rfid at metro group
DESCRIPTION
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?TRANSCRIPT
RFID AT METRO GROUPHow RFID will improve
Metro Group retail supply chain performance
Garuda TeamAlbert Winadi – Fredy Jingga – Kartika Martina Ruru
Situation Overview
• Metro Group to use RFIDSituation
•What should Metro do next to improve its supply chain with RFID?
Question
• Introduce case-level RFID tagging Answer
at
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”
at
Cash & Carry
Wholesale
RealHypermarkets
ExtraSupermarkets
Media Markt and SaturnConsumer Electronics
PraktikerBuilding Materials
Galeria Keufhof
Department Stores
About RFID
Radio-Frequency Identification Identification and tracking using radio waves.
at
Why RFID?
Automatic Identification• More efficient• Reduce errors in data
entry• Save labor time
Electronic Product Code• More information• Precisely identify
individual items
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RFID Benefits in Retail Supply Chain
Reduce Shrink in Supply Chain
Improve On-Shelf Availabil
ity
Improve Planogra
m –Promotion Complia
nce
Increase Productivity and
Labor Efficienci
es
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Process Flow
Manufacturer
Receiving and Storing Pallets
on DC
Picking and Shipping Pallets
to Store
at
Current Process
Place Cases on
Pallets
Shrink-wrap pallet
with barcode
Move pallet to storage
areaStore pallet
Scan & pick pallet, take to shipping
area
Assemble pallet for
truckloadsStore Pallet
Scan Barcode on
Pallet
Load Truck ship to
Metro DC
Manufacturer
at
What Can RFID Improve
Place Cases on
Pallets
Shrink-wrap pallet
with barcode
Move pallet to storage
areaStore pallet
Scan & pick pallet, take to shipping
area
Assemble pallet for
truckloadsStore Pallet
Scan Barcode on
Pallet
Load Truck ship to
Metro DC
Manufacturer
at
Improved Process
Place Cases on Pallets
Shrink-wrap pallet
with barcode
Move pallet to storage
area
Store pallet
Assemble pallet for
truckloads
Store Pallet
Load Truck ship to
Metro DC
Manufacturer
at
Current Process
Unload From Truck
Scan Barcode
Count cases on Pallet and inspect paper
work
Forklift Driver Scan on Pallet
Transfer Pallet to storage
Scan Storage Barcode to
verify LocationStore Pallet
Receiving and Storing Pallets on DC
at
What Can RFID Improve
Unload From Truck
Scan Barcode
Count cases on Pallet and
inspect paper work
Forklift Driver Scan on Pallet
Transfer Pallet to storage
Scan Storage Barcode to
verify LocationStore Pallet
Receiving and Storing Pallets on DC
at
Improved Process
Unload From Truck
Count cases on Pallet and inspect paper
work
Forklift Driver Scan on Pallet
Transfer Pallet to storage
Store Pallet
Receiving and Storing Pallets on DC
at
Current Process
Scan barcode on pallet
Transfer pallet to picking area
Scanning Pallet
Assemble mixed pallets
for store
Move mixed pallet to SA
Shrink-Wrap and put the
barcode
Sample Mixed pallets and check for accuracy
Scan Barcode
Load to Metro Store
Picking and Shipping Pallets to Store
at
What Can RFID Improve
Scan barcode on pallet
Transfer pallet to picking
area
Scanning Pallet
Assemble mixed pallets
for store
Move mixed pallet to SA
Shrink-Wrap and put the
barcode
Sample Mixed pallets and check for accuracy
Scan Barcode
Load to Metro Store
Picking and Shipping Pallets to Store
at
Improved Process
Transfer pallet to picking
area
Assemble mixed pallets
for store
Move mixed pallet to SA
Shrink-Wrap and put the
barcode
Sample Mixed pallets and check for accuracy
Load to Metro Store
Picking and Shipping Pallets to Store
at
Pallet vs Case at
An average pallet arriving at an Extra store : 70 cases
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 pallets
11.2
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 at
2005 2006 2007 2008 2009 -
20000.000
40000.000
60000.000
80000.000
100000.000
120000.000
140000.000
84614.000 93075.000
102382.000 112621.000
123883.000
Pallet Case
(in 1,000 EUR)
Savings at
(in 1,000 EUR)
2005 2006 2007 2008 2009.000
10000.000
20000.000
30000.000
40000.000
50000.000
60000.000
70000.000
2357.000 2593.000 2852.000 3137.000 3451.000
39934.000 43927.000
48320.000 53152.000
58468.000
Pallet Case
Cash Flow at
(in 1,000 EUR)
1 2 3 4 5.000
10000.000
20000.000
30000.000
40000.000
50000.000
60000.000
70000.000
40515.00044517.000
48919.00053761.000
59087.000
2937.000 3182.000 3450.000 3746.000 4071.000
Cash Flow - Case
Case Pallet
ROI - IRR
Pallet Case0
100200300400500600700800900
1000
70
995
59
827
ROI IRR
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NPV
Pallet
Case
- 100000000.000 200000000.000
8544247.000
182114706.0
00
NPV
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Q&A Session