Group 10 Marco P David G Mujtaba Khalil Anurag Bajpai

About Metro AG
Germanys biggest retailer
56.4 billion sales in 2006
2,300 locations in 30 countries 250,000 employees 6 independent Retail Formats

Cash & Carry Wholesale Media Market and Saturn Consumer Electronics

Real Hypermarkets

Extra Supermarkets

Praktiker Building Materials

Galeria Keufh of Department Stores

Why RFID
Automatic Identification
More efficient Reduce errors in data entry Save labor time

Electronic Product Code

More information

Precisely identify individual items

RFID Benefits in Retail Supply Chain

Reduce shrink in supply chain
Improve Plano-gram (promotion compliance) Improve on shelf availability

Increased productivity and labor efficiency

Manufacturer

Current Process
Assemble pallet for truckloads Scan & pick pallet, take to shipping area Store Pallet

Place Cases on Pallets

Shrink-wrap pallet with barcode

Scan Barcode on Pallet

Move pallet to storage area

Store pallet

Load Truck ship to Metro DC

What Can RFID Improve

Manufacturer
Place Cases on Pallets

Assemble pallet for truckloads

Scan & pick pallet, take to shipping area

Store Pallet

Shrink-wrap pallet with barcode

Scan Barcode on Pallet

Move pallet to storage area

Store pallet

Load Truck ship to Metro DC

Improved Process
Manufacturer

Place Cases on Pallets

Store Pallet

Load Truck ship to Metro DC

Shrink-wrap pallet with barcode

Assemble pallet for truckloads

Move pallet to storage area

Store pallet

Current Process
Receiving and Storing Pallets on DC
Unload From Truck Scan Storage Barcode to verify Location Store Pallet

Scan Barcode

Transfer Pallet to storage

Count cases on Pallet and inspect paper work

Forklift Driver Scan on Pallet

What Can RFID Improve

Receiving and Storing Pallets on DC
Unload From Truck Scan Storage Barcode to verify Location Store Pallet

Scan Barcode

Transfer Pallet to storage

Count cases on Pallet and inspect paper work

Forklift Driver Scan on Pallet

Improved Process
Receiving and Storing Pallets on DC
Unload From Truck

Count cases on Pallet and inspect paper work

Store Pallet

Forklift Driver Scan on Pallet

Transfer Pallet to storage

Current Process
Picking and Shipping Pallets to Store
Scan barcode on pallet Shrink-Wrap and put the barcode Sample Mixed pallets and check for accuracy

Transfer pallet to picking area

Move mixed pallet to SA

Scan Barcode

Scanning Pallet

Assemble mixed pallets for store

Load to Metro Store

What Can RFID Improve

Picking and Shipping Pallets to Store
Scan barcode on pallet Shrink-Wrap and put the barcode Sample Mixed pallets and check for accuracy

Transfer pallet to picking area

Move mixed pallet to SA

Scan Barcode

Scanning Pallet

Assemble mixed pallets for store

Load to Metro Store

Improved Process
Picking and Shipping Pallets to Store
Transfer pallet to picking area Load to Metro Store

Assemble mixed pallets for store

Sample Mixed pallets and check for accuracy

Move mixed pallet to SA

Shrink-Wrap and put the barcode

Pallet vs Case

An average pallet arriving at an Extra store : 70 cases

Financial Benefit Pallet Tagging

Specific Change Manufacturer Truck loading at manufacturer
Auto scanning at warehouse Process Change Retailer Auto scanning in receiving and storing pallets Auto scanning in order assembly Truck loading for shipments

-cent/Pallet 20
5 25 Total benefit 50 11.2 2.8 1.7 Total benefit 15.7

Financial Benefit Case Tagging

Specific Change Manufacturer
Retailer

-cent/Case 7
0.3 1.7 0.3 0.1 1.5 5 Total benefit 8.9 Total benefit 7

Increase profit from better on-shelf status

Eliminate case counting in receiving goods Labor reduction in picking mixed pallets Eliminate sample checks of mixed pallets Reduce inventory counts Reduce mispicked cases Increase profit from better on-shelf status

Growth on Sales
140000.0 120000.0 100000.0 80000.0 60000.0 40000.0 20000.0 2005 2006 2007 Pallet Case 2008 2009 84614.0 93075.0 102382.0 112621.0 123883.0

(in 1,000 EUR)

Savings
70000.0 60000.0 50000.0 58468.0

40000.0
30000.0 20000.0 10000.0 .0 2005 2357.0 39934.0

43927.0

48320.0

53152.0

2593.0 2006

2852.0 2007 Pallet Case

3137.0 2008

3451.0 2009

(in 1,000 EUR)

Cash Flow
70000.0 60000.0 50000.0 40000.0 30000.0 20000.0 40515.0 44517.0 48919.0 53761.0 59087.0

10000.0 .0

2937.0 1

3182.0 2 Case

3450.0 3 Pallet

3746.0 4

4071.0 5

(in 1,000 EUR)

ROI - IRR
1000 900 800 700 600 500 400 300

995
827

200
100 0 70 Pallet ROI IRR 59 Case

NPV
Case 182114706.0

Pallet

8544247.0

50000000.0

100000000.0 150000000.0 200000000.0

Pallet Case