Dec 06, 2006Metro Group is using RFID to speed up the movement of goods being shipped from Asia to Europe.
Known for its technology innovations, the German retailer is testing active RFID tags affixed to shipping containers carrying nonperishable items from a consolidation center in Hong Kong to a distribution center in Germany. Metro's Advanced Logistics Asia project relies on both active and passive RFID technologies. Active RFID tags are being applied to shipping containers, while passive tags are being affixed to cartons and cases packed inside those containers.
Since September, Fat Kee Stevedores' consolidation center in Hong Kong has been applying passive tags to cases of goods, loading those cases into cargo containers, which it seals by means of active tags. The cargo moves through the Hutchinson Port Holdings terminal in the Port of Hong Kong, to the Port of Rotterdam in the Netherlands, the Port of Duisburg in Germany and, finally, to Metro's distribution center in Unna, Germany.
At each port along the route, RFID interrogators read the container tags and record the cargo's arrival. The tags are also equipped with intrusion sensors that can trigger an alert to a shipping manager's PC or portable device, such as a Research In Motion (RIM) BlackBerry or a Palm Treo, indicating the container was opened during transit. Additionally, the tags can be programmed to trigger an audio or visual warning, such as a blinking light or siren, alerting nearby people.
Currently, according to Susan Evans, Savi Networks' director of business development for Europe and Africa, shippers typically secure cargo containers by means of mechanical seals consisting of a metal bolt. In the future, RFID tags could be used instead, says Metro spokesman Christian Maas. "Savi Technology offers several interesting possibilities for supply chain improvement," he says. "Currently, we are testing ways we can benefit" from RFID for shipping containers in transit.
Metro Group Buying Hong Kong (MGB Hong Kong), a business unit formed in 2002 to manage the retailer's procurement and imports activity, is overseeing the project. This project uses SaviTrack, a Web-based information service that provides a real-time view of supply chain events. The service is run by Savi Networks, a joint venture of Lockheed Martin subsidiary Savi Technology and Hutchison Port Holdings.
The project represents a major move in Metro's step toward expanding visibility up the supply chain, Evans says, to have suppliers apply passive tags to cases of products and load them into RFID-tagged shipping containers at the companies' manufacturing sites. "The next step is to tag containers and product at the manufacturing sites in China," she says. "The original plan was to begin reading tags in China, but it took time to get some frequency approvals, so the project will move there next month."
Metro plans to leverage the active RFID technology to gain visibility into containers moving through the supply chain, identifying points along the way that can slow the process of delivering goods. About 7,000 cases are exported in shipping containers from the Hong Kong consolidation center to Metro's Unna distribution center. Hass says the retailer shipped about 21,000 of these containers from Hong Kong to Germany in 2005. Most of the goods are Metro-branded clothes, household goods and electronics.
Although such non-food items, shipped from the Hong Kong consolidation center, remain a small percentage of Metro's business, Evans says the retailer plans to tag about 50 containers as part of the Advanced Logistics Asia project's initial phase. The company expects this phase to run through 2006.
"In 2007, we will start shipping the cargo from the Port of Yantian, in China, instead of Hong Kong," Maas says. "In addition to [having tagged containers and goods shipped by] the consolidator, we will have one or two suppliers sending tagged goods to us directly."
Presently, it takes 30 days to move a container from the supplier's manufacturing facilities in China, through the Hong Kong consolidation center, and on to Metro's Unna distribution center. The RFID data from the project will give Metro greater visibility deeper into the supply chain, allowing it to identify and address any delays and bottlenecks along the way. This will help reduce the amount of inventory the retailer needs to order and move products more quickly from suppliers to stores.
Metro procurement specialists plan purchases based on lead times and stock availability. RFID data could provide the information needed to change processes, reducing the number of days required to move product from supplier manufacturing sites in China to Metro's Unna DC. Eliminating a single day from this process, Evans estimates, could potentially save the retailer hundreds of thousands of dollars annually. Reducing the time products remain in inventory can free up capital for other investments. AMR Research, a Boston research firm, estimates a one-day reduction in inventory equals roughly $1 million in working capital for a manufacturer generating $1 billion in annual sales.
When the trial is complete, Savi Networks says it will present a business-value analysis to Metro, offering ways to change business processes that could potentially reduce the time needed to move goods through the supply chain. "We are trying to help Metro understand RFID technology to improve global supply chain visibility," Evans says.
