RFID AT THE METRO

GROUP
Group 11
Anmol Shankhwar
Akshay Gadpayle
Ngaonii Panii
Satyaki Patra

PGP/16/004
PGP/16/017
PGP/16/152
PGP/16/341

Metro Group
In late 1990s Company
promoted International
Expansion

1964
Founded
by Otto
Beisheim

1967
Backing
from Haniel
and
SchmidtRuthenbeck

1970s
Retailing and
Wholesaling
expansion in
Europe

1994 Otto
Beisheim
retired

1996
Metro Group
formed and
company
went Public

In 2005
56.4 bn Sales ,

RFID

RFID Radio Frequency Identification

Technology that uses
radio waves to read
special labels attached
to products and
packages

Helps in Storage of more

information than in the
conventional bar code

Helps in Identifying any

number of RFID labels
from a distance of up to
one meter and Complete
tracking of merchandize

RFID system composed of a transponder and a reader link to computer

Middle ware filter the readers data and passed it to enterprise applications
Tag could be active or passive
Passive tag: derived their energy from reader
Cost 0.20
Active tag; derived its own energy
Cost 10-50

RFID in retail
Remained limited due to high cost
Lack of industry wide standards
Barcode could only identify an item
RFIF could identify specific item
Country specific frequency and regulation complicated the development of
standard tag

Why RFID in METRO

Reducing Shrink in Supply Chain - 25 % in case level and upto 40 % in

item level
Reduce theft at the store
Improving On shelf availability and Reducing out-of-stock
Out of stock has got significant impact on sales, brand loyalty and
consumer satisfaction
Truck loading improvement with automatic RFID check
Improved labor efficiencies
Achieve time and money savings by eliminating manual entries and bar
code scanning
Improved planogram and production compliance

Future Store
Metro launched the Future store initiative
Aim of setting a global standards in retailing
Many partners from IT, consulting, consumer goods
Aims at satisfying customers through new technology
Personal shopping experience
Hand help devices which include product details
It exactly show where the products are placed
Very positive feedback from customers

Benefits at various stages

Manufacturer- Helps keeping track of shipment and reduce

labor cost
Truck Loading- Saving on truck movement time as they are
loaded with pellet tagging ensuring automatic check
Plant Warehouse- Ensures correct material are transfered
and reduce shrinkage
Metro DC- Ensures correct invoicing and accelerates
comparing materials received. Leads to better inventory
management
Stores- Accelerated process of filling shelves. Reduced
chances of Out-of-Stock

Potential RFID benefits

Using pallet- level

tagging to improve truck
loading process at the
manufacturers
warehouse
Driver could automatically
check the identity and
eliminate the need for
manual scanning
Saved 10 min for each
truck
15 trucks
250 working days
Labour cost 25 per hour
Manufacturer save 16,000
per year

Using case- level

tagging to improve
mixed-pallet picking at
metro DCs
Pickers errors amounted
to 0.5% of the case
picked
With RFID, mounted
forklift would
automatically record this
information
Savings of 4 min for
each pallet
1300 pallets per day
savings of 430,000
Labor cost savings of
81,000 per year

Using case- level

tagging to improve
shelf restocking at
stores
Replenishment can be
improved through point
of sales data and store
personal combination
Metro in stock rate is
96%
With RFID improved by
2% to 98%

RIFD role out

By November 2004, RFID used in 100 metro suppliers, 10 DCs and 250 stores
Supplier has to buy RFID tags and print EPC
Portal
green light: matching
red light: not matching
Invest in infrastructure, process design and training
Three different store format: departmental stores, hypermarket stores and cash &
carry wholesale stores
Problems encountered:
Suppliers forget to put tag
Problem of middleware
Human error putting tag on the wrong side

RFID- Decision to be taken

Continue with the existing pallet level RFID without

expansion or
Continue with the existing pallet level RFID and
expanded number of suppliers or
Case level tagging with major suppliers

Case level implementation

lot more involvement from both the manufacturers and

Metro
Manufacturers have to purchase more tags and make
process changes inside their plants
Changes to be made in It systems and data level
Process change inside their plant is expected
Metro would have to invest in training at its stores and
DCs
Suppliers potentially benefit through inventory data
sharing

comparison

Continue with the

existing pallet level
Pros
Maintain steady growth
Minimal risk involve
Cons
Against the action plan of
Metro
Less return

Continue with the

existing pallet level and
expansion
Pros
Replicate the model with
more supplier
Use incremental growth to
expand
Learning curve very
positive
Fast breakeven
cons
high investment for both
supplier and manufacturer

Continue with the

existing pallet level
Pros
Very efficient
Cons
Very high investment
Lots of process changes
required
Change in IT systems too
More time to breakeven
Existing system sunk cost
Not quantifiable

Recommendation

Continue with the existing pallet level and

expansion
As moderate investment is required
Replica of existing technology
Risk level is lower
Higher and faster returns
Breakeven very fast
All existing problems are handled and dealt
efficiently
Leaning curve is very positive

Thank you