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Produce Industry Seeks Yield From RFID
At a convention of produce company executives, speakers seemed hopeful they will cultivate a profit from their RFID deployments, but attendees showed some uncertainty.
Jun 06, 2005—Purveyors and retailers of fresh produce came together last week at the RFID Fresh Produce Academy & Expo, in Monterey, Calif., to share their experiences from early pilot tests of RFID systems used to comply with Wal-Mart and Albertson's mandates. The event was organized by the Produce Marketers Association (PMA), a produce trade association in Newark, Del.
One of the major concerns that growers, shippers and suppliers of produce share surrounding RFID is when—or whether—a return on investment (ROI) might be realized. That's also long been a concern among suppliers of nonperishable goods companies. But in addition to the typical hardware and software costs associated with deploying RFID, fruit and vegetable suppliers have to spend time and resources to figure out how to tag high-moisture products, which cause RF interference, and that further cuts into their ROI.
One audience member said if his company had to place a 25-cent RFID tag on each case of produce, it would erase most of his company's "razor-thin" margin, and other attendees seemed to share his sentiment. But among the speakers, there was a sense of optimism surrounding RFID and a belief that by starting with small pilot tests and integrating data into enterprise resource systems, produce companies would be able to be use RFID to streamline operations and reap financial benefits, just as suppliers of nonperishable goods would.
Steve McShane, director of new product development and food safety for Salinas-based produce grower and shipper NewStar Fresh Foods, was among the event's most vocal supporters of RFID as a valuable tool for produce growers and shippers—but only if they were to focus on using the data generated from RFID throughout their operations, rather than just tagging to comply with a mandate. "Slap and ship is not going to provide you with an ROI," he said.
NewStar Fresh Foods, with the support of Eden Prairie, Minn.-based produce marketer and logistics company C.H. Robinson, Sausalito, Calif.-based supply chain consulting firm QLM Consulting and Michigan State University, opened a fresh produce RFID testing center last fall at its Salinas facility.
The center is in a real packing facility, which provides a realistic venue for testing tags on cases and pallets of produce or any temperature-sensitive products. McShane said 500 people have come through the test center thus far, representing more than 100 produce, pharmaceutical, food-service, retail and dairy companies. Testers are charged a fee to use the center that will help the founding companies cover costs. The center is not designed to generate a profit.
Tom Casas, vice president of IT for Salinas, Calif., grower Tanimura & Antle and chairman of PMA's RFID Produce Action Committee, moderated the event. Casas said that for his company, RFID is seen as a way to make positive process changes. The company is focused on streamlining all of its operations, and RFID is one way it is doing that. Still, Tanimura & Antle is taking small steps with the technology.
"Right now, we're not ready for volume—we're ready for experimentation," said Casas. In November 2003, Tanimura & Antle volunteered to begin tagging some of the produce it supplies to Wal-Mart in accordance with the retailer's RFID mandate. This spring, the grower began tagging shipments of lettuce shipped to Wal-Mart's Cleburne, Texas, distribution center and is now tagging cauliflower.
Casas shared with the audience some of the lessons learned early in the company's RFID deployment. One of these is about the importance of securely attaching smart labels to the reusable plastic containers in which it ships much of its produce. Many tags it placed on its first RFID shipments to Wal-Mart did not properly adhere. "Wal-Mart sent us some pictures of our labels on the floor, on other items...everywhere but on our containers," he says.
As a pioneer in tagging fruits and vegetables, Tanimura & Antle designed its tagging operation as it went along. In addition to the difficulty of finding the right tag and tag placement for cases of water-rich lettuce and cauliflower, the company also had to devise a very mobile RFID hardware infrastructure in order to accommodate the migratory nature of produce picking and packing. For example, the lettuce that Tanimura & Antle began tagging in April is grown and packed in Arizona, but the cauliflower it is tagging now is grown and packed in California. As such, the company needed to devise a portal reader that could be easily moved between locations.
Frank Riva, director of industry development for EPCglobal US, also presented an overview of EPCglobal, the organization charged with commercializing EPC RFID technology. Riva explained that EPCglobal is interested in establishing a Food and Beverage Action Group, which would give produce suppliers and retailers a voice in the development of standards and a means to address business issues specific to their industry.
John Raudabaugh, vice president of systems implementation at grocery retailer Albertson's, provided an update of its RFID mandate. The grocer wants its top 100 suppliers to start using RFID tags on cases and pallets of goods by October 2005. It is rolling the program out slowly in six groups of suppliers. The first wave, which began shipping tagged goods in April, included one produce company, Fresh Express, a reseller of fresh-cut salads. Fresh Express is shipping tagged goods to Albertson's on a voluntary basis. Dole, one of the nation's largest produce companies, is scheduled to begin shipping RFID-tagged cases and pallets to Albertson's in the next wave of suppliers this summer.
Right now, Albertson's has equipped only one of its Dallas/Fort Worth distribution centers to accept RFID-tagged pallets and cases. This center, serving three Texas stores, communicates details about the receipt and movement of RFID-tagged cases and pallets to the suppliers involved in the pilot through e-mail notices. So when all of the contents of a tagged box have been placed on store shelves, and the box has been put into a box crusher linked to an RFID reader, a notice is sent to the supplier that the particular box of product is empty.
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