Food industry gets a taste of RFID’s potential

A cabal of Canadian food companies have agreed to share their findings as they embark on a joint RFID pilot project, scheduled to begin later this month.

The pilot is the work of the Canadian RFID Centre, which first opened its doors last year at an IBM Canada facility in Markham, Ont., as well as retailers, suppliers and food industry organizations.

The marquee names include Loblaw Companies Ltd., Maple Leaf Foods, General Mills Canada, Scott Paper and Unilever Canada. Loblaw’s is offering up its distribution centres and stores as a test bed for the six-month pilot; the other participants will mark a small selection of their inventory with RFID tags to measure the effectiveness of using the technology in a grocery store supply chain.

RFID (radio frequency identification) is beginning to come into its own as a retail technology. The tags are being used at the case and pallet level to track retail items through the supply chain. For the food industry, that could mean less spoilage and more efficient delivery.

This pilot is one among many currently underway in Canada and around the world, but is more collaborative than most, said Shai Verma, RFID practice leader for IBM Canada’s business consulting services.

“One of the objectives is to show how RFID can be implemented where not only the retailers see benefit – it’s been shown that the retailers can see a lot – but also where the manufacturers can see some benefit,” said Verma. “That’s a different approach that’s been seen in some different geographies, like Wal-Mart for example or other retailers in the States.

“For manufacturers, it’s not a slam dunk that the ROI for RFID adoption is positive.”

For that reason, the participants are trialing the technology on a very limited basis. Bill Langlois, director of customer service for Toronto-based Unilever Canada, said his company is testing tags on two of its dry-food products. Unilever has participated in other RFID pilots globally (it maintains dual headquarters in the U.K. and the Netherlands) but the attraction of this pilot is the number of companies that have agreed to participate openly.

“Because it’s collaborative by nature, it could be used as something on a go-forward basis, if and when RFID becomes mainstream,” said Langlois. “The intent of this is really assessment and to develop a business case for the industry as a whole.”

The pilot will also examine the feasibility of testing fresh and frozen foods with RFID tags, which is a relatively new area for RFID supply chain projects, said Verma. Some of the pilot’s participants wanted to start with those food categories, he added, because they have “not necessarily been well addressed in the RFID space” to date.

The reason for the beta is to conduct a rigorous examination of RFID in the grocery business, said Elaine Smith, senior vice-president of industry affairs for Food and Consumer Products of Canada, one of the industry organizations that is providing oversight for the project.

“It’s not a cheap thing to do,” she said. “If you don’t get the cost benefit out of it and you aren’t able to better serve consumers by reducing out-of-stocks, why bother? I think eventually, there will be a time where RFID will be prevalent in the supply chain, but it might take some time to get there.”

Other pilot participants include the Canadian Council of Grocery Distributors, EPCglobal Canada, Intermec Inc. and Symbol Technologies.

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