Survey: RFID business case still unclear

RFID (radio frequency identification) tagging’s early adopters in grocery have had mixed success because they have not brought trading partners along with them or resolved technical issues, according to experts.

RFID presented exciting opportunities for manufacturers, from speedier more accurate stock control and goods despatch to asset tracking and improved traceability. That was according to Pascal Durdu, business development manager at track and trace specialist Zetes, who was speaking at a traceability event in London last week.
However, many were still not clear about the business case. They recognised that retail customers might benefit from speedier and more accurate receipt of goods at depots. But they did not always see where to generate return on investment, said Durdu. He was speaking at a seminar hosted by standards body GS1 UK and supported by the Food Standards Agency, IBM and Zetes.

Manufacturers supplying Marks & Spencer, which operates a closed loop system using reusable RFID tags embedded in returnable plastic trays, had seen benefits, said GS1 UK programme manager Steve Watson. M&S benefitted from more accurate deliveries and prompter goods handling, while suppliers got paid more quickly, as those that reached a level of accuracy consistently were fast-tracked through the system.
However, other retailers such as Delhaize and Wal-Mart, which had mandated that suppliers tag plastic crates and cases respectively, had not achieved the same kind of results, said Durdu. Many were still following the ‘slap and ship’ approach, and saw RFID purely as a costly compliance issue rather than something that would benefit their businesses.
Some still chose to pay a fine per item that was not tagged rather than pay the cost of implementing RFID, he added. Many suppliers to German group Metro, which had issued a similar mandate regarding RFID tagging on pallets, were also struggling to comply, he said.
One challenge had been designing the technical infrastructure to support RFID such that readers only picked up what you wanted them to pick up, he said. As RFID readers did not require line of sight to scan labels/tags, tags on packets, crates or rollcages that were not supposed to be read could be scanned in error, for example. “What if, in a warehouse, one tag is within reach of two antennas and is picked up by both? Of course you can design your system so this doesn’t happen, but it’s been a learning curve for many companies.”
Tesco attracted a lot of publicity a few years ago over plans to introduce RFID to returnable assets such as rollcages and plastic trays moving between its distribution centres and stores. It has since remained very quiet on the issue and refuses to discuss its current plans. However, it was currently conducting several pilots of the technology, claimed delegates at the event.
Asda, meanwhile, said it was following Wal-Mart’s progress in the US, but would not comment on UK plans.