Management Information Systems (MIS) AD452 Fall 2009 Assoc. Prof. Dr.

Stefan Koch

Bianka Dreier Gkhan Yldz Merve Ylmaz Umutcan Erdin

AGENDA
INTRODUCTION -RFID BASICS -RFID IN RETAIL SUPPLY CHAINS THE METRO GROUP -COMPANY OVERVIEW -METROS INTEREST IN RFID THE FUTURE STORE INITIATIVE PREPARING FOR THE RFID ROLLOUT MOVING TO CASE TAGGING QUESTIONS AND ANSWERS

INTRODUCTION
RFID BASICS
RFID belongs to the group of automatic identification technologies Purpose to identify people and objects RFID: Radio Frequency Identification Technology

THE PRINCIPLE OF RFID

This system uses a RFID reader. Through radiowaves RFID recognises objects and people as long as the tag is within the reading scope of the RFID reader A particular signal is sent to a transponder which reflects the signal back or broadcast a signal by itself For example: A bar code can identify an object as a beer, however an RFID tag can identify a beer that has an individuality that is seperated from the other beers, even within the same brand.

THE PRINCIPLE OF RFID

The transponder and the reader is connected to computer system for the evaluation of the information.

THE PRINCIPLE OF RFID

THE PRINCIPLE OF RFID

There are 2 types of tags; Passive Tags: Their energy is derived from the radio waves of the reader, having a range up to 30 feet. The cost is about 20 cents per unit. Active Tags: They have their own batteries for the generation of energy and they broadcast signals, having a range up to 300 feet. The cost ranges from 10 dollars to 50 dollar per unit.

CHARACTERISTICS OF RADIO FREQUENCIES

RFID IN RETAIL MANAGEMENT

Ensures the transparency of the whole supply chain ,from manufacturer to the store provides maximum efficiency through the optimization of the processes in logistics Closer inspection of the stock levels to manage the inventory keeping costs and to prevent stock out runs Workers in warehouses and distribution centers can process incoming and outgoing goods easily and much faster

THE METRO GROUP

Third largest retailing company by 2005 that has 250,000 employees at more than 2,300 locations operating in 30 countries all round the world The system leader in department store business and also the Europes leader in consumer electronic retailing (Media Markt) Worlds market leader in Cash & Carry (wholesaling) Also having one of the biggest hypermarket chains (Real)

The Metro Group

METROS INTEREST IN RFID

Reducing shrink(mostly thefts by customers and employees) In METRO, RFID reduced the shrink by 25% (case level), up to 40% (item level) By improving on shelf availability, stock outs were also prevented increased brand loyalty and customer satisfaction Elimination of manual tasks through RFID by employees leads to more efficient usage of labor.

THE FUTURE STORE INITIATIVE Store Initiative(FSI) Metro launched the Future
Objective was setting global standards for retailing. By early 2003, 40 other partners from IT, consumer goods, consulting services and information industries had joined the FSI. FSI is testing new technologies that will affect regular customers

http://www.youtube.com/watch?v=sSlEa1udYGw&feature=related

THE FUTURE STORE INITIATIVE

PERSONAL SHOPPING ASSISTANT
Can be borrowed at the entrance Helps customers find products and provides in-depth information such as nutritional values , retail prices and product features

HAND-HELD COMPUTERS With bar code scanners help employees call up data on store and warehouse inventory

THE FUTURE STORE INITIATIVE

TERMINAL
SELF-SCANNING DEVICES Customers pay without a cashier Shorter waiting periods at the checkout.

Offers household tips: recipes, wine recommendations and suggestions for healthy eating

CURRENT PROCESS FLOW WITHOUT RFID FOR THE MANUFACTURER

Place cases on pallets Shrinkwrap pallet and label with barcode Assembl e pallets for truckloa ds Move pallet to storage area Scan &pick pallet, take to shipping area Scan pallet and storage location Stor e pall et

Stor e pall et

Scan barcode on pallet

Load truck, ship to Metro DC

CURRENT PROCESS FLOW WITHOUT RFID FOR THE METRO DC AND FOR THE EXTRA STORE
From the warehouse or DC: the pallets were sent by truck to Metro-owned DCs or directly to extra stores. At the Metro DCs: pallets were normally repacked into so-called mixed pallets and then sent to the stores. At the Metro store: pallets were usually placed in the backroom. Store employees opened the pallets and transferred the cases to the selling floor. Cases that could not be placed on the shelves were returned to the backroom and stored there until shelf space became available.

WITH RFID

USING PALLET-LEVEL TAGGING TO IMPROVE TRUCK LOADING PROCESS AT THE MANUFACTURERS WAREHOUSE
With RFID Warehouse personnel would not need to supervise the entire loading process The manufacturer could save 10 minutes of supervising time for each of the 15 trucks leaving warehouse every day

With RFID tags on each case

USING CASE-LEVEL TAGGING TO IMPROVE MIXED-PALLET PICKING AT METRO DCS

The picker would no longer have to manually enter the number of cases picked Metro estimated savings of 4 min. for each of the 1300 pallets picked every day, a potential cost savings of 430,000 A signal would indicate when a picker picks a product that does not belong to the delivery or picks too many or too few cases With reduced picking errors, no need to check the pallets saving 75 minutes per pallet

USING CASE-LEVEL TAGGING TO IMPROVE SHELF RESTOCKING AT STORES

With an RFID reader between backroom and the selling floor employees would know which products were available in the backroom Using this data in combination with point-of-sale data, store personnel could be notified of products needing to be replenished from backrooms With RFID implementation, METROs in-stock-rate would increased from 96% to 98% due to the improved replenishment at the store and the reduction of the picking errors at the DCs

STUDY BY KURT SALMON ASSOCIATES(KSA)

RFID implementation at the case level would result in -17% labor reduction -11%-18% theft reduction -9%-14% reduction in stock outs.

SYSTEM AND PROCESS REQUIREMENTS

Purchase RFID tags and print the appropriate electronic product code (EPC) on each tag using RFID printer Create a process to affix these tags to the right locations to ensure high reading quality RFID portal equipped with RFID readers and antenna for the shipment arriving at a DC store

STARTING THE ROLLOUT

The rollout started with a few large suppliers including Gillette, Henkel, Nestle, and Esprit in 20 Metro locations (DCs and stores) and it was spread across 3 different store formats 1. Department stores (Galeria Kaufhof) 2.Hypermarket stores (Real) 3.Cash & Carry wholesale stores (Metro Cash & Carry) Aim was to transform the logistics processes over a period of three years

PROBLEMS DURING THE ROLLOUT

Human Error: Putting the tag on the wrong side of the pallet Technology Problems: Difficulty in reading tag information through metal and water with the existing tags Training-related Problems: Need to educate the employees at the goods receiving area

MOVING TO CASETAGGING
A lot more involvement from both the manufacturers and Metro Manufacturers have to purchase more tags and make process changes inside their plants Numerous changes would have to be made to Metros IT systems like data storage

THANK YOU Questions & Answers

What are the benefits for Metro Group in using RFID within their business processes? What problems did arise during the rollout process of RFID in Metro Group?