliers to implement RFID technology on all products supplied to Wal-Mart. Wal-Mart has done with SCM and its suppliers are that of its relationship with Proctor & Gamble. These two built a software system that hooked Proctor & Gamble up to Wal-Marts distribution centers. This system would then monitor supply levels and when products run low, automatic alerts are sent out to require the shipment of more products to that distribution center. Wal-Mart has taken this as far as going to the individual store locations. The shelves are monitored in real time via satellite links that send inventory messages whenever Proctor & Gamble products are scanned at a register. This allows Proctor & Gamble to be fully aware of up to the minute product inventories at the actual store locations and ship additional products as necessary. This concept is a huge step in making SCM as efficient as it can be.

2.2.1 .WALMART SUPPLIERS:Some of the major suppliers of Wal-Mart are: Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestle, Purina Pet Care Company, Procter & Gamble and Unilever. Kimberly-Clark Kimberly Clark is a manufacturer of paper goods products that include Kleenex, Huggies and Depend. In April 2004, Kimberly Clark tagged its Scott paper towels shipment with RFID tags to be shipped to Sanger, Texas. Kraft Foods Kraft Foods, the largest food company employs RFID system to improve handling of its bulk containers. Kraft has outsourced its RFID system to TrenStar to handle the complete supply chain.

Gillette Smart razor blades have been introduced to the supermarkets. Gillette has ordered half a billion tags to track razors. The Gillette Company uses RFID for both pallet and case applications. All the cases in a pallet are scanned with RFID readers as they move along the conveyor belt. In a trial at Tesco's new market Road branch in Cambridge, the packaging of Gillette Mach3 razor blades has been fitted with tiny chips.

2.2.2. PROCUREMENT & DISTRIBUTION:Wal-Marts process of procurement involves reducing its purchasing costs as far as possible so that it can offer best price to its customers. The company procures goods directly from the manufacturers, bypassing all intermediaries. Wal-Mart has distribution centers in different geographical places in US. Wal-Marts own warehouses supplies about 80% of the inventory. Each distribution centre is divided in different groups depending on the quantity of goods received. The inventory turnover rate is very high, about once every week for most of the items. The goods to be used internally in US arrive in pallets & imported goods arrive in reusable boxes. The distribution centers ensured steady flow & consistent flow of products. Managing the center is economical with the large-scale use of sophisticated technology such as Bar code, hand held computer systems (Magic Wand) and now, RFID. Every employee has access to the required information regarding the

inventory levels of all the products in the center. They make 2 scans- one for identifying the pallet, and other to identify the location from where the stock had to be picked up. Bar codes & RFID are used to label different products, shelves & bins in the center. The hand held computers guide employee to the location of the specific product. The quantity of the product required from the center is entered in the hand held computer, which updates the information on the main central server. The computers also enabled the packaging department to get accurate information such as
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storage, packaging & shipping, thus saving time in unnecessary paperwork. It also enables supervisors to monitor their employees closely in order to guide them & give directions. This enables Wal-Mart to satisfy customer needs quickly & improve level of efficiency of distribution center management operations.

2.2.3. LOGISTICS MANAGEMENT:This involves fast & responsive transportation system. More than 7000 company owned trucks services the distribution centers. These dedicated truck fleets enables shipping of goods from distribution centers to the stores within 2 days and replenish the store shelves twice a week. The drivers hired are all very experienced & their activities are tracked regularly through Private Fleet Driver handbook. This allows the drivers to be aware of the terms & conditions for safe exchange of Wal-Mart property, along with the general code of conduct. For more efficiency, Wal-Mart uses a logistics technique called Cross Docking. In this system, finished goods are directly picked up from the manufacturing site of supplier, sorted out and directly supplied to the customers. This system reduces handling & storage of finished goods, virtually eliminating role of distribution centers & stores. Because of cross-docking the system shifted from supply chain to demand chain which meant, instead of retailers pushing the products into the system, the customers could pull the products, when & where they required.

