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RPA’s RFID/RPC Study: Pathway To More Comprehensive Traceability?

Jim Prevor’s Perishable Pundit, August 5, 2009

We remember when RFID was all the rage and the expectation was that between Wal-Mart and the Department of Defense pushing the technology, the whole industry would be rapidly transitioned to the radio frequency future. It didn’t quite work out, and all we can say is we wish we had a tiny portion of the money organizations like C.H. Robinson spent to meet Wal-Mart’s expectations regarding the technology.

So when we heard that the Reusable Packaging Association had done a study that implied there could be a dramatic reduction in the cost of RFID by utilizing tags multiple times on RPCs, we were intrigued.

Then with the Produce Traceability Initiative all in the news, we wondered if a more cost effective RFID/RPC combo might not provide a pathway to a more comprehensive traceability solution. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Jerry Welcome
Reusable Packaging Association (RPA)
Arlington, Virginia

Q: What is the significance of the RFID study [Editor’s note: Members of the RPA can have access to the full study at no charge. Others may contact RFA for additional information.]

A: Basically, the whole reason it was conducted was to determine if RFID tags designed for single use could perform in multiple-use scenarios. Because RPC’s travel through the system many times, could RFID tags work in conjunction for optimal efficiency? That type of research had never been conducted. Both lab and field research needed to take place to determine just how robust the tags were for multiple trips. That’s what the research proved out.

Q: Wal-Mart instigated pilot testing of RFID in the produce industry many years ago. [Editor’s note: See cover story: Is RFID the Key to Our Future? February 2005 issue of PRODUCE BUSINESS]. A handful of Wal-Mart produce vendors jumped on board early to stay ahead of the curve, including Tanimura & Antle, Fresh Express, New Star, CH Robinson and Lo Bue Bros. Despite investing massive resources into research and development, financial and technical obstacles pushed back initial mandates stalling any meaningful implementation. When did this RPC-based RFID study first get started?

A: The study itself took two years to do, but was three years in the making. [Editor’s note: participants included Wal-Mart Stores, Frontera Produce, Stemilt, Tanimura & Antle, Georgia-Pacific, IFCO SYSTEMS N.A., ORBIS, Alien Technology, Avery Dennison, Impinj, UPM Raflatac, Michigan Sate University School of Packaging, The Kennedy Group, California State Polytechnic University, QLM Consulting and the RPA.]

Q: How important are the findings in generating acceptance of RFID throughout the produce supply chain? Did researchers discover any surprises?

A: Obviously, we were pleasantly surprised by the results. Generally speaking, RFID tags have been positioned for one-time use. The key issue… when you put the tags on reusable packages, do you have to replace the tags each time? And the findings showed, no. The tag didn’t wash off or fall off because of handling. It wasn’t affected by cold and wet environments. One would think or expect more to malfunction. Read rates were in the high 90 percentiles. Only a couple fell off. When so many tags survived, well into the high 90 percent range, it’s easy to assume the technology could be deployed in produce business environments.

Q: Did the study examine application for tracking and tracing product through the supply chain? Could there be larger implications for improving food safety and meeting new regulatory traceability requirements proposed in the Food Safety Enhancement Act of 2009?

A: Traceability wasn’t in the scope of the study, but to the extent tags could be read through the supply chain, it is conceivable to make the link that they could be used in that manner. There are benefits to the owner of the RPC asset and the produce supplier to really track where product is in the supply chain. And down the road, with the coding of more information, greater potential exists for using this in a track-and-trace system for regulatory compliance. As FDA and Congress push regulatory trace-and-track programs, there will be a role for these technologies in the future.

The study has shown the tag works, not whether or not it can be used for track-and-trace. Technology firms, often competitors, are working on this, looking at the whole enterprise system to track data. Companies like YottaMark and Afilias represent different strategic approaches.

Through RFID, data resides on that container, and when you receive that product you pull it into your system. You use your own data system to track these things. The RFID tag is a mechanism for which data is collected. Trace-and-track is a function of data. The actual encoded data for monitoring how and when product gets from field to retail shelf could be on the RFID tag, or a barcode, but there still needs to be the system to pull that data together.

Q: Now that you’ve released these findings, what actions need to be taken?

A: There is a next step, should RFID be part of that track-and-trace system, is it reliable to actually track product from field to retail shelf, or is it just going to be used to control assets, as a more robust inventory-tracking system? RFID traceability now needs to be tested. Can you actually demonstrate that product can be traced back to the field and forward to the retail shelf? One scenario is that RFID could be used for compliance with regulatory requirements. I assure you, RPA would be interested in working with the produce industry in this capacity.

