Metro AG has expanded the use of smart tags from its stores in Europe to key producers in China as the German retail giant moves to optimize its global logistics chain.
A three-month test, launched Wednesday in Hong Kong, will require boxes and containers of products destined for Metro's distribution center in Unna, Germany, to carry RFID (radio frequency identification) tags.
The pilot is part of the company's Advanced Logistics Asia (ALA) program, which kicked off in October 2006. The goal is to have more accurate, real-time data that will help the retailer improve control over its international supply chain, resulting in lower warehousing costs and fewer out-of-stock situations, according to a Metro spokesman. For the Hong Kong pilot, Chinese suppliers can either fit passive RFID tags to their shipments themselves or allow a consolidator to manage this process. The passive chips have no energy and a very short reading distance, the spokesman said.
Containers loaded with the shipments consisting of boxes or pallets are fitted with active RFID chips. The active transponders have energy and a much larger reading distance. Product data stored in the chips, for instance, are registered by readers mounted to loading cranes in the ports and unloading docks at the distribution center. Products are tracked in real-time along their journey, from when they leave the port in Hong Kong to their arrival in Rotterdam, Netherlands, and their continued journey down the Rhine River to the port in Duisburg, Germany, and their final destination in Unna.
For the testing period, Metro is using RFID tags based on the Electronic Product Code Generation 2 (ECP Gen 2) standard, which offers much higher reading speeds and greater security over the previous generation.
Metro is collaborating with several IT companies, including IBM Corp., Intel Corp. and SAP AG, and more than 40 additional consumer goods and technology suppliers to develop RFID systems for the retail sector. The retailer, which generated more than €60 billion (US$80.8 billion) in sales last year through its 2,400 stores, operates Europe's largest RFID test bed.