2.2.4. INVENTORY MANAGEMENT:Considering the rapid expansion of Wal-Mart stores, it was essential to have a very good communication system. For this, Wal-Mart set up its own satellite communication system in 1983. This allowed the management to monitor each and every activity going on in a particular store at any point of the day and analyze the course of action taken depending on how the things went.

Wal-Mart ensures that unproductive inventory is as less as possible, by allowing the stores to manage their own stocks, thereby reducing pack sizes across many categories and timely price markdowns. Wal-Mart makes full use of its IT infrastructure to make more inventories available in case of items that customers wanted most, while reducing overall inventory. By making use of Bar-coding & RFID technologies, different processes like efficient picking, receiving & proper inventory control of the products along with easy packing and counting of the inventories was ensured. Wal-Mart owns the Massively Parallel Processor (MPP), largest & the most sophisticated computer system in private sector, which enables it to easily track movement of goods & stock levels across all distribution centers and stores. For emergency backup, it has an extensive contingency plan in place as well. Employees use Magic Wand, which is linked to in-store terminals through a Radio frequency network, to keep track of the inventory in stores, deliveries and backup merchandise in stock at the distribution centers. The order management and store replenishment of goods is entirely executed with the help of computers through Point of Sale (POS) system. Wal-Mart also makes use of sophisticated algorithm to forecast the quantities of each item to be delivered, based on inventories in the store. A Centralized inventory database allows the personnel at the store to find out the level of inventories and location of each product at a given time. It also shows the location of the product like distribution center or transit on the truck. When the goods are unloaded at the store, the inventory system is immediately updated.

2.3. EFFICIENCY IN SUPPLY CHAIN WITH RFID:-

The various components of Supply Chain are: Suppliers, Procurement, Distribution, Logistics and Inventory Management. Since the core of Wal-Mart business is perpetual improvement in its Supply Chain implementation, it believes in no-compromise on implementing an innovative IT infrastructure and strong communication system as they are the important links in the chain for a smooth functioning of the complete system. Wal-Mart tapped RFID technology with an aim to increase the efficiency of its supply chain. This is because RFID implementation will enhance transparency of their supply chain and hence will help them minimize cost and labor and will strengthen inventory control. According to Venture Development Corporation, With Wal-Mart selling over $245 billion worth of goods in fiscal year 2003, a 1% improvement in the out-of-stock issue could generate nearly $2.5 billion in very profitable sales. In current systems, you may know there are 10 items on the shelf, and that information is compiled in an enterprise planning software system. With RFID, you know there are 10 items, their age, lot number, and expiration date and warehouse origin. From the above studies it indicates that employing RFID technology will help in implementing a seamless supply chain and hence yield profits. Where it states that implementation of RFID tags in Wal-Marts inventory has helped boost sales by keeping shelves better stocked. Usage of RFID has reduced out-of-stock merchandise by 16% at the stores that have implemented RFID tags for more than a year. The CIO at Wal-Mart stated that, Wal-Mart has been able to restock RFID-tagged items three times as fast as non-tagged items. In addition to improving the availability of in-stock merchandise, Wal-Mart aims to reduce the in the case.
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practice of manually placing the order and has achieved 10% reduction

The recent studies show that 130 major suppliers ship merchandise to Wal-Mart distribution centers with about 5.4 million tags. Wal-Mart expects to increase RFID implementation by adding another 200 suppliers that are projected to supply to another 1000 stores. At present, Wal-Mart is at a nascent state of implementing RFID. In addition to strengthening the Supply Chain, the largest retailer is also looking into different dimensions where RFID can be helpful. As a pilot test, Wal-Mart is working on the data collected by RFID to analyze the consumer behavior. According to Venture Development Corporation, the major implementation milestones of RFID at Wal-Mart are to expand Regional and domestic implementation of RFID throughout 2005. These include Regional Distribution Centers, Grocery Distribution Centers and Sams Club Distribution Centers in Texas. And, by 2006, Wal-Mart aims to mandate RFID implementation for all its suppliers.

