Wal-Mart Opens Doors to Widespread RFID Adoption
Radio Frequency Identification, or RFID, companies like CYBRA Corporation (OTC-BB: CYRP) and I.D. Systems, Inc. (Nasdaq: IDSY) could benefit as Wal-Mart Corporation (NYSE: WMT), the world’s largest retail chain, moves to adopt the emerging technology on a huge scale.
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Since its invention in 1945, RFID has been hailed as a breakthrough technology, but a lack of standards has kept it out of the mainstream. Since then, the technology has been standardized, miniaturized and enhanced to such a level that researchers at Bristol University actually glued RFID microtransponders onto ants!
A Supply Chain Management Overhaul
While studying ant movements may be interesting, the RFID technology’s real market potential is in supply chain management. Currently, most retailers use bar codes that must be individually scanned at each location along the supply chain. Additionally, this scanning requires a line of sight, meaning that the bar codes must be placed on the outside of packages.
For instance, a t-shirt sold by Wal-Mart must be scanned by the manufacturer when it is created, the shipper when it is sent, the warehouse when it’s received, the store when it’s placed on the shelves, and at the checkout when it is purchased. This process involves significant man-power and leaves a lot of room for error.
Since they can be scanned from 20 feet away and within the product carton, RFID offer an improved solution that can greatly enhance efficiency. Meanwhile, RFID tags can hold significantly more information and can be rewritten – and even re-used – along the supply chain, as needed.
Wal-Mart Finally Pulls the Trigger
Last week, Wal-Mart announced that they are finally planning to roll out RFID technology to track individual garments along its supply chain. The technology will help the world’s largest retailer ensure that best-selling sizes are always on the shelves for customers to purchase, improving both profits and the customer experience.
And with a planned rollout encompassing more than 3,750 stores, Wal-Mart’s move could signal big things for the RFID and retail industries. While approximately 30 retail chains are already testing RFID, larger ones like Target Corporation (NYSE: TGT), will now be forced to consider RFID adoption sooner than later order to remain competitive.
RFID Can Save Wal-Mart Millions
While RFID tags are slightly more expensive than bar codes, the cost savings realized from the technology make it very compelling. German research firm Soreon released a study in 2004 conducted at a department store with 90,000 RFID tags. With only 30% of its items tagged, the retailer was able to achieve a return on investment of 187% and payback within a year.
The majority of the savings was seen in the reduction of manpower that was previously required to scan each item as it was moved from warehouse and distribution centers onto retail shelves. Meanwhile, point-of-sale cashiers were no longer required to scan individual items and manually control inventories, since this was automatically done via RFID tracking.
Previously, the high cost of RFID meant that manufacturers hesitated. However, the sharp reduction in RFID costs and the standardization of the technology since 2004 has helped to eliminate much of that cost and pave the way for industry implementation.
CYBRA Offers the Industry’s Best Solution
CYBRA Corporation (OTC-BB: CYRP), long known as one of the largest players in the barcode industry, is also positioning itself in the emerging RFID industry. With more than 20 years of experience, CYBRA Corporation has already amassed thousands of clients, as one of the only software vendors building solutions on top of IBM’s Power System. Now that the world’s largest retailer has jumped onboard with RFID in a big way, others are sure to follow suit, with IBM’s Power System as one of the premier platforms.
By moving into the RFID space at a key time and dominating one of the industry’s most-used platforms, investors may want to take a look at this relatively undiscovered stock as a way to take advantage of the coming wave of RFID adoption in retail environments.
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