Avery Dennison Uses RFID for Sustainability

By Edson Perin

In an interview with IoP Journal, the company defined the concept of "regenerative retail economy" and explained why brands must be ready for it.

Ed. Note: This article was previously posted at  IoP Journal.

Sustainability is on the agenda of companies and consumers alike. During the COVID-19 pandemic, market studies showed an increase of 22 percentage points in the importance of sustainability as a crucial factor in buyers' brand choices, and that number has now reached 55 percent.

In an interview with IoP Journal, Tyler Chaffo, a global sustainability manager at  Avery Dennison Smartrac, explained how radio frequency identification (RFID) technology has helped companies in various sectors, including food. On the concept of the "regenerative retail economy," Chaffo says the term "regenerative," now used with a focus on retail, has historically been associated with the agriculture sector. "We're seeing that sort of thing being transcended into other industries," he adds, "and 'regenerative' means different things to different people."

Image: Avery Dennison Smartrac

According to Chaffo, the concept of "regenerative" is part of the circular economy and is a systemic approach to economic development, designed to benefit businesses, societies and the environment. "There's really a contrast when you look at taking it and generating waste, which is the linear model," he explains. "Therefore, a circular economy is generally regenerative by design, a kind of decoupling of growth from the consumption of finite resources, which makes us consider the source of materials to make products."

Hence, Chaffo says, the question is this: "How can I get more plastic out of the ecosystem than I'm putting in with my retail products?" He adds, "Then you start to see companies that have publicly made commitments to adopt a regenerative approach, that are really basing their strategies on the positive or regenerative future in terms of resources—and I think that's really what you're going to see happening more and more."

The movement of retail companies in this direction, Chaffo says, shows that sustainability is not just a matter of the future, but something happening now: a problem that must be solved every day herein. "In supply chains, having more resilient, more regenerative and more sustainable initiatives has been a positive factor," he states. "We are looking for RFID products that have less environmental impact and better, plastic-free production methods for retail apparel applications, for example."

Tyler Chaffo

"We recently announced that our climate goals were approved by an organization called  Science Based Targets Initiative—which is, I would say, the gold standard in terms of weather," Chaffo says. "Here, we have the biggest impact: our solutions help customers measure and validate their emissions. We recently launched  Atma.io, which works in conjunction with our physical products to create connected products and take this digital idea and make it more powerful."

"By using technology, products and solutions, we create ways to make other things possible," Chaffo reports. "That's where we think we have the greatest potential for impact, and that represents our focus on innovation and sustainability to actively remove carbon emissions from our broader supply chain solutions—not just from our solutions, but from our customers' supply chains as well. We also have a very strong focus on reducing food waste."

The changes resulting from the pandemic have promoted the growth of e-commerce operations, with home delivery or in-store collection of purchases made online, and these offer opportunities for RFID in Avery Dennison's sustainability vision. "Delivery is expected to increase to 30 percent by 2030," Chaffo states, "and online retail is driving this on a massive scale, with 36 percent of that growth. As an omnichannel enabler, RFID helps to reduce environmental impacts. Our solutions are critical to enabling omnichannel, and are helping to mitigate some of the increased landfill of items being returned, as well as issues with products that are often being shipped less efficiently."

The food supply chain is the single largest contributor to global greenhouse gas emissions, at 26 percent. "Compare that to other industries like automotive and apparel, which hit 4.2 percent," Chaffo says. "A 2021 report released by the  World Wildlife Fund says that food waste is responsible for 10 percent of greenhouse gas emissions worldwide. This is waste, and that's a big number. Think about it, especially considering that the number of people suffering from food insecurity has increased during the pandemic."

"We thought about how to make eating more people-safe, and it turned out that there is a net benefit of $73 billion annually if food waste were addressed," Chaffo says, adding that there is a strong return on investment. "We're starting to see a lot of investment happening to address food waste and really use technology to address it." RFID is at the heart of sustainability solutions, he notes.

"When we think about what RFID has done historically," Chaffo says, "we've measured it in terms of inventory accuracy, but what we haven't said is that we're also reducing waste. If we manage to have an increase in sales, say 1.5 percent to 5 percent, we reduce inventories by 2 percent to 13 percent. Obviously, we're on board with that, reducing waste in our supply chain." He adds, "If you are able to provide better visibility into food exploration—things like cold chain management, managing product recalls and packaging—then we will have a strategic focus to enable reusable packaging, using RFID and other technologies to enable the circularity of packaging."

Estefania Bernal

Estefania Bernal, an Avery Dennison Smartrac executive in Latin America, discussed the company's success story with  Algramo, in Chile. The project consists of reusing packaging, making it smarter via RFID tags. "This Avery Dennison tag, when connected, allows it to enter certain refill programs or mobile supermarket dispensers, or to be used in other industries, such as automobiles, that sell branded products," Bernal says. "The user can do two things: reuse the packaging (obviously, this helps to mitigate the environmental and economic impact) and choose what really should be used or what you want to use (that is, you don't waste it, because you only buy what you need to use)."

Brands of cleaning products, as well as products for pets and other goods, can also use this solution, Bernal notes. "Something that I found very cool is that users of these programs participated in a loyalty program, with a bonus for the next purchase of the same product," she says. "For me, sustainability is a word that involves collaboration. In other words, success would not have been possible without technology, without the collaboration of brands, and also without this engagement and consumer participation."