Still no business case for RFID at item level in grocery

By Rick Pendrous

- Last updated on GMT

Related tags: Radio frequency identification, Electronic product code, Rfid

There may still be no business case for replacing barcodes with electronic radio frequency identification (RFID) technology at item level in the...

There may still be no business case for replacing barcodes with electronic radio frequency identification (RFID) technology at item level in the grocery sector, but new European Commission research reveals opportunities to be gained by tagging high-value foods.

David Lyon, EPCglobal business manager for standards body GS1 UK, said: “There is not a case for item level tagging in the UK grocery supply chain at the moment.” Although he added: “High-value items would warrant tagging from a ‘shrinkage’ point of view.”

However, the three-year project by BRIDGE​ (building radio frequency identification for the global environment) identified opportunities in using RFID for tagging high-value food through a manufacturing process pilot done with Spanish Iberian ham producer Covap.

The research has also shown that RFID based on electronic product code EPCglobal standards can effectively be used to reduce waste and stockholding within manufacturing operations while improving visibility of products along the rest of the supply chain. BRIDGE was coordinated by global standards body GS1 and supported by the EU’s sixth framework programme for research and technological development (FP6) with euro 7.5M funding.

A set of education and demonstration materials were produced as part of the project​. Project partner Covap found the use of RFID so successful within its manufacturing operations that it now plans to extend its use on these high-value products further down its supply chain, reported Lyon.

Meanwhile an unnamed UK-branded food manufacturer planned to use the technology to prevent its heavily discounted high-volume, high-value products sold at wholesale prices to one retailer being sold on to third-party retailers at prices lower than it normally charged, said Lyon. “This particular brand owner has used it to great effect to identify the consignments sold.”
He also said that a Northern Foods plant supplying ready meals into Marks & Spencer (M&S) was “a fabulous example of the use of RFID [although not at item level], and the efficiency gains that they were getting out of it were significant"

However, Lyon reported that Tesco had decided not to go ahead with item level RFID tagging in grocery because the retailer had discovered that its existing systems were sufficiently effective at tracking products along its supply chain. "In their grocery side it came out with the conclusion that the technology most certainly worked but there was no business case because its supply chain was efficient enough and the benefit of using RFID was not enough," said Lyon.

In a separate development, UK beer and cider giant Scottish and Newcastle (S&N), a subsidiary of Heineken, is extending its RFID beer keg tracking system. The brewer is upgrading its InteliTap RFID keg tracking and management system to the re-branded VisibiliTy 4.0 system. S&N was the first company in the UK to implement RFID tags on its containers in 2001. It currently owns 2.1M kegs, all of which are included in the InteliTap tagging system.

Paul Hoffman, S&N UK’s operations director, said: “We are also working with InteliTap on other major projects to provide requisite visibility and leading edge security to our keg assets.”