Rfid at the Metro Group Essay

The market is mature and continually seeks innovative ideas to enhance competitive advantage -Highly capital intensive -Low to moderate labor intensiveness -Low margin; high volume – they take advantage of economies of scale -Characterized by high volume holding capacity controlled through Information Technology Company Facts Metro Group was Germany’s biggest retailer (250 stores, 10 warehouses, 100 suppliers) that operates globally in 6 divisions: Metro Cash & Carry (wholesale), Retail (hypermarkets), Extra (supermarkets), Media Market and Saturn (consumer electronics), Praktiker (building materials), Galeria Kaufhof (department stores) -Metro Group (hereafter, Metro) is the world’s 3rd-largest retailer -Having the capacity to carry large volumes of inventory and have it adequately controlled and managed by cost efficient Information Technology resources – Increased company international expansion overseas -Metro is seeking to improve product accessibility: Having products consumers want in locations consumers can find them easily oReducing shrink in the Supply chain oHaving little to no Out of Stock occurrences -Launched the Future Store Initiative in September 2002 to test different initiative aimed at improving all aspects of the customer experience Competitive Environment -Porter’s Five Forces o Supplier Power- Relatively low; products can be procured from many different places at low price. Products have low differentiation oSubstitutes- High threat with established companies such as Walmart, Tesco, and Carrefour in the same industry. Buyer Power- Moderate level of buyer power. Customers are sensitive to prices, brand names and are willing to investigate substitutes oBarriers to Entry- Relatively high- Metro is rather large and established as well as some of its competitors. Need lots of capital, innovative supply chain management strategy will be need to be able to compete. oRivalry- Moderate to high level of rivalry between the competition. Companies are investigating new way to improve product availability and cut costs Strategic Fit or Alignment -Metro’s supplier have not been implementing RFID as Metro would like i. e. Misplaced, low quality tags are a major issue -Metro’s IT subsidiary has aided in improving fit across the 6 independent sale divisions -There is a lack of fit between employees’ training and the mission of management to implement the RFID -Lack of alignment existent within Metro’s leadership as to whether or not RFID should be applied company-wide as the solvent for Metro’s supply chain issues -Hard Conclusions: Metro should develop an even more strategic relationship with its suppliers so that they are cognizant of how to implement RFID and that they maintain a certain level of quality; Metro should also train its employees on how to apply RFID within their tasks; Metro’s highest management should continue to utilize RFID but should also seek to improve its supply chain in the areas suggested by opponents of RFID RFID Facts -RFID contains at least two parts oIntegrated circuit- storing and processing information, modulating and demodulating a radio frequency and other specialized functions oAntenna- receiving and transmitting the signal Used in enterprise supply chain management to improve the efficiency of inventory tracking and management -Limited growth and adoption in enterprise supply chain markets due to advanced technology needed to implement it Metro’s Competitive Strategy -Metro is a leader in supply chain innovation through the use of the RFID system. Metro does not want to sacrifice quality over costs for RFID which: oReduces shrink because of great accuracy in inventory location oImproves on-shelf availability and reduces substitute purchases oReduces out-of-stocks by reducing poor store execution oImproves productivity and labor efficiencies by eliminating manual entries and barcode scanning -Strengths (Metro) oMore economies of scale oGlobal recognition and success Moving in a positive direction with innovative technologies.