RFID: What one of the world's biggest retailers found out
September 02 2004
by Jo Best
There's good bits and bad bits - but it's going ahead
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Retail chain Metro has around 240,000 employees and stores in 28 countries, with a turnover of €54bn. It's one of the first multinational companies planning an RFID rollout. So how's it going?
Dr Gerd Wolfram, project manager for Metro's Future Store Initiative, where the RFID technology is on trial, said the experiment has turned in some impressive results but wasn't without its problems.
The pilot has been going for one year and started off with a logical progression, Wolfram said. "What we did there… was to test the tech first - whether it works", he said, then the company moved on to developing a business case and seeing where the technology could be applied.
Applying the tracking tags gave the retailer best results in supply chain visibility, he said, and was a huge advance from the traditional barcode.
"We did the test in the store itself… you knew [exactly] where the delivery was. With barcodes, you know it's in the store but you don't know where - is it in store room or in back room? If it is in the backroom, you don't know whereabouts," he said.
Metro has analysed the results of the Future Store Initiative and believes process efficiency rose by 12 to 17 per cent with RFID, losses and theft were down 11 to 18 per cent and merchandise availability increased 9 to 14 per cent.
The retailer is obviously impressed with the results - it plans to start a full rollout shortly. The first wave starts in November, with the rollout going on until December 2005, taking in 100 suppliers, 269 stores and eight distribution centres.
Does that mean the pilot was flawless? Of course not.
"We had some technology problems with item-level tagging - not every item was read on the shelf, there were so-called blind spots [on the on-shelf RFID readers]," he said, with metal and liquid products presenting problems. "There's also a cost factor," he added - the cost of the tags and readers, as well as the engineering and cabling needed to install full supply chain RFID tracking, is prohibitive even for the bigger retail chains.
Item-level tagging - in contrast to case and pallet level - is still a long way off for retailers, Wolfram said, with a timeframe of 10 to 20 years before individual products will carry the chips.
That will certainly come as welcome relief for privacy and civil liberties groups. Metro in particular has felt the wrath of campaign group Caspian, which protested outside the Future Store when when RFID tags were found in loyalty cards.
However, some believe that it's a case of when, not if, for item-level tagging. "Undoubtedly, item-level tagging will come," said Simon Merriott, senior manager of RFID applications at consultants KSA.
Privacy aside, RFID might still be unable to dodge the bullets of controversy. A study by analyst house Yankee Group predicted that four million jobs will be affected by the technology in the US alone, as process automation changed retail workers' roles or made them redundant.
Wolfram quoted figures of a labour reduction of 17 per cent but said that no jobs would be lost. "There won't be a reduction of labour - it will be a shift of labour," he said, with workers reassigned to different duties. |
