RFID at the Metro Group
Mierdorf and Wolfram are preparing their report to the RFID steering committee next month and they have three options to recommend. They can: * Expand the scope of the current pallet level RFID rollout * Move to case level RFID tagging with the manufacturers currently engaged in pallet level rollout * Stop the expansion of the RFID and focus on traditional process improvement opportunities Given the facts in the case and as outlined in more detail in this case study, it is our recommendation that Mierdorf and Wolfram move to the case level RFID tagging process. The improvements up and down the supply chain in accuracy, inventory control, reduced labor costs are enough to at least continue with the RFID rollout at the pallet level. However, there is ample financial data that supports quite forcibly the added benefits of RFID at the case level. Now, with any initiative as bold and challenging as this as far as logistics between manufacturers, distribution centers, and retail stores, implementation of technology that is emerging almost daily, and not to mention the substantial capital expenditures has its inherent risks. We identify those risks later in this study. However, we contend that despite the obstacles that lie ahead, the benefits for this initiative are overwhelming. The potential for this technology given the reporting capabilities, the versatility of product specific inventory levels, and the opportunity to make the RFID tag universal worldwide are endless. Furthermore, as more manufacturers, retailers, shippers, distribution centers, etc. incorporate RFID into their supply chain the more cost effective it becomes for the entire industry. In this study, we examine the process flow of the supply chain; the financial analysis of both pallet level and case level tagging; the risks associated with RFID tagging at both levels; and conclude with a timeline chart starting from the beginning of the project up to this juncture. Process flow of the supply chain
Pallets are assembled at the manufacturer’s plant after the production line. These pallets are either stored at the manufacturer’s warehouse or shipped to a distribution center (DC). From here, the pallets are either shipped to one of Metro’s DCs or directly to a Metro store. Commonly, pallets at the Metro DC are unbundled and repackaged as mixed pallets. Pallets sizes can range from 60 to 80 cases per pallet and in extreme situations as much as 900 cases on a pallet. One can imagine the labor force required to receive a pallet from a manufacturer, check it in, break in down and reassemble and then ship it out to a retail location who then must receive it, check it in and break it down into the cases. At this point, the stockroom must determine how much of the product can be moved directly to the sales floor and how much was to remain in the stock room. It was common to have to return product marked for the sales floor back to the stock room due to lack of display space. Furthermore, products would be moved within the sales floor for promotional events which necessitated handling the product again. A retail store could receive shipments directly from the manufacturer or from a variety of Metro DC’s. The shipments from the manufacturer or Metro DC varied from week to week and store to store. This made it difficult for the stores to anticipate what would be delivered on a day to day or week to week basis. In addition to the various locations the shipments originated, the pallet sizes, the pallet mix, the randomness of the delivery schedules, and the number of times it took to handle the pallets, there were also the times when the product had to be returned for quality issues or product damage.
Process Flow Chart without RFID – Manufacturer
Process Flow Chart without RFID – Metro DC
Benefits of RFID
In general the benefits for implementing the RFID process would be labor productivity, accuracy of...
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