Wal-Mart adopted the RFID technology with a view to enhance the efficiency of its supply chain.
This is because the implementation of RFID improves the transparency of the supply chain, resulting in reduced operation costs and labor expenses. This will have a positive impact on inventory control, since it will strengthen it.
There is a clear difference between existing technology and the RFID systems. While the existing systems only show the quantity of goods still on the shelves, the RFID systems offer much more information on the same goods. For example, the RFID technology displays the expiry date of each item on the shelf, their age, warehouse origin and a few other critical details. By employing the RFID systems, Wal-Mart has been able to create a seamless supply chain and generate high profits (Liard, 2004).
Wal-Mart is also using the RFID technology to analyze consumer behavior.
The data collected by RFID is crucial in determining consumer behavior. This is because it shows the frequency which customers buy certain goods and the quantities at. This information is very important since it helps Wal-Mart to stock that the items needed by customers, thus, enhancing its inventory.
RFID has also improved Wal-Mart's inventory systems through reducing the practice of manual order placement. Wal-Mart has mandated the implementation of RFID for most of its suppliers (Liard, 2004). This enables the suppliers to deliver stock as soon as the system shows that stock levels at Wal-Mart have gone low. This reduces the practice of ordering goods manually. This has also enhanced inventory control at Wal-Mart.
3PLs and 4PLs
3PL and 4PL are technical terms that were developed by Accenture, a well-known research and consulting firm. They describe a key business activity concerned with the fulfillment of tasks for other companies, also known as outsourcing. They mean third party logistics and fourth party logistics respectively.
3PLs denote outsourced tasks for businesses that help the recipient business to manage their supply chain. These include activities such as warehousing, packing, picking, shipping and inventory management. They may also assist companies with the administration of such tasks as invoicing and accounts receivable. On the other hand, 4PLs work as consultants between principal companies and the 3PLs to ensure that all operations are running efficiently. 4PLs may also carry out various tasks at various levels, such as, offering advice and the daily management of important logistical activities in the principal company (Vivaldini, 2008).
Both 3PL and 4PL are outsourcing companies.
Thus, they assist other companies accomplish tasks that would be too expensive for them to handle on their own. However, 4PLs have a wider scope of operation compared to 3PLs. This is because 4Pls also engage in other activities such as consulting, which 3PLs do not.
Both are also associated with the transfer of services from one region to another, sometimes even from one continent to another. Customer service is among the services that can be transferred from one place to another. This is because some companies go abroad in order to facilitate their business, as it is cheaper to run it abroad than in a home country.
How Local Companies Can Benefit from RFID, 3PLs and 4PLs
Local companies that are expanding globally can gain a lot from the implementation of RFID and the adoption of 3PLs and 4PLs. To begin with, RFID, 3PLs and 4PLs reduce operation costs and labor expenses to a great extent. This is because the use of RFID reduces the practice of manually ordering goods and services whenever their stock levels run low. In such a way, companies that are expanding globally are able to save funds for the expansion and diversification. In addition, companies can ensure that their suppliers are on RFID too.
Secondly, companies may also reduce the cost of production by outsourcing some of their business activities. Some tasks are cheaper when outsourced than when they are carried out by the company in a home country. Such tasks include customer service and processing of raw materials, among others. In addition, 4PLs also offer consulting services, which can go a long way to assist companies expanding globally, especially those that do not have the experience and the technical know-how.
Essentially, companies can benefit greatly from the adoption of the RFID technology, as well as the commissioning of 3PLs and 4PLs. This is especially important as a tool for checking stiff competition from both local and international players. To be able to compete with other players, a company needs to cut down on its cost of production. The reduced costs are then passed on to customers in the form of reduced prices for commodities and services. There are numerous success stories from companies that have benefited from this technology, Wal-Mart Stores being one of those. Therefore, since Wal-Mart has made it, other companies can make it too. RFID, 3PLs and 4PLs are essential tools for the successful management of companies and ensuring sustainable profitability.