RFID Talk Blog

RFID could save food retailers $3B a year

There is a lot of debate about the next big market for RFID after retail apparel. Intriguing use cases exist in healthcare, but the folks at Avery Dennison are banking on the food sector — fresh fruits and meats in particular — as the next frontier for RFID.

Every year retailers waste about $15 billion worth of fresh produce that goes unsold. Avery Dennison believes that RFID could prevent 20 percent of that, saving the industry at least $3 billion a year. The potential for tagging food dwarfs apparel.

RFID in food retail

RFID could save retailers $3 billion year or more by eliminating food waste.

“Food volumes are enormous compared to apparel volumes,” says James Stafford, global head of food RFID development at Avery Dennison. “Even medium size retailers sell tens of billions of items a year.”

By comparison, about 4.2 million apparel items will be tagged this year, according to ChainLink Research, with a total pool of about 50 billion apparel items potentially being tagged in the future.

“The business case is a little different than the clothing business, and the driver behind it is slightly different,” says Stafford. “The business case is very high level.”

Earlier this summer Avery Dennison began a pilot with two grocery retailers in Europe to test RFID on perishable items like fruits, vegetables and meats. Avery Dennison is also looking to collaborate with retailers and manufacturers in the United States. The company has manufactured more than 4 billion RFID tags and labels.

In the pilot, higher value items like meat and poultry are being tagged at the item level, while less expensive items like strawberries are tagged at the tray level. The pilot is also conducting research on tag placement for perishables.

Stafford says that tagging trays can prevent one of the biggest culprits in the food supply chain, which occurs when items are delivered to the wrong store. That creates two issues — the store receiving the goods has a waste problem due to being overstocked, and the store that doesn’t receive the items faces lost revenue.

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. This is especially true when dealing with fresh meat, which is a very expensive product to stock and has a short shelf life. 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.

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.

RFID can also help food retailers eliminate labor costs involved with compliance. In Europe, selling products that are beyond the expiration date is a criminal offense. Most retailers spend large amounts on labor to check dates, sometimes twice a day, which must then be recorded to prove the inspections occurred. Stafford believes the entire process can be replaced with handheld RFID scanner.

Stafford says that food retailers will need to be educated about RFID, similar to the education process apparel retailers went through, but he expects a much faster ramp-up than the apparel industry.

“We are pretty much with food where we were 10-12 years ago with apparel,” says Stafford, who led many of the early RFID projects at Marks & Spencer. “When we started with apparel the business case was pretty clear, but it took so long to ramp up because the technology wasn’t anywhere as good as it is now. There wasn’t an infrastructure in place.

“We are in a very different situation now, where we are using the same technology that is used for apparel. That’s why the ramp-up with food will be much faster than the 10 years it took for apparel.”

Click here to learn more about RFID in apparel retail.

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