Tesco is expected to start installing radio frequency identification (RFID) readers throughout its UK supermarkets later this year following trials at selected stores with a small group of suppliers, including Robert Wiseman Dairies, according to business sources.
While the RFID readers will initially be used to monitor back of store deliveries on roll cages and pallets for higher value goods, extension to the monitoring of trays and cases is likely to follow. “This is the way retailers are going, with more and more RFID,” said one expert in the field.
For Britain’s food and drink manufacturers, still desperately trying to make a business case for investing in this technology, the implications of Tesco’s RFID roll-out are significant. Justification for the high costs involved will not be easy.
It’s about having the right infrastructure in factories to support RFID, according to another expert. “It’s hard to get to that first step and justify your return on investment (ROI). That’s still the real stumbling block … the infrastructure is still the killer in this.” But, according to manufacturers already travelling down this road, there are potential benefits as well as costs.
Northern Foods, for example, has worked with Marks & Spencer (M&S) on RFID using Siemens and SAP systems for several years. The experience has shown both costs and benefits, said Northern Foods’ chief information officer designate Alan Bowling, speaking at a supply chain conference in London last week.
“Now we are reading and writing 30M [RFID] tags a year linked to SAP,” said Bowling. “To benefit, you have to integrate it into your business processes. There is quite a lot of benefit, but you have to think about it.” For example, Northern Foods’ accuracy of orders has improved, he claimed. “It has had a very significant impact on the bottom line.”
Elsewhere, a major EU RFID collaborative project is also underway. Funded to the tune of euro 13M under the Framework 6 programme (FP6), Bridge (Building RfID projects for the Global Environment) involves 30 partners in total.
As part of Bridge, a three-year UK study involving Cambridge University, Nestlé UK, SAP and BT, began in July 2006 to look at the use of RFID from a manufacturing viewpoint. Following an initial investigation into the potential benefits of RFID, it is now at phase two, which involves modelling areas with the highest potential benefits in terms of innovation, efficiency improvements and integration.
Phase 3, which will develop the business case and look at ROI, business improvement and the use of RFID in track and trace, will begin later this year. This will be followed by the final phase - a demonstration project - provided phase 3 proves successful.