Metro to penalise suppliers who don't use RFID

By Ahmed ElAmin

- Last updated on GMT

Related tags Supply chain Supply chain management Rfid

Suppliers to Germany-based Metro Group will pay a financial penalty
if they decide not to ship pallets that are tagged with radio
frequency identification (RFID) technology.

The decision indicates the seriousness of the giant retailer in making its supply chain more efficient, and the pressure on processors to implement the technology. RFID has long been touted as the future of logistics for all companies by allowing retailers and suppliers to track goods throughout the supply chain. However high prices for tags and systems has held enthusiasm at bay. Privacy concerns have also limited its use at the consumer level. Mandates from such giant retailers as Wal-Mart and Metro are slowly forcing processors to make investments in the system. Martin Bruening, a Metro spokesman said as the retailer asks more suppliers to become part of the company's RFID roll-out, it expects to achieve more supply chain efficiency. "We will extend the accruing benefits to compliant suppliers by giving them preferred treatment at our facilities,"​ he told "Those suppliers who don't use RFID will be charged with the higher process costs."​ Currently, Metro's RFID roll out involves about 180 locations in Germany, including the stores and distribution centers that service them. The stores belong to Metro Group's Cash & Carry wholesale chain and its Real hypermarket sales brand. In addition the company runs an RFID-enabled supply chain system between suppliers in China and Germany. Currently about 70 suppliers are already participating with RFID-enabled pallets to Metro's stores in Germany. Among them are big corporations like Procter & Gamble and medium-sized ones like Papstar, Bruening said. "By the end of 2007 several other suppliers will have entered in agreements after completing the discussions that are already well under way,"​ he said. The group has produced guidelines for suppliers, which explain the necessary steps for implementating RFID. The company also has a special members section for suppliers at its website, which serves as information platforms. The company started international tests in 2006 through pilot projects concentrating on the supply chain between Hong Kong and Germany. Earlier this year Metro said RFID tests at one of its distribution centres in Germany had achieved read rates of close to 99 per cent. Metro had sales of €55.7bn in 2005, making it the world's fourth largest retailer. RFID uses a wireless system that helps enterprises track products, parts, expensive items and temperature-and time-sensitive goods. Transponders, or RFID tags, are attached to objects. The tag will identify itself when it detects a signal from a reader that emits a radio frequency transmission. Each RFID tag carries information on it such as a serial number, model number, colour, place of assembly or other types of data. When these tags pass through a field generated by a compatible reader, they transmit this information back to the reader, thereby identifying the object. RFID is being seen as a step up on bar codes by giving those in the supply chain the ability to track individual products and obtain more data. The use of radio frequency identification (RFID) technology along the food supply chain is set to rise dramatically to $5.8bn (€4.3bn) in 2017, according to a recent report by IDTechEx. The amount includes the money spent on on RFID systems plus the tags in 2017. RFID use in the food sector will become more important than any other application of the technology the analyst firm forecasts

Related topics Processing & Packaging

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