CANADIAN FOOD INDUSTRY LAUNCHES RFID TEST

MICHAEL GARRY

MARKHAM, Ontario - The Canadian RFID Centre here is launching an RFID pilot next week on behalf of the Canadian food retail and CPG industry to assess the business case for the technology in what is Canada's first grocery industry RFID project.

Participants in the six-month pilot include Loblaw Cos., Maple Leaf Foods, General Mills Canada, Scott Paper and Unilever.

The project is being facilitated by members of the 10-month-old Canadian RFID Centre, including the Canadian Council of Grocery Distributors, Food & Consumer Products of Canada, Intermec, EPCglobal Canada, Intermec, Symbol Technologies and IBM Canada. IBM Canada is serving as manager and systems integrator for the project.

"We're very proud that it's more of a collaborative approach to demonstrate the benefits of RFID collectively," said David Wilkes, senior vice president, trade and business development, CCGD, and chair, Canadian RFID Centre. "The culture of the Canadian market is to approach these opportunities that require a critical mass of adoption by [collaboratively] demonstrating the business case for retailers and manufacturers."

By contrast, in the U.S. and Europe, RFID pilots have been spearheaded by large retail companies such as Wal-Mart Stores and Metro Group. However, last month, Wal-Mart Canada announced it would begin its own RFID test in southern Ontario this fall involving a distribution center, 21 stores and 15 suppliers.

In the new pilot, pallets and cases equipped with "Gen 2" UHF RFID tags will be tracked from the four suppliers to a Loblaw DC and then to a few Loblaw stores. Loblaw declined to identify the DC and stores or comment on the pilot.

Product lines in the test include between 12 and 15 SKUs encompassing frozen foods, dry and canned goods, meats and paper goods, according to Shai Verma, RFID practice lead, IBM Canada here. RFID tags will not be placed on individual products.

The purpose of the pilot will be to assess the business case for RFID in a real setting. In particular, the pilot will address RFID's ability to reduce out-of-stocks, improve execution of promotions and trace products' movement through the supply chain, Verma noted.

Though Wal-Mart and others have reported out-of-stock reductions and promotion compliance via RFID, "those benefits are in Power Point," Verma said. "We can't say yet that RFID is ready for prime time."

The pilot will also use the RFID infrastructure to track temperature changes, possibly employing separate RFID tags with temperature sensors, Verma said.

A third-party host will make the RFID data gathered by Loblaw and its suppliers available to everyone participating in the pilot, Verma said, declining to identify the host company. "Suppliers can log in and see product movement in the back room of stores, and Loblaw can check orders at the manufacturers."

While proprietary information in the pilot will be protected, the Canadian RFID Centre plans to "use the pilot learnings to brief the industry as a whole on whether RFID makes sense or what needs to change," Wilkes said.

The results may filter into the U.S market via Canadian companies with a U.S. presence, Verma noted. "It's up to those companies to decide what to do with it."

Funding for RFID tags, readers and related equipment will come from the trade associations, Loblaw and participating manufacturers, Wilkes said.