Twenty suppliers have begun shipping their products on pallets marked with RFID (radio frequency identification) chips to more than 270 stores operated by Germany's Metro.
Metro, the world's fifth largest retailer, said earlier this year it would introduce smart-tag technology across its logistics and storage operations by November. Initially, the company planned to have more than 100 suppliers using RFID by this deadline.
"Not everyone is ready yet, but our plan is definitely to have all suppliers convert quickly to RFID technology in the areas of shipping and warehousing," said Jürgen Homeyer, a spokesman for Metro in Düsseldorf, Germany.
The list of suppliers meeting the November deadline include Colgate-Palmolive, Kraft Foods Deutschland, Nestlé and Procter & Gamble.
RFID tags are computer chips equipped with miniature antennae. The technology enables non-contact transmission of product information such as price, manufacturer, expiration date and weight via a radio frequency. Many retail experts believe the tags will replace bar codes over the next decade.
In a next step beginning early next year, Metro will require suppliers to affix RFID tags to other types of transport packaging such as cases and crates, and eventually to individual products, according to Homeyer.
"We are aware of the privacy concerns that many people have with RFID, and we are openly discussing these concerns with consumers," he said. "But we see huge advantages - for us and our customers - in using RFID to store information about individual products."
Metro views RFID as a way to manage the huge flow of merchandise in and out of its stores more effectively, while at the same time reducing both inventory losses and labor costs, according to Homeyer. Consumers, he said, can also benefit from having products, for instance, automatically scanned with a running tally when placed in shopping carts.
In July, Metro launched a new centre in Neuss, Germany, where suppliers can test RFID systems, such as readers and smart tags, with their different packaging units under real-life conditions.
For more than a year, the retailer has been testing the new tracking and information technology with a number of IT suppliers and consumer goods suppliers at its Extra Future Store in Rheinberg, Germany.
Howeve, in March, Metro decided to drop the use of RFID tags embedded in customer loyalty cards at its Future Store.
Metro owns and operates more than 2,300 wholesale stores, supermarkets, department stores and specialty retailers, such as consumer electronics stores, mainly in Germany and the rest of Europe.
John Blau writes for IDG News Service