Q: Do you envision more retailers converting to RPCs to capitalize on multiple-use RFID tags in light of new regulatory measures? Currently, only a few supermarket chains have embraced RPCs.

A: Wal-Mart’s commitment to RPC’s was predicated on benefits unrelated to RFID technology. We are seeing RPC interest starting to pick up more and more based on economics, quality and ease of handling. In the produce arena, boxes get weighty and product integrity can become damaged with stacking. Kroger executives tell me one advantage of switching over to RPC’s is less product loss.

RFID multiple-use tags add dimension. The owner of the RPC asset accrues a distinct advantage. He can track product and know how many times it is used. The grower/shipper knows where product is in transit and when it gets to facilities.

The question will be if the retailer embraces RFID, takes the technology and does something with it. Are retailers using it currently? No. They haven’t adopted RFID as a technology critical to their business operations.

Q: Couldn’t that change with legislative mandates, buoyed by technological advancements and economies of scale?

A: Early on, it was all being pushed by Wal-Mart. Wal-Mart wanted their supplier base to get behind it and do it, but eventually backed off of it. There were huge costs involved, and suppliers didn’t want to dive in full force without guaranteed return on investment. Yes, suppliers felt pressured if they were big customers to Wal-Mart, but in an industry where margins are so thin, they couldn’t afford the extra nickel on every container, when only making 10 cents on each. Economics matter. Now tags and readers have come down in cost. Transforming the produce industry through RFID can be compared to starting out with barcodes. Implementation was viewed as a nightmare.

We haven’t seen that critical mass of acceptance at retail. When retailers start demanding it, then RFID will take off. With government food safety traceability initiatives, that will be what drives the adoption of this technology. When government says you have to tell me where and when your product was in the system, companies will be scrambling to do it. RFID is positioned to effectively trace product.

There was the whole issue of how tags were to be coded, finding the right system and creating global standards. The actual codes had to be universally acceptable so when things got coded, all readers could read them and everyone would know what the codes meant. Now we need to decide what constitutes the best technology to utilize those codes. Is it RFID or something else?

With the advent of acceptable product codes, now the industry is in the position to really start to put these codes on coding devices starting at the grower level until it reaches the retail shelf. And someone walking down the aisle with technology can track it. The whole point of this thing is to get to the root of a problem as fast and effectively as possible. Why destroy whole industries like we did during the spinach crisis?

No one wants to invest the cost if there is no value to it. Over the course of 10 years, each RFID study gets closer to a solution that could have a real value, but what drives value is government saying you will track all produce. RFID will be a much more valuable piece of technology when that mandate comes down.

RPAGP6411Drop Test … The photo captures the testing of the impact of supply chain handling on RFID tags. Each container was dropped in a free fall from the position in the photograph. Each container was loaded with the maximum amount of weight (in plastic bags) that the container was designed to hold. All specifications were based on standardized practices.

RPA orbis 6428 …. Loaded ORBIS 6428 RPCs on Vibration Table at Michigan State University School of Packaging. The small labels on the right are the RFID tags. The larger labels contain identification data needed solely for the purpose of the test.

RPA Two tags on container … Two different brands of RFID tags that are being tested are shown on this Georgia Pacific container.

RPA Worker Affixing … A staff member affixes an RFID tag to reusable containers. The small labels on the right are the RFID tags. The larger labels contain identification data needed solely for the purpose of the test.

Q: Did your study include an analysis of short-term and long-term cost savings?

A: The researchers did conduct a cost analysis. However, because it wasn’t originally part of the scope of the study, and the results were not fully documented, we didn’t release the data. There are obvious savings with the mere fact you can use the tag multiple times; from the cost of the tags to the labor to put them on, to the sustainability aspects, etc.

Q: What feedback have you received from suppliers and retailers since you released the study?

A: We haven’t gotten reaction back as of yet. As the news gets out in the marketplace, we anticipate more discussion will take place on what steps to take next.

This research is another piece in that traceability puzzle. There is viability here, but all of this is a moot point if the retailer doesn’t require and adopt it. Maybe companies will do RFID to track assets. ORBIS or IFCO can use it effectively to track pallets, but it must be adopted across the system or the traceability chain can be broken during a food safety crisis. This study is another step in proving out the technology. It clearly shows the RFID solution can be used in the produce environment.

Q: Why the retailer resistance to RFID? Is it a matter of costs and logistics?

A: Wal-Mart is progressive and may have jumped a little too quickly in what they were demanding of the industry. They’re big enough and powerful enough where they can do that. Wal-Mart still has a dedicated RFID group working on this.

