RFID at Metro Group

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Metro Group, German's leading retailer, aims to optimize its supply chain performance with RFID. The initial results are satisfactory, and right now the company arrives at a new question: Expand the …

Metro Group, German's leading retailer, aims to optimize its supply chain performance with RFID. The initial results are satisfactory, and right now the company arrives at a new question: Expand the already-proven pallet tagging, or increase the granularity with case-level tagging?

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  • Dear François,

    My group did this presentation as a study case for the Metro Group. The original case (which contains all the data used) is from the 'RFID at the METRO Group' case from the Harvard Business Review which you can obtain from its website.

    Cheers!
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  • Dear Mr Winadi,

    I am a currently doing a survey about Metro's rfid projets. I was wondering where you got the information written in this very interesting presentation.

    Thanks for all

    François P.
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  • 1. RFID AT METRO GROUPHow RFID will improveMetro Group retail supply chain performanceGaruda TeamAlbert Winadi – Fredy Jingga – Kartika Martina Ruru
  • 2. atSituation Overview • Metro Group to use RFID Situation •What should Metro do next to Question improve its supply chain with RFID? • Introduce case-level RFID Answer tagging
  • 3. atAbout 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 Extra Wholesale Hypermarkets Supermarkets Media Markt and Praktiker Galeria Keufhof Saturn Consumer Building Department Electronics Materials Stores
  • 4. atAbout RFID Radio-Frequency Identification Identification and tracking using radio waves.
  • 5. atWhy RFID? Automatic Identification • More efficient • Reduce errors in data entry • Save labor time Electronic Product Code • More information • Precisely identify individual items
  • 6. RFID Benefits in Retail Supply atChain Reduce Improve Increase Improve Shrink in Planogram – Productivity On-Shelf Supply Promotion and Labor Availability Chain Compliance Efficiencies
  • 7. atProcess Flow Receiving and Storing Pallets on DC Picking and Manufacturer Shipping Pallets to Store
  • 8. at Current ProcessManufacturer Assemble Place Cases pallet for Store Pallet on Pallets truckloads Shrink-wrap Scan & pick Scan Barcode pallet with pallet, take to on Pallet barcode shipping area Load Truck Move pallet to Store pallet ship to Metro storage area DC
  • 9. at What Can RFID ImproveManufacturer Assemble Place Cases pallet for Store Pallet on Pallets truckloads Shrink-wrap Scan & pick Scan Barcode pallet with pallet, take to on Pallet barcode shipping area Load Truck Move pallet to Store pallet ship to Metro storage area DC
  • 10. at Improved ProcessManufacturer Load Truck Place Cases Store Pallet ship to Metro on Pallets DC Shrink-wrap Assemble pallet with pallet for barcode truckloads Move pallet to storage Store pallet area
  • 11. at Current ProcessReceiving and Storing Pallets on DC Scan Storage Unload From Barcode to verify Store Pallet Truck Location Transfer Pallet to Scan Barcode storage Count cases on Pallet and Forklift Driver inspect paper Scan on Pallet work
  • 12. at What Can RFID ImproveReceiving and Storing Pallets on DC Scan Storage Unload From Barcode to verify Store Pallet Truck Location Transfer Pallet to Scan Barcode storage Count cases on Pallet and Forklift Driver inspect paper Scan on Pallet work
  • 13. at Improved ProcessReceiving and Storing Pallets on DC Unload From Truck Count cases on Pallet and Store Pallet inspect paper work Forklift Driver Transfer Pallet to Scan on Pallet storage
  • 14. at Current ProcessPicking and Shipping Pallets to Store Sample Mixed Scan barcode on Shrink-Wrap and pallets and pallet put the barcode check for accuracy Transfer pallet to Move mixed Scan Barcode picking area pallet to SA Assemble mixed Load to Metro Scanning Pallet pallets for store Store
  • 15. at What Can RFID ImprovePicking and Shipping Pallets to Store Sample Mixed Scan barcode on Shrink-Wrap and pallets and check pallet put the barcode for accuracy Transfer pallet to Move mixed Scan Barcode picking area pallet to SA Assemble mixed Load to Metro Scanning Pallet pallets for store Store
  • 16. at Improved ProcessPicking and Shipping Pallets to Store Transfer pallet to Load to Metro picking area Store Sample Mixed Assemble mixed pallets and pallets for store check for accuracy Move mixed Shrink-Wrap and pallet to SA put the barcode
  • 17. atPallet vs CaseAn average pallet arriving at an Extra store : 70 cases
  • 18. Financial Benefit – Pallet atTagging Specific Change €-cent/PalletManufacturer Truck loading at manufacturer 20 Auto scanning at warehouse 5 Process Change 25 Total benefit 50Retailer Auto scanning in receiving and storing pallets 11.2 Auto scanning in order assembly 2.8 Truck loading for shipments 1.7 Total benefit 15.7
  • 19. Financial Benefit – Case atTagging Specific Change €-cent/CaseManufacturer Increase profit from better on-shelf status 7 Total benefit 7Retailer 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
  • 20. atCost Saving COST SOURCE Tag Printer Tag Portal - Reader
  • 21. atGrowth on Sales140000.0120000.0 123883.0100000.0 112621.0 102382.0 80000.0 93075.0 84614.0 60000.0 40000.0 20000.0 - 2005 2006 2007 2008 2009 Pallet Case (in 1,000 EUR)
  • 22. atSavings70000.060000.050000.0 58468.0 53152.040000.0 48320.0 43927.030000.0 39934.020000.010000.0 2357.0 2593.0 2852.0 3137.0 3451.0 .0 2005 2006 2007 2008 2009 Pallet Case (in 1,000 EUR)
  • 23. at Cash Flow Cash Flow - Case70000.060000.050000.0 59087.0 53761.040000.0 48919.0 44517.030000.0 40515.020000.010000.0 2937.0 3182.0 3450.0 3746.0 4071.0 .0 1 2 3 4 5 Case Pallet (in 1,000 EUR)
  • 24. atROI - IRR 1000 995 900 800 827 700 600 500 400 300 200 100 0 70 59 Pallet Case ROI IRR
  • 25. atNPV Case 182114706.0Pallet 8544247.0 - 50000000.0 100000000.0 150000000.0 200000000.0 Pallet Case
  • 26. Q&A Session