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to transmit the identification information to a reader。 The reader converts the radio
waves reflected back from theRFID tag into digital information that can then be passed
on to computers that can make use of it。〃） RFID will allow Wal…Mart to track any pallet
or box at each stage in its supply chain and know exactly what product from which
manufacturer is inside； with what expiration date。 If a grocery item has to be stored
at a certain temperature； the RFID tag will tell Wal…Mart when the temperature is
too high or too low。 Because each of these tags costs around 200； Wal…Mart is reserving
them now for big boxes and pallets； not individual items。 But this is clearly the
wave of the future。
〃When you have RFID；〃 said Rollin Ford； the Wal…Mart logistics vice president； 〃you
have more insights。〃 You can tell even faster which stores sell more of which shampoo
on Fridays and which ones on Sundays； and whether Hispanics prefer to shop more on
Saturday nights rather than Mondays in the stores in their neighborhoods。 〃When all
this information is fed into our demand models； we can become more efficient on
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when we produce ＇a product＇ and when we ship it and then put it on the trucks in exactly
the right place inside the trucks so it can flow more efficiently；〃 added Ford。 〃We
used to have to count each piece； and scanning it at ＇the receiving end＇ was a
bottleneck。 Now ＇with RFID＇； we just scan the whole pallet under a bubble； and it
says you have all thirty items you ordered and each box tells you； 'This is what I
am and this is how I am feeling； this is what color I am； and am I in good shape'…so
it makes receiving hugely easier。〃 Procter & Gamble spokesperson Jeannie Tharrington
talked to Salon。com （September 20； 2004） about Wal…Mart's move to RFID： 〃We see this
as beneficial to the entire supply chain。 Right now our out…of…stock levels are higher
than we'd like and certainly higher than t
he consumer would like； and we think this technology can help us to keep the products
on the shelf more often。〃 RFID will also allow for quicker remixing of the supply
chain in response to events。
During hurricanes； Wal…Mart officials told me； Wal…Mart knows that people eat more
things like Pop…Tarts…easy…to…store； nonperishable items…and that their stores also
sell a lot of kids' games that don't require electricity and can substitute for TV。
It also knows that when hurricanes are coming； people tend to drink more beer。 So
the minute Wal…Mart's meteorologists tell headquarters a hurricane is bearing down
on Florida； its supply chain automatically adjusts to a hurricane mix in the Florida
stores…more beer early； more Pop…Tarts later。
Wal…Mart is constantly looking for new ways to collaborate with its customers。 Lately；
it has gone into banking。 It found that in areas with large Hispanic populations；
many peoplehad no affiliation with a bank and were getting ripped off by check…cashing
outlets。 So Wal…Mart offered them payroll check cashing； money orders； money
transfers； and even bill payment services for standard items like electricity
bills…all for very small fees。 Wal…Mart had an internal capability to do that for
its own employees and simply turned it into an external business。
TOO MUCH OF A GOOD THING
Unfortunately for Wal…Mart； the same factors that drove its instinct for constant
innovation…its isolation from the world； its need to dig inside
itself； and its need to connect remote locations to a global supply chain… also got
it in trouble。 It is hard to exaggerate how isolated Bentonville； Arkansas； is from
the currents of global debate on labor and human rights； and it is easy to see how
this insular company； obsessed with lowering prices； could have gone over the edge
in some of its practices。
Sam Walton bred not only a kind of ruthless quest for efficiency in improving
Wal…Mart's supply chain but also a degree of ruthlessness period。 I am talking about
everything from Wal…Mart's recently exposed practice of locking overnight workers
into its stores； to its allowing Wal…Mart's maintenance contractors to use illegal
immigrants as janitors； to its role as defendant in the largest civil…rights
class…action lawsuit in history； to its refusal to stock certain magazines…like
Playboy…on its shelves； even in small towns where Wal…Mart is the only major store。
This is all aside from the fact that some of Wal…Mart's biggest competitors complain
that they have had to cut health…care benefits and create a lower wage tier to compete
with Wal…Mart； which pays less and covers less than most big companies （more on this
later）。 One can only hope that all the bad publicity Wal…Mart has received in the
last few years will force it to understand that there is a fine line between a
hyperefficient global supply chain that ishelping people save money and improve their
lives and one that has pursued cost cutting and profit margins to such a degree that
whatever social benefits it is offering with one hand； it is taking away with the
other。
Wal…Mart is the China of companies。 It has so much leverage that it can grind down
any supplier to the last halfpenny。 And it is not at all hesitant about using its
ability to play its foreign and domestic suppliers off against each other。
Some suppliers have found ways to flourish under the pressure and become better at
what they do。 If all of Wal…Mart's suppliers were being squeezed dry by Wal…Mart；
Wal…Mart would have no suppliers。 So obviously many of them are thriving as Wal…Mart's
partners。 But some no doubt have translated Wal…Mart's incessant price pressure into
lower wages and benefits for their employees or watched as their business moved to
China； whence Wal…Mart's supply chain pulled in 18 billion worth of goods in 2004
from five thousand Chinese suppliers。 〃If Wal…Mart were an individual economy； it
would rank as China's eighth138
biggest trading partner； ahead of Russia； Australia and Canada；〃 Xu Jun； the spokesman
for Wal…Mart China； told the China Business Weekly （November 29； 2004）。
The successor generation to Sam Walton's leadership seems to recognize that it has
both an image and a reality to fix。 How far Wal…Mart will adjust remains to be seen。
But when I asked Wal…Mart's CEO； H。 Lee Scott Jr。； directly about all these issues；
he did not duck。 In fact； he wanted to talk about it。 〃What I think I have to do is
institutionalize this sense of obligation to society to the same extent that we have
institutionalized the commitment to the customer；〃 said Scott。 〃The world has changed
and we have missed that。 We believed that good intentions and good stores and good
prices would cause people to forgive what we are not as good at； and we were wrong。〃
In certain areas； he added； 〃we are not as good as we should be。 We just have to get
better。〃
One trend that Wal…Mart insists it is not responsible for is the off…shoring of
manufacturing。 〃We are much better off if we can buy merchandise made in the United
States；〃 said Glass。 〃I spent two years going around this country tryingto talkpeople
into manufacturing here。 We woul