Intelligent shelf on the way

Software giant Oracle says health scares such as bird flu are prompting food producers to adopt RFID electronic tagging technology to fast-track product recalls.

RFID - radio frequency identification - was "something a lot of cold storage and slaughterhouses are taking very seriously given all the problems we're having today around bird flu and mad cow disease", Rohit Nagarajan, Oracle's Asia Pacific business development manager, said last week.

Speaking at the Oracle Technology Summit, a briefing for the company's corporate clients in Sydney, Nagarajan said RFID tracking was becoming "hot" as the cost of the technology dropped and standards for using it became more established.

"Knowing where exactly a particular product or item like a pack of meat came from is very important for doing things like product recall, or to be able to track a product back to its source," he said.

Nagarajan said the business case for RFID would receive a boost from the results of a study into the impact the technology was having at Wal-Mart, the world's largest retailer.

The study, issued this month, found there had been a 16 per cent reduction in "out-of-stock" items at pilot Wal-Mart stores using RFID technology to track inventory.

The University of Arkansas study also found the RFID-enabled stores were 63 per cent more effective at replenishing out-of-stock items.

Nagarajan said for a retail giant such as Wal-Mart, those results would equate to millions of dollars of additional revenue as a result of adopting RFID across the entire business.

Mark McGeachen, sales and marketing director of New Zealand retail software company AdvanceRetail Technology, said while local retailers operated in a different and smaller league, Wal-Mart's RFID trials were being watched with interest.

"The whole industry is looking at it as quite a valuable learning experience," he said.

"The big benefit from RFID at this moment is for the big retailers. It doesn't necessarily offer a lot of benefits for the smaller retailers, like New Zealand-sized organisations."

Local retailing heavyweight The Warehouse, with IBM, this month announced an evaluation project of RFID technology aimed at improving stock availability.

Warehouse chief information officer Owen McCall said the company had evaluated a number of potential uses for RFID before deciding to focus on in-store stock management, "which is the application we believe will provide the greatest benefit to our customers".

McGeachen said while hi-tech scanning would eventually change the face of retailing, the industry's focus was on developing systems to scan and track cartons and pallets of goods through the supply chain.

"The nirvana that everyone talks about is the RFID-enabled store - you walk to the checkout and your entire trolley is scanned instantaneously."

He said the concept of an "intelligent shelf" - one that records when an item is removed and put in a consumer's trolley - was also on the horizon.

"These are all the things that people talk about and would love to see happen but the reality is we're some way away from that."

Nagarajan said Oracle was encouraging its customers to build RFID into its systems at a basic level to enable them to assess how it would benefit business before they invested too heavily in the technology.

* Simon Hendery attended the Oracle Technology Summit as a guest of the company.