METRO Plans Company-Wide RFID Roll Out
METRO Group, the world's fifth largest retailer, plans to use radio frequency identification (RFID) technology for supply chain applications throughout its operations. Starting in November 2004, METRO says approximately 100 suppliers will use RFID tags on pallets and transport packages for delivery to 10 central warehouses and 250 stores within METRO's cash and carry, Real hypermarkets, Extra supermarkets and Galeria Kaufhof department stores.
METRO has been testing RFID for some time, most publicly at its Extra Future Store in Rheinberg, Germany, which is being used as a showcase for new retail technologies such as smart product scales and interactive shopping carts.
"In the future, the use of innovative technologies will be one of the crucial competitive factors in our industry," said Hans-Joachin Körber, chairman and CEO of the METRO Group, at the National Retail Federation conference in New York this week. "With the Future Store Initiative, the METRO Group will push the modernization of retailing."
METRO is using the Electronic Product Code (EPC) protocol -- developed at MIT and now managed by EPCglobal -- for its RFID trials.
METRO CIO Zygmunt Mierdorf, also speaking at the show, noted that the Future Store experiment has thus far been a success, with 77% of customers at the store using at least one of the technologies on display (the smart scale was the most popular). During his presentation, Mierdorf led attendees on a guided tour of the German store via a satellite video link. The store includes an executive "dashboard" screen in a meeting room that shows inventory levels on RFID-enabled smart shelves that monitor the number of tagged items, such as Gillette razors.
In response to privacy concerns, METRO has also added a deactivation station in the store so customers can erase RFID tags on their merchandise if they choose.
Mierdorf says METRO will test RFID in several other stores through April of this year, starting the rollout in Germany. IBM, SAP and Intel -- all sponsors of the Future Store -- will be involved in the company-wide implementation.
METRO is also part of the newly announced EPC Users Group, formed by Intel and also announced at the NRF show. The group also includes retailers Carrefour and Tesco, both of which have piloted RFID systems in Europe.
Both Wal-Mart and the U.S. Department of Defense (DoD) are beginning RFID pilots and will require suppliers to use EPC-based RFID tags. A research note from AMR Research Inc. indicates METRO's company-wide plan will help both of those initiatives.
"METRO's cooperative approach will positively affect Wal-Mart and the DoD as suppliers gain additional experience, resulting in more suppliers coming closer to compliance," says AMR.