Retailer resistance to RFID is complicated. It’s not just the cost of putting tags on and installing readers. Once you get the data, what do you do with it, where do you store it, how does it fit within the enterprise-wide system? The challenge is making sense of it all. I don’t think it’s a hardware issue; it’s a software and management issue.

This new technology is not totally proven out in the produce industry. Then there’s the question of cost, and then what codes are going to be used. That part of the system is further along, then what do we do with this stuff once we’ve got it?

We’ve taken the technology as it has existed over the past two years and applied it to a real world environment, on the RPC crate used by the farmer in the field, to a cooling place, to their warehouse, on the truck, to the distribution center, and then recouping the asset, getting it washed and reused. Using tags with the right adhesives, information remains optimally in tact at every point along the way. Research showed that RFID tags placed on those RPC containers produced a read rate between 96 to 98 percent.

Q: You had good buy-in for this study. Is Part 2 in the works?

A: Would the produce industry be interested in doing more studies? We can’t afford it on our own. Retailers have to be a committed part of it. As this traceability legislation goes through, the government won’t say you have to use RFID. It is not going to care how we do it, but it will care if we can show this system works. Certainly RPC producers would like to work with government to prove it out. It warrants further scrutiny.

The government has a vested interest in seeing this system work and should be putting money in it to find an unbiased solution. RFID has been around a long time, used extensively by the Department of Defense. It may in fact use RFID for tracking product through their supply chain.

The produce industry is often embedded in traditional ways. The industrial industry embraced RPC’s years before the produce industry. I used to be with the International Fresh-Cut Produce Association. Food processing is a whole different mindset. A lot of growers/shippers are slower to change. From a regulatory perspective, the RFID tag didn’t seem a viable solution if every case of lettuce was losing money. Now with the ability to re-use the tag multiple times, new opportunities arise.

It is funny how things work out in life. We met Jerry Welcome in his capacity as President of the old International Fresh-cut Produce Association (IFPA), which ultimately merged with the United Fresh Fruit and Vegetable Association to form the United Fresh Produce Association.

Back at the very last IFPA convention in Baltimore, we had the opportunity to do an interview with Bruce Peterson, then with Wal-Mart. You can see that interview here. Soon enough, Bruce teamed up with Michael McCartney of the same QLM Consulting involved with this research and was leading the charge for traceability that would later precipitate into the Produce Traceability Initiative. You can read our interview with Michael here.

And, of course, it was back during Bruce Peterson’s tenure at Wal-Mart that the RPC was adopted. In fact, whatever the actual motivations for adopting the RPCs, we always thought Wal-Mart got a significant bonus. At the time, virtually nobody used RPCs, so product packed in RPCs was basically unsalable to anyone except Wal-Mart. The one thing no shipper wanted to have was a Wal-Mart rejection, so the product quality Wal-Mart wound up getting was often way above spec and taken care of with extra love.

Finally, Bruce Peterson just recently joined the board of YottaMark!

So now, it all ties together: Jerry Welcome, RPCs, Bruce Peterson, Michael McCartney, RFID, traceability.

We find RPA’s test results very encouraging as they do indicate economies may be available that will bring down the cost of RFID if we combine it with RPCs.

At the same time we wonder… if RPCs were actually going to be used with RFID, wouldn’t it make sense to design the RPC with an internal slot for some kind of RFID tag? The slot could be internal yet easily replaced if damaged. Why run the risk it may fall off if we can build it into the container?

It seems like some kind of traceability dream, but one could imagine some kind of industry database with readers everywhere feeding into it. So if product goes from a shipper to a wholesaler to a smaller wholesaler to a purveyor and even into a store or restaurant, one could imagine readers everywhere effortlessly tracking the RPC.

Then we remember that even with as simple a supply chain as a shipper selling to Wal-Mart and Wal-Mart delivering to its own stores, they couldn’t make it work well enough or cost effectively enough to make it happen.

Of course technologies mature and, perhaps, they were just all on the bleeding edge.

There were paranoid objections when it was proposed that milk containers should have RFID chips and that every refrigerator should have a reader. The technology could be used to send a consumer an alert when the milk passed its expiration date or it could automatically reorder when the milk carton disappears for a set period of time.

We suspect it is inevitable and, we think, rather useful. Here is a quick video on how it works:

Of course the RPA test was not really about these whiz-bang applications.

Yet incredible advances usually depend on mundane things like durability and economy. Wouldn’t it be something if this small demonstration project — by showing that RPCs and RFID working together offers the prospect of real economies — set the produce industry on a path to utilizing the pair of technologies to not only conform to government traceability requirements but to better serve consumers?

Many thanks to Jerry Welcome and the Reusable Packaging Association for sharing this learning with the industry.

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