Metro tests RFID along German-Asia supply route

By Ahmed ElAmin

- Last updated on GMT

Related tags Rfid

The pressure on processors to use radio frequency identification
(RFID) continues inEurope, with Metro Group testing the technology
to track goods along the supply chain from China to Germany.

RFID has long been touted as the future of logistics for all companies by allowing retailers andsuppliers to track goods throughout the supply chain. However high prices for tags and systems hasheld enthusiasm at bay. Privacy concerns have also limited its use at the consumer level. Howevermandates from such giant retailers as Wal-Mart and Metro are slowing forcing processors to makeinvestments in the system.

UPM Raflatac, an RFID tag and inlay manufacturer, announced this week that the retail giant wasgoing to use its technology for the pilot project. The company is supplying its G2 ShortDipole RFIDinlay product for the scheme.

"The Metro Group is leading the way in its use of RFID technology to streamline and drive down costs in its supply chain managementprocesses,"​ UPM Raflatac said in a press release. "The retailer now wants to extend the use of the technology to where the supply processes begin - the manufacturer."

UPM Raflatac is using the EPC Gen2 UHF standard for the tags that will be used in the project,which Metro is calling "Advanced Logistics Asia". The inlays, converted into four-inch by six-inch labels by RFID Systems and SuppliesLtd. (RSS), will be tested at package level using different product categories.

Mandates from Metro Group, the world's fifth largest retailer, would push through the Europeanadoption of the Gen 2 Electronic Product Code (EPC) technology, an international standard for theuse of RFID as a means of tracking goods throughout the supply chain.

For the Asian project the RFID tagged packages will be monitored as they are shipped from the consolidation center in China to Metro's operations in Germany.

In a description of the "Advanced Logistics Asia" project on its Future Store website, Metrosays the project is meant to demonstrate the economic potential of RFID - for manufacturers, transportation providers andother retail companies.

"The long-term objective is to make international merchandise flows more efficient and transparent with the help of the technology and to completely track the path oftransportation,"​ the company said.

The company plans several pilot projects and test scenarios that focus on deliveries from Hong Kong and the Pearl River Delta to Germany.Chinese logistics service provider Fat Kee Stevedores Ltd, a company that bundles products from various manufacturers forMetro and prepares them for shipping, equips select merchandise with passive RFID transponders.

An RFID reader at the exporter's outgoing goods portal registers the shipments and automatically checks them for completeness. From there, the packages are shipped by MGBIMetro Group via different ports to Germany.

At the Metro Group distribution center in Unna, the merchandise is checked again with RFID. A reader at the incoming goods portal controls within seconds whether all ordered products were delivered.The items are then distributed to the group's individual stores and supermarkets

" The new technology greatly accelerates the work process,"​ Metro stated.

As one of Europe's largest retailers Metro has been leading the way toward the use of RFID in thefood industry. It has been testing and using RFID at various stages along the supply chain sinceNovember 2004. It's Future Store

The company begin by using RFID for its logistics and warehouse management processes. Thecompany began by using RFID transponders on pallets, packages and hanger-goods shipments. Since August 2006, retail units,the cartons and subcartons using for goods, have been fitted with RFID.

The company has also issued mandates to its suppliers, among them Procter & Gamble, Henkel and Johnson & Johnson.

A study conducted in conjunction with IBM and Procter & Gamble has demonstrated the enormous potential of thetechnology, Metro Group says.

According to that study, the use of RFID and Electronic Data Interchange (EDI) would mean total potential savings of €8.5 millionper year in Germany for the sales divisions the company's Metro Cash & Carry chain.

Metro has also built a RFID research center in Neuss near Duesseldorf in Germany, called FutureStore, allowing food processors and other suppliers to test the technology under realisticconditions.

Metro is at the forefront of European efforts to create a better supply chain system. Metro wasnamed as the European test lab by EPCglobal, a fledgling standards setting agency, for the furtherdevelopment of RFID technology. The aim is to construct a global supply chain information networkthat combines RFID technology, existing communications network infrastructure and EPC, a number foruniquely identifying an item.

Generation 2 refers to an updated version of the standard, which makes tracking and tracingsystems compatible throughout the world.

A unified data system as developed by EPC would allow changes in information about product sizes,weight, name, price, classification, transport requirements and volumes to be immediatelytransmitted along the supply chain. For example it would allow shippers to immediately know if theamount of product stacked on a pallet had changed, or give a retailer time to adjust display space.

Consumer giants such as Unilever and P&G as well as Nestle, Coca-Cola, PepsiCo, Hormel Foods, Kraft, Wegmans Food Markets and Sara Lee areamong the food processors helping to develop the supply chain standard by using the EPCglobal'sGlobal Data Synchronization Network (GDSN).

As a member of EPC, Metro has undertaken to observe the data protection guidelines developed bythe organisation. The retailer said it has a de-activator system, allowing consumers to turn off thetags as they exit the stores.

Notices displayed in the Future Store indicate which sales areas are using RFID.

RFID uses a wireless system that helps enterprises track products, parts, expensive items andtemperature-and time-sensitive goods. Transponders, or RFID tags, are attached to objects. The tagwill identify itself when it detects a signal from a reader that emits a radio frequencytransmission.

Each RFID tag carries information on it such as a serial number, model number, colour, place ofassembly or other types of data. When these tags pass through a field generated by a compatiblereader, they transmit this information back to the reader, thereby identifying the object.

Metro Group had sales of €56.4bn last year. The group has supermarkets in 30 countries and a workforce of about 250,000.

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