Wal-Mart Stores Inc. says radio-frequency identification is working, reducing out-of-stock product 16% compared with stores not using the technology. That's the conclusion from a study it commissioned the University of Arkansas to do during the last several months.

Wal-Mart has said one big payoff from RFID, for both the retailer and product manufacturers, will come from higher sales because shoppers won't find an empty shelf when looking for an item. The company has a major investment in RFID, including pushing suppliers to adopt it despite their difficulties getting the technology to work in all situations. Therefore, Wal-Mart is eager to spotlight areas where RFID is delivering.

Researchers found that items with RFID labels using EPC codes were replenished three times faster than items marked with standard bar-code technology, because employees were able to find them faster. "These items were identified as being in the back room three times quicker than those without RFID tags," says Simon Langford, Wal-Mart's strategy manager for RFID.

Wal-Mart also lowered its inventory, since employees didn't manually order merchandise when they couldn't find it in the back room, the report concludes. It has cut manual orders in RFID-equipped stores about 10%, says Rollin Ford, Wal-Mart's executive VP for logistics.

For 29 weeks, researchers analyzed merchandise that was out of stock at 12 pilot stores equipped with RFID technology and at 12 stores that didn't have the technology. Bill Hardgrave, director of the RFID Research Center at the University of Arkansas and executive director of the Information Technology Research Institute, led the study. The university plans to publish the findings soon in a series of white papers.