Retailer Progressive Enterprises plans a small trial of radio tags to track meat moving through a factory scheduled to start operation in September.
The radio labelling will be at the level of a case rather than individual items, and will not at this stage extend into stores, says IT general manager Alan Hesketh. Foodtown, Woolworths, Countdown, Fresh Choice and Super Value are part of the Progressive group.
Practical trials of RFID — an enhanced short-range radio equivalent of bar-code marking — in New Zealand are thin on the ground, though some companies investigating the technology clearly fear compromising their competitive advantage. It is a technology attracting world attention, but its use in New Zealand appears scarce and some local specialists say it is vital for us to catch up.
Labelling by “shipping unit” — pallet or case — seems the appropriate approach at present, Hesketh says, bearing in mind cost and the still early stage of the technology.
“We still don’t know where the benefits will accrue, perhaps in a lower-cost supply chain or in a better buying experience for the customer. [Benefit in either area] has not been clearly demonstrated,” he says.
Progressive is closely monitoring the emerging use of RFID by chains such as Wal-Mart in the US and Metro in Europe, Hesketh says.
Giant US retail chain Wal-Mart sent jitters through its partners mid-2003 by announcing that it would move to RFID this year and expected suppliers to do the same. Suppliers of tightly controlled prescription drugs were given the tightest timetable, having to deliver RFID-enabled containers by the end of March. The deadline has now slipped to mid-year.
“Wal-Mart keeps cutting back on its requirements,” says Michael Liard, a senior analyst following radio tag technology at the Venture Development Corporation, a market research company in Massachusetts. “They’re not ready; the industry’s not ready; and the technology is not ready.”
This is a common refrain. The technology is still mired in controversy about the cost of the chip-based identifier tags and the efficiency of its code reading, which according to some estimates could average a few percent but reach 20% at times. Other issues include standards, data management, privacy and integration (see Editorial).
Regardless of the hurdles, large local retailers and manufacturers are keeping as close to developments as they can.
Dave Christian, national loss-prevention manager at The Warehouse, says the retailer is hoping it can reuse some of the radio-sensing hardware in its RFEAS anti-theft devices, supplied by Checkpoint Meto.
Kmart was reluctant to discuss local involvement last week but the New Zealand and Australian companies are collaborating on a trial. Owner Cole Myer’s Melbourne spokesman did not return calls by deadline.
Computerworld’s story on local start-up Sandtracker sparked a call last week from a waste disposal company keen to investigate the potential of RFID tags for tracking its bins and checking customer complaints of late pickup. The caller says the company is waiting for the price of tags to become economical; Sandtracker claims it will be able to produce a simple tag for less than 10c.
One of Sandtracker’s backers, Jan Hilder of financial services software firm Tacit Group, says the company has been running commercial trials since early this year and claims five companies are trialling various forms of its tags. Hilder says applications range from courier packs to meat packaging and distribution, coin bags and large reels of paper.
Carter Holt Harvey CIO Pat O’Connell says the company has no serious trials tracking paper reels but is watching events closely. “Our US parent, International Paper, is trialling RFID in that application and we’re watching that with interest.”
The CHH-owned tissue business in Australia, which the company about to divest, is running an RFID trial to better manage the warehousing of the product. CHH would be interested in the outcomes of the trial, “but we might have to ask them very nicely, as when it finishes they won’t belong to us any more”.
Fonterra is experimenting with RFID, says press contact man Gareth Johnston, though he could not confirm the purpose of the experiment.
NZ Post “had some thoughts” about it a couple of years ago, according to spokesman Ian Long, but the figures did not attack up at that time and the technology has been backed off to “watching brief” status.
Local consultants such as Deloitte partner Thorsten Engel warn that New Zealand is moving too slowly to remain competitive in a world of RFID retail. Not only Wal-Mart but British chains like Tesco are moving to RFID, he says, and it is of vital interest to New Zealand that we use technology acceptable to our major markets.
Deloitte has an interest in RFID not only as a technology but for the broader changes to business processes it will bring in its wake, he says.
Deloitte Consulting senior manager Grant Frear says it is essential for New Zealand to start moving with RFID at the international trading level so secure tracking of cargo can be assured in a world increasingly nervous about terrorism.
He claims a number of companies in New Zealand are “considering [RFID] very seriously” but none is implementing it in the immediate future.
An electronic product code suitable for use with RFIDs is being co-ordinated by EPCglobal, a joint venture of numbering body EAN and the US-based Uniform Code Council. It will be launched in this country at an Auckland conference scheduled for May 5 and 6.
Speakers from EPCglobal and from US user industries will be present, including Dick Cantwell, vice-president for worldwide beauty products at Gillette, one of the most keenly watched RFID-implementing companies in the US.