RFID AT METRO GROUP

How RFID will improve

its retail supply chain performance

Garuda Team
Albert Winadi – Fredy Jingga – Kartika Martina Ruru
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Situation Overview

Situation ●
Metro Group to use RFID

Question What should Metro do next to improve

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its supply chain with RFID?

Answer Introduce case-level RFID tagging

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About Metro AG
 Germany’s biggest retailer
 €56.4 billion sales in 2006
 2,300 locations in 30 countries
 250,000 employees
 6 independent “Retail Formats”

Cash & Carry Real

Wholesale Hypermarkets
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About RFID
 Radio-Frequency Identification
Identification and tracking using radio waves.
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Why RFID?

Automatic Identification
More efficient
Reduce errors in data entry
Save labor time

Electronic Product Code

More information
Precisely identify individual items
RFID Benefits in Retail Supply at
Chain

Improve
Improv Increase
Reduce Planogr
e Producti
Shrink am –
On- vity and
in Promoti
Shelf Labor
Supply on Efficienc
Availab
Chain Compli ies
ility
ance
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Process Flow

Manufacturer
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Current Process
Manufacturer
Shrink-wrap
Place Cases pallet with
on Pallets barcode

Move pallet to
Store pallet storage area

Scan & pick

Assemble pallet
pallet, take to
shipping area
for truckloads

Scan Barcode
on Pallet
Store Pallet
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What Can RFID Improve
Manufacturer
Shrink-wrap
Place Cases pallet with
on Pallets barcode

Move pallet to
Store pallet storage area

Scan & pick

Assemble pallet
pallet, take to
shipping area for truckloads

Scan Barcode
on Pallet Store Pallet
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Improved Process
Manufacturer
Shrink-wrap
Place Cases pallet with
on Pallets barcode

Move pallet to
storage area

Assemble pallet
Store pallet for truckloads
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Current Process
Receiving and Storing Pallets on DC

Unload Scan
From Truck Barcode

Count cases on
Pallet and inspect
paper work

Forklift Driver Transfer Pallet

Scan on Pallet to storage
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What Can RFID Improve
Receiving and Storing Pallets on DC

Unload Scan
From Truck Barcode

Count cases on
Pallet and inspect
paper work

Forklift Driver Transfer Pallet

Scan on Pallet to storage
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Improved Process
Receiving and Storing Pallets on DC
Unload Count cases on
Pallet and inspect
From Truck paper work

Forklift Driver
Scan on Pallet

Transfer Pallet
to storage Store Pallet
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Current Process
Picking and Shipping Pallets to Store
Scan barcode Transfer pallet
on pallet to picking area

Assemble mixed Scanning

pallets for store Pallet

Move mixed Shrink-Wrap and

pallet to SA put the barcode

Scan Sample Mixed

pallets and check
Barcode for accuracy
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What Can RFID Improve
Picking and Shipping Pallets to Store
Scan barcode Transfer pallet
on pallet to picking area

Assemble mixed Scanning

pallets for store Pallet

Move mixed Shrink-Wrap and

pallet to SA put the barcode

Scan Sample Mixed

pallets and check
Barcode for accuracy
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Improved Process
Picking and Shipping Pallets to Store
Transfer pallet Assemble mixed
to picking area pallets for store

Shrink-Wrap and Move mixed

put the barcode pallet to SA

Sample Mixed
pallets and check
Load to
for accuracy Metro Store
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Pallet vs Case

An average pallet arriving at an Extra store : 70 cases

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Financial Benefit – Pallet Tagging

Specific Change €-cent/Pallet

Manufacturer Truck loading at manufacturer 20
Auto scanning at warehouse 5
Process Change 25
Total benefit 50
Retailer Auto scanning in receiving and storing 11.2
pallets
Auto scanning in order assembly 2.8
Truck loading for shipments 1.7
Total benefit 15.7
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Financial Benefit – Case Tagging

Specific Change €-cent/Case

Manufacturer Increase profit from better on-shelf status 7
Total benefit 7
Retailer Eliminate case counting in receiving goods 0.3
Labor reduction in picking mixed pallets 1.7
Eliminate sample checks of mixed pallets 0.3
Reduce inventory counts 0.1
Reduce mispicked cases 1.5
Increase profit from better on-shelf status 5
Total benefit 8.9
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Cost Saving

COST SOURCE

Tag Printer
Tag
Portal - Reader
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Growth on Sales

140000.000
120000.000 123883.000
100000.000 112621.000
102382.000
80000.000 93075.000
84614.000
60000.000
40000.000
20000.000
-
2005 2006 2007 2008 2009

Pallet Case

(in 1,000 EUR)

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Savings

70000.000
60000.000
58468.000
50000.000 53152.000
48320.000
40000.000 43927.000
39934.000
30000.000
20000.000
10000.000
2357.000 2593.000 2852.000 3137.000 3451.000
.000
2005 2006 2007 2008 2009

Pallet Case

(in 1,000 EUR)

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Cash Flow

Cash Flow - Case

70000.000
60000.000
59087.000
50000.000 53761.000
48919.000
40000.000 44517.000
40515.000
30000.000
20000.000
10000.000
2937.000 3182.000 3450.000 3746.000 4071.000
.000
1 2 3 4 5

Case Pallet
(in 1,000 EUR)
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ROI - IRR

995
1000
827
900
800
700
600
500
400
300
200 70 59
100
0
Pallet Case
ROI IRR
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NPV

Case 182114706.000

Pallet 8544247.000

NPV
Q&A Session