Metro's supplier RFID deadline arrives
frequency identification (RFID) programme.
Some 20 of its suppliers have equipped goods pallets with what are known as smart chips, and selected warehouses as well as outlets of the Metro Cash & Carry, Real and Kaufhof sales divisions are participating.
Another 80 suppliers are scheduled to follow next year, and by January 2006, Metro Group plans to have 300 suppliers sending RFID-tagged pallets and cases to its distribution centres.
Metro says that it is concentrating first on applying the new technology in logistics and storage management. Participating suppliers include Kraft Foods Deutschland, Maggi, Nestlé and Unilever Bestfoods Deutschland.
"The Metro Group is one of the first retailing companies to use RFID for the daily processes between the consumer goods and retailing industry," said Zygmunt Mierdorf, management board member of the Metro Group.
"We see our commitment as a vital contribution to the innovation offensive in retailing."
The Metro Group will begin the second phase of the RFID launch as early as next year. At that point, the participating industry partners will not only equip pallets with smart chips, but also transport packaging.
This, says the Metro Group, will allow it to automate processes such as goods-in and goods-out, supply management as well as sorting in warehouses and retail outlets.
Smart chips are thin identification labels which contain a programmable chip and an incorporated miniature antenna. RFID readers will be installed on the goods-in and goods-out of participating outlets. They record the Electronic Product Code stored in the Smart Chip and transmit it to the merchandise management systems.
Every shipping unit can be clearly identified from the number code. This makes it possible to systematically trace and manage goods along the entire process chain - all the way to the warehouses of the respective store.
"With the broad use of RFID technology, we can make our processes more efficient, increase the availability of goods and security, and decrease costs. Our customers stand to profit considerably," said Mierdorf.
A study conducted by consultants at Kurt Salmon Associates in the Metro Group's Future Store showed that the availability of goods increased significantly as a result of RFID. Out-of-stock-situations fell by between 9 per cent and 14 per cent. The waste of goods was also reduced by up to 18 per cent.
Metro Group, the world's fourth-largest retailer with a turnover of more than €54 billion, aims to become the first in the business to install RFID technology throughout its entire process chain. The group opened its RFID Initiative Centre in Dusseldorf, Germany earlier this year in order to test the technology under real conditions.
The roll-out follows UK supermarket Tesco's recent RFID project, which is designed to track shipments from its central distribution centre to all 98 of its Tesco Extra superstores. Completion of the scheme has been set for Christmas this year.
"What customers want to know when they shop at Tesco is that the items they want to buy are available and on the shelves," said Tesco IT director Colin Cobain.
"By extending our use of radio barcodes in our Secure Supply Chain initiative, we will be able to improve on-shelf availability while reducing shrinkage. We will start with using radio barcodes on high value goods and plan to expand our roll-out across our entire supply chain over the next few years."
As part of this rollout, Tesco will also equip its 40 Tesco trunk distribution centres with RFID technology in order to arrival and departure of the tagged trays and pallets.
