Wal Mart Distribution Centers: How they utilize technology(RFID and other technologies) - Essay Example

However, it is only recently that business organizations have realized the huge benefits that this technology can deliver to their organizations. The RFID technology is revolutionizing value chain by ushering the business arena in “a new era of cost savings, efficiency, and business intelligence.” (How RFID can help optimize 8). This paper will specifically look at how Wal-Mart Stores, Inc (Walmart) has utilized the RFID technology for its benefit. Wal-Mart is currently the world’s largest retailer and the second largest corporation next to Exxon Mobil with 2005 total sales of $316 billion in sales (Wal-Mart 1).

With its size and scope, it is irrefutable that Wal-Mart’s supply chain is comprised of many suppliers where the international retailer sources the various merchandise in its stores. Thus, Wal-Mart distribution centers houses numerous products from different suppliers. Traditionally, merchandise from different distributors cannot be individually tracked as they enter the retailer’s shop floor because there is no equipment and facility to facilitate monitoring. It should be noted that before the RFID technology, barcodes are manually checked by the workforce of Wal-Mart once merchandise enter its distribution centers.

However, the mandate of Wal-Mart in 2003 to install RFID tags in the products of its top 100 suppliers in the January 2005 revolutionized its entire supply chain (Roberti 2004). From the tedious task of monitoring the shipment of merchandise to Wal-Mart’s distribution centers, the international retailer has now entered an era of benefiting from RFID technology to track the shipment of merchandise from the suppliers’ shop floor to Wal-Mart’s warehouses and finally, to its distribution centers.

The cost savings associated with the use of RFID is enormous. According to Philip Windley, the utilization of this technology in Wal-Mart can lead to $8.35 billion annually which is more