Metro to roll out RFID tracking this year
to expand trials of RFID (Radio Frequency Identification) tags on a
number of non-food items, its decision was met with a storm of
protest on the grounds that the use of such technology impinged on
consumers' privacy.
So the reaction to yesterday's announcement by German retailer and wholesaler Metro that it is to introduce the same RFID technology across its entire supply chain will be extremely interesting to watch, especially given retailers' sensitivity to consumer demand.
For now, though, Metro appears to be unconcerned about such fears, not least because the technology will not initially be used to track goods once they have left its stores. Nonetheless, as of November 2004, some 100 suppliers will affix RFID tags to their pallets and transport packages for delivery to ten central warehouses and around 250 stores.
Goods tracked using RFID technology will be sold through 100 stores from the Real and Extra sales divisions, 122 Galeria Kaufhof department stores and 59 Metro Cash & Carry wholesale stores in Germany.
Metro said that tests of the new RFID tags had been successfully conducted at its Extra Future Store in Rheinberg, Germany, a pilot scheme used by the group to test a wide variety of new technologies before rolling them out - or not- to the rest of its businesses.
The company explained that the RFID technology enabled the non-contact transmission of product information such as price, manufacturer, expiration date and a product's weight via radio frequency.
The rollout, which like the Future Store, is part of a wider Future Store Initiative, will be carried out in partnership with SAP, Intel, IBM and around 40 other leading companies from the IT, consumer goods and service industries. The most recent member to join is Microsoft.
Thus far, the Initiative is only testing RFID in certain areas of the process chain, primarily in warehouse management, Metro said. RFID technology allows the automatic inspection of incoming goods, with goods delivered to the Future Store in Rheinberg fitted with RFID tags in the central warehouse allowing them to be read upon arrival at the store.
During transport from the store's warehouse to the salesroom, the tags are read again, and identified as 'moved to the frontstore'.
The tests in Rheinberg have shown that RFID offers retailers and their customers enormous advantages, not least improving the efficiency of the supply chain and helping to reduce costs.
Using RFID, goods will be able to be located along the entire process chain - from production all the way through to the shelf in the store. Managing orders can be optimised, losses reduced and out-of-stock situations avoided, assuring an even more consistent availability of goods for the customer, Metro claimed.
"We see RFID as one of the crucial technologies for the future of retailing. With our large-scale introduction of RFID, we will for the first time cover the entire process chain with this technology," said Zygmunt Mierdorf, CIO of the Metro Group. "The strongly expanded and mutually supportive co-operation with our suppliers in this area will help to significantly move forward the establishment of international standards for RFID."
"Because of emerging technologies like RFID, retailers everywhere now have the opportunity to rethink their entire supply chain approach," said Christian Nivoix, general manager of IBM's global distribution sector. "Metro's groundbreaking Future Store work is proof of how retailers can use e-business on demand to reduce costs, while building customer loyalty."
These thoughts were echoed by John Davies, vice president of the solutions market development group at Intel. "RFID technology has the potential not only to make inventory and supply chain management more efficient but to create a new shopping experience for the consumers."
All of which is all well and good, as long as the consumer accepts the technology, of course. Metro, at the present time at least, has no intention of using the technology in the same way as Tesco, which apparently wanted to keep tabs on 'dangerous' items such as razor blades and other products such as DVDs even after they arrived in store.
If it uses the technology solely to improve its supply chain, then consumers will certainly benefit, and protests should be avoided - but Tesco also said that that was its sole reason for using the technology, a claim which was clearly not believed by many.
