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RFID at the METRO Group

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on 13 November 2014

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Transcript of RFID at the METRO Group

RFID at the METRO Group

Harvard Business School

"The retail industry is all about volume and it can only be controlled by means of IT"

Zygmunt Miersdorf, CIO at the METRO Group
Radio Frequency Identification (RFID)
RFID at Metro
Integrated suppliers
Gillette, Henkel, Nestlé, Esprit

Amount of Metro locations
20 (DCs & stores)

Stores format
Department stores (Galeria Kaufhof)
Hypermarket stores (Real)
Cash & Carry wholesale stores (Metro C&C)
Sales: €56.4 billion
3rd largest retailer in the world
Locations: 2,300 in 30 countries
Employees: 250,000
Organized in six independent sales divisions
Metro Group Information Technology GmbH (MGI) handles Information Management System, data warehouse & enterprise ressource planning (ERP)
Reducing shrink in the supply chain
Improving On-Shelf Availability & Reducing Out-of-Stocks
Productivity & Labor Efficiency
Receiving real-time point-of-sale data
The Future Store Initiative (FSI)
launched in 2002
aimed at setting a global standard for retailing
including technology partners & large brands
remodeling supermarket in Rheinberg, Germany
majority of customers "highly satisfied"
number of sales increased significantly
Table of Contents

RFID at the METRO Group

Founded in 1964 by Otto Beisheim in Muelheim, Germany
Expansion to Europe during 1970s
Going public in 1994
Merger of retail holding with cash&carry operations into "The Metro Group" (Metro)
Dr. Gerd Wolfram
Managing Director of Metro Group Information Technology GmbH (MGI)
Zygmunt Mierdorf
Metro Chief Information
Officer (CIO)

1935: Radar used to identify airplanes during WWII
1973: Patent for transponder to unlock a door without a key
1980s: Toll payment via transponder
2004: Boston Marathon participants use transponder
2004: Toyota uses transponder to unlock cars
Way of Working
Main goal: Identify people or objects
Active vs. passive system
Transponder + reader connected to a computer system
Transponder: Microchip to store information about product or shipment
Reader: Receives information as transponder passes
Active & passive tags have different ranges & costs
Complications & solutions during development
Country-specific frequency & power regulation
Incompatibility of initial series with existing ISO standards
Joint Venture of MIT, suppliers & retailers
Aligning global standard with ISO
Possible options for Rollout
Using Pallet-Level Tagging to Improve Loading Process at Manufacturer's Warehouse
eliminating need for manual scanning after moving of pallets
elimination of supervision of loading process
Using Case-Level Tagging to Improve Mixed Pallet Picking at Metro's DC
elimination of manual entering of number of cases picked
reduce picking errors
improve shipping accuracy
Using Case-Level Tagging to improve Shelf-Restocking at Stores
Delivering information of available products
Suppliers & Shops
Suppliers forgot to use tags
Suppliers put tags on wrong side of pallet
Suppliers used low-quality tags
Connection problems between readers & servers
Results after 1/2 years
33 suppliers integrated
22 stores & DCs
Setting a global standard for tags reduced costs
Reduction of truck unloading process by 15-20 minutes
Total benefit for Metro
Purchase RFID tags (€0.17/unit)
Purchase printers for product code (~€2,000/unit)
Create process to affix tags
Training of employees
Installation of RFID portal (€8,500/unit)
Changes in IT systems
Training of employees

"Difficult to estimate but clearly significant"
Presented by Philipp Ritter
Full transcript