By Mary Catherine O'Connor
FORTUNE -- In June 2003, Linda Dillman, then CIO of Walmart (WMT), laid down the hammer. At a retail supply chain trade group meeting, she revealed that the retailer would require its suppliers to apply radio frequency identification, or RFID, tags to pallets and cases of goods sent to its distribution centers. Initially, the company would only require this of its top 100 suppliers, companies such as Procter & Gamble (PG) and Hewett-Packard (HPQ). But by 2006, it wanted all suppliers to get on board.
By 2007, after various delays and slow starts -- and with many suppliers balking at the high costs and meager benefits of their investments in the technology -- Walmart changed its RFID strategy. Neither it nor many suppliers completely abandoned it, but the promise to foment the smartest darn supply chain in the world, with every product landing at the right place at the right time, did not materialize.
RFID lets retailers identify individual items, cases or pallets the same way bar codes do, but wirelessly, with richer data and without need for a line of sight. But it was a solution looking for a problem. Today, RFID has landed a high-demand job: Helping retailers become more competitive with online sellers, through "omnichannel" sales -- closing a sale on the buyer's terms, whether in the store, on the Web, using social media, or through some combination of those channels.
According to market research firm Monetate, one in five online purchases were made on a mobile device in 2012. That jumped nearly 50 percent, to one in three, in 2013. Knowing its customers will stand inside a Macy's (M) store and comparison shop, the company is making sure that what its website says is in the store is actually in the store.
"RFID enables frequent [inventory] counting, which enables inventory accuracy. You can't be great at omnichannel without having high confidence at the store level, at the size and color level," said Bill Connell, Macy's senior VP of logistics and operations.
"Hindsight is always 20/20," said Bill Hardgrave, dean of Auburn University's College of Business. Hardgrave founded and directed the founder and director of the RFID Research Center at the University of Arkansas until 2010, where he led research into various RFID applications for Walmart and other retailers. "But when we look back, it almost seems silly that we started it as a supply chain tool. If you think about the way many manufacturing centers and distribution centers operate, for many retailers those were already Six Sigma. How much more efficiency or accuracy can you squeeze out of that? Well, by definition of Six Sigma, there's not much left to squeeze out."
Yet some retailers found RFID to be useful as they continued to tinker with it. In 2009, Macy's started piloting the technology in its Bloomingdale SoHo location. "We tagged virtually everything in the store and began scanning and doing cycle counts," Connell explained.
The tags, which contain a simple chip and antenna, are embedded into product pricing labels, such as those that hang from apparel. They are powered by the radio signal emitted from readers, which can be hand-held or fixed in place. It allows store associate to check the inventory of an entire rack of hanging dress shirts, for example, by simply walking around the display with a handheld reader. Software then displays a list of sizes or styles that need to be replenished, and the associate can narrow in on the needed items in the stockroom by turning the reader to a "Geiger counter" setting.
Attempting this kind of replenishment by visually inspecting items or scanning bar codes would take an untenable amount of time. "You can count [inventory] once or twice a year with bar codes with limited accuracy, because the person can be distracted, or scan the same code twice," Connell explained. "We can count up to 24 times a year using RFID. It just enables us to keep inventory accuracy in the high 90s [in terms of percentage]."
Based on early pilot success, Macy's began installing RFID infrastructure in all its 850 stores. Starting this month, Connell says, Macy's is expanding substantially the number of vendors it is asking to ship items that are pre-tagged with RFID. By the end of the summer, the retailer plans to have half of all replenishment vendors sending RFID-tagged merchandise.
As it turns out, RFID helps retailers much more significantly on the sales floor than in their supply chains. This is especially true with apparel, which thanks to multiple size and color combinations can be troublesome to keep properly stocked. "A warehouse can be Six Sigma, but [inside] a store is No Sigma," Hardgrave quipped. "Stores are chaotic. The processes are not repetitive; customers don't behave the same way every day; the weather isn't the same every day and that impacts buying patterns. So this is where RFID has the most value."
