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RFID Pays Off for Metro AG

Brian McCarthyDirector, Enterprise Capture Program Management Intermec Technologies Corporation

Metro Future Store Initiative

Infrastructure

ComfortShopping

SmartCheck-out

In-storeInformation

RFIDInventoryManagement

January: Announcement of RFID rollout at NRF, NYMay: 1st METRO Group RFID congress for suppliers, Cologne

July: Opening of the METRO Group RFID Innovation Center, NeussNovember: Start of RFID roll-out, 1st phase

January: Founding of the METRO Group Future Store Initiative

April: Opening of the ExtraFuture Store, Rheinberg

November:EPCglobal replaces Auto-ID center

2000 2003 2004 2005

RFID at METRO Group – Timeline to Success

January: 100-days balance of the RFID roll-out at the NRF, NY

June: 2nd METRO Group RFID congress for suppliers, Cologne

End of 2005: Start of RFID roll-out, 2nd phase

Metro Group

Metro’s Vision: RFID along the complete supply chain

Production

Storage

Loading

Order picking/additional merchandise

Delivery notification (DESADV)Incoming merchandise

Incoming merchandise - precise verificationReserve area

Outgoing merchandise

Incoming merchandise

Inventory management

Shelving

Shelf management

Manufacturer Distribution Warehouse Store/Outlet

Metro Group

Metro RFID Innovation Center

RFID Printer

Hängesorter Conveyor Belt

Forklift Mobile RFID Terminals

RFID-Portal Conveyor for Clothes

750 / IP3 + Barcode and RFID

RFID forklift solution

Mobile RFID Solutions

100 days of RFID – First results are satisfying (I)

• METRO Group’s RFID Solution Team: finding new solutions in a highly qualifiednetwork

• Open discussion with suppliers and technology partners for fast integration of RFID

• Defining worldwide standards for the future of retailing in cooperation with EPCglobal

• METRO Group’s RFID Solution Team: defining the optimal hard-and software setup

Metro Group

100 days of RFID – First results are satisfying (II)

• Reduced idle hours at delivery

• Faster goods receipt process

• Reduced loading errors

• Handling

• Out-of-stock

• Early identi-fication and elimination of weak spots in handling process

Metro Group

First 100 days – High reading accuracy in first trials

Hanger goods conveyor:

99%

Portal for incoming and outgoing goods:

Varying results,up to 99%

Returnable transportitems:

> 90%

Stackable goods conveyor:

99%

Metro Group

Roll-out plan with three phasesFirst step is completed

• Enlargement of Retailing unit level (sub-cartons) by August 2006

Phase 1: Phase 2: Phase 3:

• Logistic unit level started in Nov 2004

• Retailing unit level (cartons, cases) by End of 2005

Metro Group

Next steps

Integrating a larger number of suppliers and locations into the roll-outPreparing roll-out-phase 2 Further development of standards in cooperation with EPCglobalOptimizing the technology Enhancing further processes, e.g. RFID enabled forklift

Metro Group

Metro RFID Roll Out

8 Distribution Centers

269 Stores

> 100 Suppliers

Pallet and Case Level Tracking

- Start November 2004

Why did Metro Choose ISO over Gen 1?

• Committed to global standards• Regulatory environment in Europe

• Power• Bandwidth

• EPC data structure on ISO tag• Committed to Gen 2 as an ISO standard

Why EPC Gen 2?

• Gen 1 doesn’t meet user requirements like these:• Single, standard communication protocol• Global compliance with RF regulations without site

license• Multiple manufacturers of tags and readers• Interoperable system components• Writable, verifiable, “killable” tags• Secure, cloak-able communications• Dense installation of non-interfering readers

Gen 1 simply doesn’t meet user requirements

Who Defined Gen 2 Requirements?

• Dozens of the world’s leading retail supply chain organizations defined Gen 2 user requirements

Who Defined EPC Gen 2 Standards?

• Best minds from around the globe developed this standard

• Multiple proposals and innovations merged into a single standard

• Not a compromise; best practices and solutions

• Driven by global user requirements

• Managed by EPCglobal consensus process

What’s the Difference?

EPC Gen 1: Obsolete; ticking time bomb

EPC Gen 2: Compliant product “meets sufficient set” … could be bare minimum

Robust feature set that meets user requirements and leverages Intermec innovations

Efficiency Range CostSecurityReliabilitySpeed

User Requirements

Dense reader installation

Global unlicensed operation

Minimal interference

Up to 5 meter range Synchronized

Timing

Write protection

Tag kill

Secure forward link

Data cloaking

Verified write

Error correction in air interface

Wide operating temperature

Eliminate ghost tags

Many tags and late tags

Fast singulatedwrite

Tag select by data filter

Intermec innovations

User Requirements for Gen 2

• Speed• Read and write to tags as fast as possible

• Efficiency• Best use of limited radio frequency bandwidth

• Reliability• Data and system integrity

• Range• Meaningfully long read/write data distance

• Security• Practical data protection from alteration and eavesdropping

• Cost• Efficient protocol design to minimize tag cost

Only Intellitag Gen 2 Meets User Needs

Gen 2 First Commercial Use

• 22 March: Metro is first commercial user of Gen 2 tags and readers“Generation 2 RFID is here now. This demonstration meets a key METRO Group objective: we wanted to ensure our existing RFID systems would seamlessly migrate forward to the ISO-based Gen 2 solution, and this was the first time to demonstrate that in the field.”

– Dr. Gerd Wolfram, Executive Project ManagerMETRO Group Future Store Initiative

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Thank You.Brian McCarthyDirector, Enterprise Capture Program ManagementIntermec Technologies Corporation

brian.mccarthy@intermec.com+1-425-348-2688