Operating Strategies Case Study

Case Title:

RFID in Wal-Mart: Willy Nilly Compliance by its Suppliers

Abstract:
Wal-Mart is the largest retailer and one of the largest companies in the world based on revenue. In 2005, Wal-Mart reported a net income of US $10.3 billion on US $285 billion of sales revenue (3.6% profit margin). Wal-Mart achieved success by focusing on technology enabled supply chain in order to provide service to the customers. In 2003, Wal-Mart deployed RFID (Radio Frequency Distribution) in 8 distribution centers (in cases and pallets) through pilot approach and witnessed 1% improvement in inventory control. In 2005, when Wal-Mart asked 200 suppliers to comply with RFID, they expressed their unwillingness to comply with RFID implementation. In spite of all the objections raised by the suppliers, Wal-Mart wanted RFID enabled supply chain in all its stores and distribution centers by the end of 2006.

Pedagogical Objectives:

• To discuss how technology plays a vital role in retailing
• To understand how Wal-Mart witnessed growth through its technology enabled supply chain
• To understand the advantages and disadvantages of RFID in retailing.

Keywords :  Wal-Mart; RFID; suppliers; bar codes; technology; supply chain excellence; challenges; RFID compliance; cost; cost; investment in technology; return on investment RFID tags; Operating Strategies Case Study; IT enabled supply chain