Apple trimmed iPhone 5C orders 50%. Or was it 20%? Or 35%?
FORTUNE -- I knew there was a reason I didn't comment on the several reports of iPhone production order changes -- up and down -- that came across the business wires last week. (See here, here and here.)
But it wasn't until I read the MacDailyNews' take on the issue Saturday that I could articulate why.
"We're going to make this so MOREPhilip Elmer-DeWitt - Oct 20, 2013 4:36 PM ET
An Apple bear spent a week in Asia and came back a changed man. Again.
FORTUNE --Peter Misek, the top Apple (AAPL) specialist at Jefferies, has taken a lot of heat lately on two fronts: From investors for his bearish stance on the stock, and from the tech press for starting a basket full of Apple rumors that didn't pan out. At one point this year Cult of Mac assembled A History Of MOREPhilip Elmer-DeWitt - Oct 8, 2013 5:51 AM ET
Today's bullish estimates can be tomorrow's "orders slashed due to weakening demand."
FORTUNE -- In a note to clients Monday, Jefferies' Peter Misek offered some intriguing numbers.
Based on checks with his network of Apple (AAPL) suppliers, he believes that the company plans to build iPhones at the rate of
25 to 30 million by the end of June
25 to 50 million more by the end of September
60 to 65 million more by MORE
More selling pressure on Apple from reports that supplier orders have been cut
FORTUNE -- Apple's (AAPL) share price was hit again Monday morning after several analysts reported that the company's orders to its suppliers are down. According to Topeka's Brian White, who monitors these things on a monthly basis, February's report was the worst on record.
UPDATE: The stock recovered, to say the least, at the end of the day. See Apple shares MOREPhilip Elmer-DeWitt - Mar 11, 2013 10:20 AM ET
Behind the reports that triggered a flurry of Apple analysts' revisions
FORTUNE -- At least five top Apple (AAPL) analysts lowered their price targets last weekend based on reports that the company had reduced some parts orders for the iPhone 5 in its Asian supply chain.
In a note to clients issued early Tuesday, Topeka's Brian White took a closer look at those order changes. His conclusion: "we believe the doomsday scenarios MOREPhilip Elmer-DeWitt - Dec 18, 2012 8:28 AM ET
Calls the suggestion that his company doesn't care about the health and safety of workers in the supply chain he built "patently false and offensive"
Here's one thing that's changed since Steve Jobs died.
When Tim Cook, Apple's (AAPL) new CEO, thinks his company has been wronged by the media, he doesn't shrink from hitting back -- swiftly and in a way that he knows will quickly become public.
This report that got MOREPhilip Elmer-DeWitt - Jan 27, 2012 12:16 PM ET
An addendum discloses for the first time the names of 156 Apple suppliers
Apple's (AAPL) sixth annual "supplier responsibility" report is sure to be closely read by both critics and competitors.
For one thing an addendum to the report lists for the first time the names of Apple's major subcontractors -- 156 companies, many in the Far East, representing 97% of the company's supply chain. The list is available here for anyone MOREPhilip Elmer-DeWitt - Jan 13, 2012 1:34 PM ET
Apple seems to be controlling inventory, not reacting to a slow-down in sales
Apple's (AAPL) stock price fell sharply last week after some confused reports out of China and Taiwan regarding the company's communications with its supply chain. The first report was that Apple had cut back orders 10% to 15% on parts for the iPad 2 and the iPhone 4S because, according to Taipei-based DigiTimes, "sales of the iPhone 4S MOREPhilip Elmer-DeWitt - Nov 17, 2011 10:30 AM ET
A report out of Apple's Asian supply chain may have sent the wrong signal to Wall Street
Apple (AAPL) shares fell sharply in early trading Monday following a widely reported note to clients from J.P. Morgan's Gokul Hariharan to the effect that multiple supply chain vendors in Asia have registered a 25% cut in fourth-quarter iPad 2 orders from Apple -- "the first cut ever we've seen" according to Hariharan. (Business MOREPhilip Elmer-DeWitt - Sep 26, 2011 11:30 AM ET
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