After radio-frequency identification has made inroads into apparel and other markets, are packaged foods now ripe for RFID applications? James Stafford, head of RFID, Avery Dennison, thinks so. He points to lower costs and the fact that most major retailers are either deploying or testing radio frequency identification (RFID) technology, making it more of a case of “when” rather than “if” when it comes to RFID adoption for packaged foods.
Stafford will be speaking on the topic Using RFID in Packaging to Improve Efficiency and Margin in the Food and Beverage Industry on October 7th during PhillyPack as part of a 1-day conference program “Packaging Design That Sells” (this and the full conference program are found here; more information follows at the bottom of this article). We get an inside look at the market for packaged foods in this exclusive preview from RFID expert Stafford.
How would you characterize the current deployment of RFID in packaged goods and especially for food (and beverages)?
Stafford: We are at the start of deploying RFID into packaged goods, such as food. With more than 10 years of experience helping leading brands and retailers successfully deploy RFID, we know that by employing radio waves rather than laser scanners, RFID can read 100 times faster than barcodes, and RFID does not require a line of sight, allowing for more efficient throughput of products, potentially less handling as well as better inventory management of packaged goods.
RFID has become a more mature and reliable technology operating to global standards, so we expect the rate of adoption to be faster than in the early days of apparel. Furthermore, the cost of RFID equipment and tags is at least 50% lower than it was 10 years ago. As RFID continues to grow, we believe the food industry will be one of the biggest users. We see a future in which RFID technology will help food retailers reduce in-store waste by about 20% and improve efficiency, all while being able to track every aspect of food manufacture and distribution.
What’s the climate for RFID now versus say 10 years ago?
Stafford: Right now, the climate for RFID is incredibly positive. Back then, retailers and brands did not understand the technology. And even if they did, they were skeptical about its reliability and ability to scale in volume. Cost of the technology was also an impediment to adoption.
When most major retailers are now either deploying or testing the technology, it is more of a case of “when” rather than “if” when it comes to adoption given the business case and ROI associated with RFID.
What kind of influencer is traceability in the RFID market?
Stafford: While we see traceability as a positive influencer, it’s not the major driver at this stage. There is definite interest from the meat and poultry sector to use RFID to trace products throughout the supply chain. Many food retailers are currently focused on building the infrastructure to manage this traceability data. Once management systems are in place, then the speed and accuracy of RFID data capture will make this an optimum traceability solution.
What are the business case justifications for RFID in packaged foods?
Stafford: RFID gives retailers the opportunity to check that they have the right products, the right quantities and most importantly, the right dates, at every stage of the chain, at minimum labor costs. This visibility of accurate data will enable better management of the process and avoids products ending up as expensive waste, which can often be as high as 10% of the sales value of the turnover at a retail location.
We believe the key business case justifications will be in achieving visibility and accuracy of product identity, quantity, and shelf life throughout the global supply chain.
Early stage adopters will likely be retailers managing high volumes of refrigerated, perishable, short shelf life foods. These retailers have the constant challenge of managing availability of fresh products for their customers, while avoiding excessive quantities of products going past their sell-by date and ending up as waste.
This challenge is compounded by multiple deliveries all with different dates that need to be accurately date-rotated in distribution centers and in-store. At the moment, retailers have few tools to help with this process, and have to rely on visual inspection and the workforce. This inevitably means that a compromise has to be made between levels of checking and labor costs in a high-volume area.
What’s a common misunderstanding about RFID that you’d like to correct?
Stafford: RFID is a leading edge technology, which has been around for decades, but many believe the technology only works for apparel. It’s true that RFID is perfectly suited to work on apparel; and years ago, RFID technology was limited by the categories you could tag. But over the last few years, the technology has advanced with better readers and smaller, more efficient inlays that enable retailers to use the technology in other categories, including food.
In the food industry, fresh food retailers must achieve the correct balance between availability and waste of perishable foods to maintain profitability and customer service. Currently, most food retailers use barcodes to try and manage inventory, but it can be a very time-intensive, manual process, and packages that need to be moved can accidentally be overlooked when the store is busy or during shift changes.
Another misunderstanding is that RFID is just a fast way of reading barcode information. The unique information within an RFID tag, which is far more detailed than the data contained in a barcode, will create new opportunities to improve inventory productivity, margins, store operations execution, and the overall customer experience. The old compromise between speed and accuracy disappears. Now retailers can get real-time information on inventory at a speed that was impossible in the past. We believe this will create a paradigm shift in the management of fast-moving consumer goods, such as foods.
By using RFID with encoded inlays typically on labels or integrated into packaging, food retailers can create rapid reports of both product availability and residual life throughout the supply chain. This, in turn, can enable more reliable stock rotation, reduce date-expired waste, save time in stock counting and clearance processing, and improve availability on display.
One more comment that I’d like to make is that we are looking forward to working collaboratively with food retailers to establish best practices and build business cases to help accelerate adoption.
For more on this session and others as well as an overview of the entire slate of PhillyPack offerings October 7-8 in Philadelphia, visit www.phillypack.packagingdigest.com.