Germany’s largest retailer, METRO Group came out with a radio frequency identification technology that it planned on implementing initially at 250 stores and 10 distribution centers, as well as collaborating with 100 suppliers. The implementation only happened at
The need for RFID technology
The need for RFID technology was obvious to any major retailer. There were many reasons to invest in RFID technology and the most important ones were: * Reducing shrinkage in stores by 25% if used at case level and up to 40% if used at item level * Improving on-shelf availability and reducing out-of-stocks * Improving visibility for suppliers regarding planograms and promotion compliance * Increase in productivity and labor efficiencies
RFID at Metro
The roll-out started at 20 locations and with several large suppliers. At first, Metro Group encountered a few difficulties when it came to reading the tags, and working with suppliers to ensure quality tags are used and are placed in the right locations. However, the accuracy improved from 30% to over 90% in just a few months. By mid-2005, Metro had implemented the pallet-level RFID at 33 suppliers, 13 stores and 9 distribution centers. One of the most significant benefits turned out to be that trucks spent 15-20 minutes less with each shipment. Moreover, a 2nd generation of RFID tags is scheduled to debut soon, decreasing the costs per tag by almost 95% in some cases. This would allow both Metro and its suppliers to get quality tags at reasonable prices. The only downside to moving to 2nd generation tags would be replacing the current readers.
Case-level vs. pallet-level
There are some significant differences between case and pallet level RFID tags. The case level can reduce shrinkage by 25% which that alone could offset the cost of the additional cost of the tags. Both pallet and case level tags will add to labor productivity and efficiency, however case-level tags will...