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Brazilian Supermarket Operator Improves Logistics, Inventory Accuracy

Grupo Pão-de-Açúcar's investment in RFID has eliminated accounting discrepancies and boosted efficiency related to the distribution of fish to its Pão-de-Açúcar and Extra stores.
By Edson Perin
Oct 21, 2013

Grupo Pão-de-Açúcar (GPA) has found an RFID solution to a problem that previously affected both logistics and accounting for its Pão-de-Açúcar and Extra supermarket chains. The distribution of fish, as well as other products in its cold chain, presents significant challenges for the retailer. After all, fish do not have identical weights, and businesses work with average values per unit, resulting in differences between what theoretically was delivered to a store, what was really sold and the expected revenue generated by marketing.

Paulo Leonidas, GPA's director of supply, says that prior to adopting RFID, his company had to calculate the fish's average value since it was impossible to know each unit's exact weight at the time of distributing tons of goods to supermarkets. "So, the store received 30 kilograms of a product, on average—but, in fact, it could be 32 kilos, which had just generated an additional sale of 2 kilos," Leonidas explains.

The executive says weight differences resulted in significant accounting discrepancies—a problem that was eliminated with the use of RFID. The impact of this difference may seem to be merely 2 kilos at a single store, but across a network composed of hundreds of supermarkets, this variation amounts to a hundreds of kilograms valued at hundreds or thousands of Brazilian reals in revenue.

With the RFID system, the average weight was replaced by the actual weight. "RFID carries the ID number of each of the boxes of products delivered to stores," Leonidas states. "If you have 32 kilos of fish, you have exactly 32 kilos, which eliminated the problem in the accounting books and also regarding the replacement of products."

Prior to GPA's adoption of RFID, Leonidas says, if the system indicated that the store had received 40 kilos of a product, based on the average unit weight, only 35 kilos might actually be available. "In such a situation," he notes, "the consumer himself would be without your product, because the store manager would only realize that the stock would be at a critical level when the quantity of product was about to end, or when it was exhausted."

Thanks to RFID, Leonidas reports, the risk of shortages of a certain type of fish at stores has been eliminated. The distribution efficiency—beyond the actual control of the revenue provided by these products—is encouraging the company to expand its use of radio frequency identification. "The idea is to expand the technology to meat and produce," he says, "which also suffer from challenges quite similar to the distribution of fish."

The group has distribution centers that serve all of its stores. "I contact the product suppliers for the entire network," Leonidas says, "and we serve each store based on the Oracle business-management system [ERP] installed in the company. The Oracle system generates the request almost automatically, based on the stock that was received, as sold and even seasonal conditions."

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