SUMMARY I,

.. ~ , '

o Case : ·Describe s the initiative '·by METRO Group

w

(Germany ;,s biggest retailer) to.~p:timize the retail supply

.. chain by ·using RFID tebh~9l~>gy-,c;luring 2003-200 5

o The case details t}{~i:~p~~~if~:nil:Md fillancial benefits

achieved by the tech!iplpgy:; -,. :.•; .'. • · . •
• ..1,i , '!Ii ),~~{')!~~~l{ '.\is:,2'. )- --
1
o The case also discu:sse·s ·th~_::challenges posed to ensure !

effective impleme11tationlof.1,tlie, technolo gy

I iJ

G The questjon
• Should they expand on already proven Palette level tagging?
. C>R, ,ts
• Should they invest 1nore on Case levc1I tagging?
 --~
METRO
'

>R : ,..

o Formed ~~-r;l964
0@ 200- 5
• Eur o 56.4.billion in~s,ales
,, '

·'.!· •. • ; ;>\' .-•' . '.·1:-:1f•,J. !

• 23001ocatiogs,'3lfif~ijp,tries and ~mployed 250,000

peop1. . .. , .,. . ""' ·., }r;lltt.: ,; • -,··. ' :• • . • J:~•,c-;:,:•.'·;::~,,,·•.~-,,,,H·
• • - -_ t'-'i'"'' >~;i~yi:::~J,t.
. . .c . . ., • •

• 6 •indepennen~/ • . \- ..'.?dtvi~iq
•

• o· Cash ~d CArr.
o ~,tear~· Hyperrn~rk~f.s •
o "Ex:tra" Su~<irrp.afkc·t~ll.j
;,

o ·Med ia Ma:rkt ;, ',r 1

11
11;J'.i •,
1
• '1' '1
- •I •

o Satu rn (Cori.s·u1no1~·· ·'.Ele~b~on1 1

't

io Prak tiker (Bn'i lding rriateria

I,;;,
Ii

R NEF ·,
S-
l
- ,. ·t.
Reducing _,hi, P, er aD;·alysis, use·of RFIP coµld redu.~e ·shrink by 25%
Shl~ink , (approximately$ 7 bilµ_~n•; ~aving$)'::~~d µtttc>_ 40% ($ 10
1

_billion
-
savings) if use4. at case
'l,.
level' . .,·_!· ,. ,

I -------·-----...-...----- ---------·.--------------- ---

·~'
Imp1~ving on • Signifi<:ant number of ~llt-of ~~ks- c~used, by poor store execution (products in
••,•·•••• " J . • • - · - · - - - , L • ~ -......... , . ~ - -•---~---~

the shelf back 1-oom - but not in s0lling·,~1.--ea,_.~•.rong plaoo estimated at 25..30% of the
availability 1-e-a!,O ns of st(~k-~_!r,!•~~ _~-i{:~/~~J~ \~/t.:.;~. /,: . _,· . - ,- _-.
RI<,IDs enable auto'n1aticfideritif1:cation of these scena1·ios and
----·------- avoid skck-oubl<, :·~:·5::_;{~~:;;~~'':- , _, - _ _ ..::.;;;;.-;_.____, ,_. . ;,. ;. ;
Improving Due to lack of r"esouffe~:·;tci l~qctii'ately adhe:i·e to promotions
I,

Planogtain and plans and planogrii--i±3=s, •ri~fases kiss of business

P1·omotio:n. ' . . . . t· ,.,,.,,., .,., 1.. , ,••
::.. ·t., ' .1.

con1pliance • R,FID enable technology-to enable identification of non-

adherenee ari<l ne(~essa ry correct.ions
Productivity RFID improves productivity by automation and reduction in
and Labol' ~- nu.m.ber of n1tu1uH l step:;
efficiencies '
rj ,,. ,>-

i 1. ltFll) ~ec~ucos data inaccuracies, scannjng issues etc I

t
RFIDIN·AC
_Manufacturing Wa1·ehoµse;
. . 1, - - •.. , ., •· .

• Elit~linated ma~1u~l .$ea;1:ning ... -- _. _,,,, .. , __ , , , _ __ 1,, _

•·Es~Imated Saving of Etu-o 16,0~)0,p~r year ,q~ 0!?0 ·pe.i;:: pallet

sluppoo ·-<'{ ,, ' : -- - ::1·•1td.:1: ,!','( - ' ,

,•'.: _ .~ _ - 1, "~-f ~~;!/t ::.t;~--ii)J~Jfa{t)~::~~- '. ': : ·._ ·'.-..) :!~. -

Pistribution -Centef''(e~s:e·:~oi~kt~ggj:_ng) --.-. -
• Eliminated ma1uial entry ~ic~~~$•~ick~i(½f:jj;} '• -\:c:.: -• -
-- '-,, , . -~· 1 ; ···'f·i·.-f,.':.'.J"1 :._,,. ,.,•. ·- ·:-__ .-

• 11· - d ' . _A _. : k~' ' •...-~ti? J::1-:i:~;:\?/i;)\., ,; ;, .:·•:~:;~,;>\\t!:i~~ .•• -_c -

~e UCtlOU ll_l J)lC mg-~ll'O;l S ;' ':- <.11,J,J:/s!;;,,'· , ", '- - J ,-,:-,, .- ,:,; - - •
- - , '"' '". ' -,,·-111, I·:-·':·" -- -- _, -
• Estimated saving 0£ E!g1-o SlOQQ)>:~i,~-lf~~,11:U.' E~u-o0.003 pe1• case
• Savings in avoiding·incofa·t?p~ ship~ii~f~#~t\ted a.s Euro 0.015
per en~ . >. ' I ,!J·' •

'
Ret.~il S~(>res ". l I'

• lm,1n.·<.rve in-stor;k rate from 9611/0 to vs•:,.; inturn inc:i:e::lsing s~le by

0.o~t and increase, in p1·ofit by Euro 0.5 per product sold
.. '.R>!:!ilrn~ii<m i1L };~bot• {,17%) 1)n<I •lif-lfr l'+-i(htction (11 •l 8, 11 0) ornl
reduction in stock-outs (D 141)~)
WAY FORWARD (RECOMMENDATION)
o Implementation s.uccess
• By mid 2005, 33 s~ppliers, 13 .stores and 9 DCs were already
: realizing benefits of RFID • ·,
• .Improvement of 15.. 20 minutes at DCs
o Question: Should they move to Case Level Tagging
.. . .
Imptessive oost l>enefit.!:I ~.-·15. OOtlt& • •. -· •
per case saving for rctaile1,~ and-:; - • _· • • Considering the huge benefit
manufoctul'el' combined . . ,., :, 0'.-1 ,._. >· on cost savings with case
Assuming 75 cases per p~I~~t. it::,,,~''\ -~ level tag·ging, MErrRo should
amounts to 10 eu1·0 per pallet•-' . 1 , •i1 •, ,
compared w 65 (,•~mtsJ)e1: Pullet.;'\ i'!js ' ' go ahead ·with Case Level
savings£'01·palletfovc.J.taggi11g ,;·',.:..
.· , . , 'J'".l,g0'1·r1g , . ey can ge t. th
. • ti • . 1'f'th , e
• buy-in and support fron1
Additional inve-stment-for METRO
and suppliers Supplici·s
Process changes
T1•aining chfJnga.s
Additional lT investments
<!hang~ ,in ,hnn sloa·ng~