Published: June 30, 2004 in Knowledge@Wharton Shoppers leaving Wal-Mart Stores these days are used to long check-out lines. In a few years, however, those lines well might be history. Wal-Mart is introducing radio frequency identification (RFID) tags to its products - small devices that emit radio waves containing information about product size, price, etc. Though this scenario is still far in the future, such tags could let the world's largest retailer add up the prices of purchased goods as shoppers leave the store and deduct the tab directly from their accounts. Whether such futuristic practices materialize or not, one thing is certain: RFID has begun to acquire a buzz that positions it as the next revolution in the world of retailing.

 

How real is this revolution? And what does it mean for retailers and customers? Experts at Wharton and elsewhere say that RFID is a potentially powerful technology that several organizations - including retailers and government organizations - are seriously looking at implementing to ramp up the efficiency of their supply chains. While companies like Wal-Mart and Target have already announced plans to roll out RFID programs, others are waiting in the wings. Still, several hurdles remain. One big question is whether the benefits will be immediate or be spread out years into the future. “There’s a bandwagon here and a lot of players say RFID is on the brink of having a big impact,” says Morris A. Cohen, co-director of Wharton’s Fishman-Davidson Center for Service and Operations Management. “But before that, there are technical challenges to overcome.”

 

Fans say that RFID technology promises to revolutionize the supply chain through real-time item tracking. Its goal is to keep goods on the shelves, garner more efficiency through better inventory management, enhance safety through smart recalls and cut theft, known as "shrink" among retailers.
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