2.4. LIMITATIONS OF RFID:Global standards: A single global RFID standard is highly unlikely to evolve. Like barcodes, standards for RFID will probably vary between many regions of the world. Multinationals like Wal-Mart may need to implement a variety of RFID standards and technologies across their global organizations. Technology problems: Problems such as signal distortion, reader accuracy and speed, and tag transmission capabilities persist making RFID still not practical for widespread use. Some of the major technical limitations are:
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Read-range distances are not sufficient to allow for consumer surveillance: Most of the RFID tags currently in use have read ranges of fewer than 5 feet. The read range of the RFID tags depends on the antenna size, transmission frequency, and whether they are passive or active.

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2.

Limited information contained on tags: Although some researchers on RFID support this aspect of the technology by pointing out that the tags associated with most consumer products will contain only a serial number. However, this number can reveal a lot of information, which is generally used as a reference number that corresponds to information contained on one or more Internet-connected databases. This means that the data associated with that number is theoretically unlimited, and can be augmented as new information is collected.

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Defective and poorly performing RFID tags: RFID tag manufacturers continue to produce faulty tags. Failure rates in early RFID pilots have been as high as 30%. Unfortunately, "relatively high reliability" is unacceptable if an RFID mandate calls for a 100% read rate.

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Damaged RFID tags: Since tag reading happens automatically without line of sight and no human interaction, it can be difficult to know when certain tags are not read. This becomes a serious issue for business applications built around RFID if 100% read rates are implicit as part of the core business application design.

Data management: Lack of development of right information management tools to manage the data effectively, is making it difficult to realize the full potential of RFID in generating a wealth of information. Companies planning to adopt RFID face technical concerns related to effective data capture (or reading), and to data volume (in database management and transmission). Cost: Any developing technology is associated with high costs and so is RFID, which is highly expensive to implement. Individual tags cost about 30 cents each; this will drop to between one and five cents per tag once billions are being produced . And depending on functionality, tag readers can cost anywhere from several hundred to several hundred thousand dollars. The largest cost issues, however, reside in the required size of the databases, their integration with a companys current systems and the effective transmission of information. Associated costs can approach the millions of dollars, but they are unavoidable if the full benefits of RFID are to be realized.

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Industry Standards: Many privacy advocates are insisting the companies to state their intended use of the technology due to lack of industry standards regarding the use of personal information that could be encoded on the chips. Privacy and civil liberties: One major confrontation for RFID technology would be to deal with the threats to consumer privacy and civil liberties. RFID tags can be embedded into/onto objects and documents without the knowledge of the individual who obtains those items. Must be programmed, applied and verified individually, and data synchronization is usually required. A final barrier to implementation that may need managing is employee acceptance, particularly in light of potential job losses.

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2.5. CONCLUSION:In conclusion, to understand a company, it is important to analyze its environment and operation. Therefore understanding the business model, the people, organization and technology in Wal-Mart provides an overview of its operation. Inspirational leaders, open door policy culture and using advance technology have made Wal-Mart the number 1 corporation in the world. WalMart supply chain is a legendary which is the company key success factor. Accompanied with RFID technology in place, it is near to perfection. No organization is perfect thus Wal-Mart can improve by becoming a more sustainable and green organization.

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2.6. REFERENCE:http://supply-chain-it.tompkinsinc.com/post/rfid-revival-at-walmart.aspx http://communication.howstuffworks.com/how-inventory-management-systemswork1.htm http://www.asaresearch.com/ecommerce/supplychain.htm http://02-25-1.php/?cid=2293&ctype=content http://communication.howstuffworks.com/how-inventory-management-systemswork2.htm http://communication.howstuffworks.com/how-inventory-management-systemswork3.htm http://www.scdigest.com/assets/newsviews/09-http://www.ameinfo.com/66090more3.html http://www.tutorial-reports.com/wireless/rfid/walmart/case-study.php http://gizmodo.com/5595129/wal+mart-wants-to-track-underwear-with-rfid-tags http://www.cio.com/article/173702/Wal_Mart_Is_Dead_Serious_About_RFID

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