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UK RETAIL RFID: Maintaining radio silence

The buzz around RFID continues to lurk below the radar screen of the drinks industry, though it is beginning to be used in other sectors, says Sally Easton MW

RFID (radio frequency identification) is a bit like bar codes with knobs on. It is an automatic identification method that requires no line of sight to gather information about a product. This is one major difference from bar code technology. RFID also allows increasing automation of the logistics process.

A tag (“smart label” or transponder) is attached onto or built into a product, say a pair of jeans, or a livestock animal. Tags are small and contain a chip which is usually smaller than half a millimetre. This tag contains any amount of unique digital information about the product: point of production, origin of raw material, price, colour, bottling date, batch number and so on.

Tags can be attached at any level of monitoring. One tag could be placed onto a pallet of wine, which would track about 100 six-packs for example. Or a tag could be placed on each of the 100 cases. Or a tag can be placed on each of the bottles. The cost implications are clearly much more significant for item-level tagging. But for high value items, such as luxury Champagne cuvées or the most expensive Bordeaux reds, the technology offers some interesting provenance-tracking and traceability possibilities.

Tags are no good by themselves. Equipment is needed to read the information on the chips.  Readers communicate with tags via radio waves, hence radio frequency. Readers are commonly fixed, for example at the door of a warehouse. Because no line of sight is needed with this technology, as a lorry enters or leaves the warehouse, the movement of its cargo is tracked/read and updated onto the system. For instance, X number of pallets, or X number of cases, or X number of bottles.

Logistical issues
Some of the easily identifiable benefits are in the supply chain, providing an unbroken traceability chain, or chain of custody, from manufacturer to retail.

KN Drinks Logistics, a wholly owned subsidiary of Kuehne and Nagel, is not yet using RFID technology. Geoff Lippitt, commercial director, says: “The RFID concept is to minimise intervention into the audit trail for product. The cost of entering the technology has been prohibitive. The gap is narrowing, and quickly, but it’s not there yet.” As the prices of tags come down, the infrastructural needs to make their use worthwhile remain a stumbling block. 

“It’s difficult to pin down to hard benefits,” Lippitt continues. “You would get efficiency in the accuracy of batch traceability and auditing where product has gone. It would speed up the scanning (or reading) process, but it probably wouldn’t improve the speed of picking” over KN’s existing system.

Given the costs of investment, freight forwarders are only likely to invest in the technology at the request of their customers. Tags are usually put in by the manufacturers, and the fixed reading equipment needs to be compatible with the tags used.

David Mawer, joint managing director, FFG Hillebrand, agrees: “Not an awful lot has happened in the last year from the customer side of things. And we can’t do much without customer demand. It’s not really been applied to international trade – you already know where on the ocean your is, but information is only useful if you can do something with it.”

The benefits are currently seen where returnable packaging is used in a closed loop system.  For some time, Marks & Spencer has been tagging the returnable plastic trays, which cycle between manufacturers and stores a couple of times each week.  The five million-plus trays have a lifespan of seven years; so, therefore, do the tags.  

The sums add up at this level. But, Lippitt says: “Where transport is one way, eg, a case produced at a brewery, consumed by the customer, and the outer pack is recycled or thrown away, then the investment has to be recovered over a single life.” This makes the barriers to entry much higher.

The driving force
Mark O’Donnell, sales and marketing manager at Weber Marking Systems, which makes RFID labelling and encoding systems, says: “RFID has been talked about for several years, and is likely to continue to be talked about. We have the capabilities and we have the equipment, but there are a lot of things that are unresolved with things like chips (tags). Feedback from the food and beverage industry is about reducing costs and which type of tags are used. I think people are waiting for the likes of Tesco and Asda to use it.” 

As far as beers, wines and spirits are concerned, no updates were reported from Asda or Tesco. While Marks & Spencer has been rolling out its item-level tagging trials of RFID in the clothing sector, a spokesperson said: “We have no plans for item level RFID on food or drinks at all. We do use it in the supply chain for food, but it is for back-end operations, not customer-facing ones.”

Tipping point

At the customer interface, closure producer Zork has introduced a radio frequency tag to one of its range of stoppers. As part of an anti-theft measure, an EAS (electronic article surveillance) tag is built into the hollow plunger of the stopper.  This is de-activated at the point of purchase using existing reader infrastructures in stores. Unlike RFID tags, EAS tags do not contain data about the product. But, being built in at the point of manufacture, they are much less susceptible to tampering. David Pahl, vice president for sales and marketing at Zork, says: “RFID is a technology that we will explore when the industry has the infrastructure available and a commercial need has been established.” Clearly, if an EAS tag can be built in, so can a more “intelligent” RFID tag, which would have additional benefits, especially for high-value items.

Lippitt thinks the drinks industries will benefit as RFID is introduced via FMCG categories. “The impact of RFID in the off-trade will be driven by wider developments in FMCG and drinks are an increasingly significant part of FMCG.”  So it seems likely that when suppliers to the key supermarkets are compelled to provide product that is RFID compatible, this will be the tipping point that will drive industry change.

© db August 2007

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