Grupo Exito Launches Major Electronics Tagging Pilot

The Colombian retailer has tagged more than 45,000 items at its new electronics store in Bogota.

The Éxito Group is the number one retail chain in Colombia with a retail platform of 261 stores* (as of the second quarter 2010) including hypermarkets (under the Éxito brand), supermarkets (Carulla and Pomona), Bodega stores (Surtimax brand), as well as other formats (Ley, Home Mart, etc.).

They launched a major innovative pilot placing EPC Gen 2 passive ultrahigh-frequency (UHF) RFID tags on every item at their new electronics store, Éxito Techno, to determine if radio frequency identification can improve the traceability of products across the supply chain, while also reducing shrinkage, by tracking items from distribution center to point of sale. Results will be analyzed at the end of the pilot stage.

Goods are tagged at the distribution center (DC). Before an order is shipped, employees confirm that the correct items were picked. The company chose to use a handheld rather than install an RFID portal at one of its dock doors, because it was easier than ensuring that orders for the Éxito Techno store always moved through the portal-equipped dock door.

A portal was set up at the store's single receiving dock. When the store places an order with the DC, larger items—such as televisions and DVD players—are placed onto pallets. Smaller products, such as USB storage devices and packages of batteries, are placed within totes, which are then sealed.

When a truck from the DC containing merchandise arrives at the store, employees use a pallet jack to remove the pallets from the vehicle. The workers rotate each pallet by walking around in a circle while holding onto the pallet jack's handle, thereby causing the pallet to revolve in the read field, and thus maximize the chances of reading every item onboard. Totes are brought to an Impinj Brickyard near-field antenna mounted on the wall, next to the portal, and each tote is then rotated in an effort to read all items contained within.

Software developed by ADT Colombia, LOGyCa and Group Éxito checks whether or not 100 percent of the expected items were read. When goods are missed, a store employee utilizes a handheld reader in an attempt to capture each item's ID number. The process of receiving a delivery at the store can take 20 to 30 minutes, but is still much faster than the two hours or more previously required for workers to unload a truck and then count each item.

"The read rates are very reliable," states Exito's Luis Fernando Castañeda. "With a little effort, we can confirm receipt of every item sent from the distribution center. We now have visibility of what is leaving the distribution center and what has arrived at the store. If there is not a perfect match, we can investigate why."

In addition, interrogators were installed at the point of sale. Currently, staff members still employ bar codes to ring up purchases, but the items' RFID tags are also read using a handheld RFID reader, and the store's database is updated to indicate that merchandise was sold. If someone attempts to leave the building with an un-purchased item, prototype gate antennas—provided by ADT Colombia and powered by an Impinj R420 RFID reader—interrogate that product's tag and trigger an alarm to sound.

The RFID solution went live on October 10, 2011. The plan, Éxito reports, is to continue tagging items at least through the month’s end, after which the company plans to prepare a report estimating the reduction in labor costs associated with receiving goods into inventory, the decrease in shrinkage as compared with the electronics departments of other Grupo Éxito stores and the electronics store's first few months of operation, and the ability to confirm with 100 percent reliability that items shipped from the DC arrived at the store.

The pilot could have a significant impact on RFID adoption in electronics, Castañeda says, if it proves that an improvement in tracking goods from DC to store, and in tracking in-store inventory, can significantly reduce shrinkage levels. A five (5) percent decline in shrink, he notes, would be sufficient to deliver a return on the company's investment in tags and readers.

Filed under Keywords source tagging; security; shrink

Published on 3/21/2012 Permalink

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