SIDEBAR: Supply Chain Hot Potato
For now, one UK supplier is sticking with barcode technology
When it comes to potatoes, Greenvale knows its onions.
The Brits like their potatoes and Greenvale is one of the largest purveyors of potatoes in the UK, supplying the likes of Tesco and Sainsbury as well as consumer goods manufacturers such as chip maker Golden Wonder and McCain. It also supplies seed and dehydrated potato flakes. Managing the supply of all those potatoes and potato products is an increasingly information intensive business.
And with British supermarkets now prepared to fine suppliers if products have to be recalled or redelivered due to quality control issues, understanding where produce comes from, how long it has been out of the ground, and where and how it has been stored is important to the suppliers.
Bruce Nisbet is group IT manager for Greenvale, and he met Moraitis's Con Colovos and Nick Drasic during their European fact-finding mission earlier this year. Like Moraitis, Greenvale runs its operations off a Navision platform, which has been installed for around five years. Unlike Moraitis however, the company has pretty much decided not to proceed with RFID tagging, even in pilot, at least for the next 12-18 months. In part it is an economic issue because of the current cost of equipment and tags - but more importantly it is because as yet British supermarkets and retailers have not mandated RFID.
"In Australia the retailers seem ahead [of us] on tagging," Nisbet says. "Our retailers have played with it." With that in mind hard economics has driven Greenvale's decision. Margins are slim in fresh produce and unless IT investment can be justified at the bottom line it is unlikely to be approved.
At the moment, "there's not a lot of difference in the barcode information versus the RFID information", says Nisbet. Except barcoding is a lot cheaper and the information stored on the RFID tags could just as easily be captured on the barcode. "RF tagging is too expensive," he says, "or was when we last looked at it a couple of years ago. If the costs came down then we might put in the hardware, but at the moment it's just not cost effective."
He says that the real inhibitor is not the tags themselves but the cost of having a lot of RFID readers. If all that was needed was a single RFID tunnel to scan tags as produce left the warehouses then it might not be too costly, Nisbet says. However, if prices continue to drop he would consider having another look at the technology in 12-18 months' time.
Where the benefit would come he says would be from having all boxes and bags tagged. RFID readers could then identify where stock was, where it had been sourced, how long it had been in a particular location and so forth. "If you tagged at the bag level, and say there were 260 bags on the pallet, then the system could alert you to the fact that 130 bags had one sell by date and 130 bags had another," says Nisbet.
That's the sort of thing that could have a supermarket demanding a refund and redelivery. But if it was picked up before the potatoes were shipped the problem never eventuates.
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