RFID Technology and Walmart

Radio Frequency Identification Technology in Walmart

Radio Frequency Identification (RFID) is a technology that may automatically read data from tags affixed to pallets, cases, products, or containers. The usage of this technology is intended to improve the visibility of an organization’s supply chain. FRID technology allows each product in the company to be individually identified so that it can be tracked throughout the supply chain. The benefits and consequences of this technology in Walmart, as well as the effectiveness and efficiency that the technology offers to the company, will be examined in this article. Walmart is a multinational retail store which operates grocery stores and hypermarkets in many parts of the world. In 2014, it was ranked the world’s largest company by revenue, and it currently operates over 11,000 stores (Traub & Volonino, 2012). The success of the corporation is usually attributed to RFID technology that has enabled it to boost its management of the supply chain.

Walmart’s Efficient Inventory Management with RFID Technology

Walmart’s use of RFID technology has allowed them to effectively manage their inventory through the ability to track an item in the supply chain. The technology enables Walmart to collect more information than they could when using other technologies. The data that is collected increases the visibility of the supply chain while reducing costs due to the coordination as a result of data collected. The inventory of the corporation is therefore well supplied because the technology increases responsiveness by the management due to real-time information being provided by the technology that enables Walmart to make accurate orders for products as they change in their inventory. In Walmart, the technology uses numerical codes on products which can be scanned from a distance (Traub & Volonino, 2012). The technology works in such a way that products which have been ordered leave the supply chain and are recorded as a deduction in the system making it easy for effective forecasting on items to replenish. Consequently, workforce and cost are reduced when using this technology at Walmart which makes the company invest more in the production of high-quality products for its clients. Therefore, RFID technology provides sufficient data coordination that improves the management of the inventory in Walmart.

Comparison between 3PL and 4PL

Companies mainly rely upon outsourced elements to provide them with services such a logistics. Third party logistics (3PL) refers to the use of a third party entity by a company to outsource logistics services such as distribution and supply of products to the enterprise. The services being offered by a 3PL are customized to the need of the clients. On the other hand, fourth party logistics (4PL) refers to an entity that strives to manage and operate an entire supply chain solution for a company by gathering and combining technologies, resources, and capabilities. According to Fabbe-Costes, Jahre & Roussat (2008), 4PL is more complex and is at a higher level than 3PL because a $PL manages the whole process and can even manage a third party logistics provider.

Key Differences between 3PL and 4PL

The following are the major differences that can be identified between 3PL and 4PL. First, a 3PL offers partial services to the clients. For instance, a 3PL provider can only be responsible for a particular function in the supply chain. On the other hand, a 4PL accumulates resources so that it can be able to manage an entire supply chain solution for a company. Secondly, 4PL aims at providing solutions to a whole supply chain process while a 3PL concentrates on a particular niche where they excel in the supply chain process. Another difference between 3PL and 4PL is that a 3PL focuses on the provision of services such as warehousing, clearing, forwarding, packaging, and transportation while the services offered by a 4PL include supply chain designing, planning optimization, and management. Furthermore, a 3PL is ideal in a situation where there is a supply chain design in existence, and only the execution process is needed whereas a 4PL can be used in companies where a complete supply chain solution from planning to execution is required. Lastly, 4PL services are entirely outsourced in that the firm may have no knowledge of how the process works. However, in a 3PL service, there is a need to have the company undertake collaboration between in-house and outsourced entities hence some processes in the supply chain on its own (Fabbe-Costes, Jahre & Roussat, 2008).

Benefits of RFID, 3PL, and 4PL for a Local Company Expanding Globally

The use of RFID, 3PL, and 4PL is beneficial to a local company trying to expand globally in several ways. The use of RFID technology can enable the company to reap benefits such as inventory accuracy, increased warehousing, reduction in thefts, increased utilization of assets, reduced labor costs, and reduced inventory for obsolete products (V. Daniel Hunt, 2007). The benefits the company will gain from a 3PL and 4PL will include enhanced expertise in the management of the logistics needs of the company, reduced wastage of time and resources, worldwide sourcing strategy, optimize flow of materials, and transparency in the distribution process because the client will not be involved.

Conclusion

Adoption of technology in the logistics industry has transformed the industry’s functionality. The use of technology such as RFID makes the operation in the sector smooth and more efficient. The new technology has changed stock supply and inventory management. Furthermore, the introduction of 3PL and 4PL service providers has changed how companies are involved in the supply chain process. Hence, the success of business in both local and global markets relies on the firm’s ability to analyze the market and adopt the most appropriate technology available, as seen in the case of Walmart.

References

Fabbe-Costes., M. Jahre, & C. Roussat, (2008). Supply chain integration: The Role of Logistics Services Providers. International Journal of Productivity and Performance Management, Vol. 58, No.1, 71-91.

Turban, E., & Volonino, L. (2012). Information technology for management, 8th ed. New York, NY: John Wiley Sons Inc.

V. Daniel Hunt, A. P. (2007). RFID: A Guide to Radio Frequency Identification. Hoboken: John Wiley & Sons.