Metro Group to penalise RFID non-compliance

With the holiday period over and a return to business-as-usual, I found myself reading a number of posts concerning retail RFID on Evan Schuman’s blog StorefrontBacktalk, notably Metro Group’s decision to put some muscle behind its RFID programme by penalising suppliers who fail to comply with its requirements.

It’s been reported elsewhere (e.g. RFID Update) about Metro stepping up its RFID deployment plans:

• Full deployment at 200 locations in Germany
• Implementation rate of approx 10 locations per week
• 650 suppliers mandated to play ball by early 2008

Certainly this echoes other RFID announcements e.g. that of Wal-Mart, but what Evan Schuman and others (e.g. RetailWire, RFID Update) underline as going a step further than even Wal-Mart, is Metro’s intention to fine non-compliant suppliers. Any supplier failing to meet Metro’s contractual requirements regarding tagged pallets will be invoiced additional handling charges.

I haven’t yet found any detail about the level of RFID tagging required by Metro, but I would assume we are talking pallet and case tagging but not SKU tagging.

Of course whether or not mandatory RFID actually gets entrenched in supplier contracts will depend on the next round of contract negociations. Metro Group has muscle with its suppliers, that’s clear, but the cost to suppliers of implementing tagging will be high. Some suppliers have already bought into the benefits of RFID (e.g. Johnson & Johnson, Nestlé, Proctor & Gamble, Unilever and other majors who participated in the Metro pilot), but others may not be so keen. Remains to be seen.

Layoffs planned as FMCG companies slim down

With increasing focus on paring down portfolios to core growth products and on maximizing production efficiency, FMCG companies are announcing restructuring, factory closures and significant layoffs.

In recent memory: Premier Foods, Johnson & Johnson, Cadbury.

And today Unilever announces a move to regional operating companies (merging over 100 nation head offices into around 25 “multi-country” head offices), the closure of up to 60 factories, and the cutting of up to 20000 jobs over the coming four years.

A few weeks ago when Unilever announced the merger of its Dutch and Belgian organizations, I asked for larger steps and braver thinking. Today’s announcement shows that thinking is there.

It has to be. Maximising efficiencies means maximizing available revenue that can be pumped back into brand development and support (=growth) and into shareholder value. In today’s market, only the leanest players are going to survive.

Unilever analyses the ice-cream smile

Whoever said there was no science to marketing?

Following on from earlier Unilever-funded research using MRI to identify the way ice cream stimulates the brain’s pleasure zones, the FMCG company has now teamed up with the University of Amsterdam for a study using facial expression interpretation software to identify facial reaction to a variety of foods.

Not surprisingly, yoghurt and apples fared less well than ice cream and chocolate.

Practical applications for this technology may be found in the market research field, notably where subjects may not be fully conscious of their own reactions, or where they may try to hide their expression perhaps due to embarrassment.

There’s a good write-up posted earlier today on Wired.

Unilever to merge its Dutch and Belgian organisations

It seems Unilever continues to take baby steps in its approach to indirect-cost-cutting organisational consolidation.

Yesterday afternoon Unilever announced its intention to merge its Dutch and Belgian operations, shedding 340 jobs in the creation of a new Unilever Benelux organisation.

• Operations are expected to be led from the Rotterdam office, with a Brussels office retained presumably mainly for the country-specific sales and customer service organisations that Unilever says will be retained. Layoffs are expected to hit the Belgian company in particular, where over a quarter of the employees are in the line of fire.
• Unilever factories, the Foodsolutions division and regional and global corporate departments situated in the Netherlands and Belgium are not affected.

But it does make me wonder, if Unilever believes that the serious cost savings it needs are going to come from operating on a more regional scale, why such a baby step approach? Larger steps and braver thinking – say a move to running all of European marketing and logistics and back-office operations out of a single organisation – would go much faster and further to cutting those indirects.