Metro and its industry partners, including Kraft Foods, have been delivering pallets and hanger goods equipped with smart chips since November 2004. Metro will now extend its RFID roll-out to unit levels by the end of 2005.
By January 2006, Metro Group plans to have 300 suppliers sending RFID-tagged pallets and cases to its distribution centres.
According to packaging consultancy Pira, second-generation smart chip supplied by Avery Dennison will be used in the second-phase of Metro's RFID initiative. These were not available in November, but will now replace the older model currently in use.
A spokesperson for Metro said that the group is currently preparing for the roll-out of RFID for cartons and cases. Research is also being done with single-item tagging and temperature-enabled RFID tags, although any implementation of these systems is likely to be a long way off.
For some however, the rolling out of Metro's RFID initiative to cartons and cases raises some security concerns. RFID (Radio Frequency Identification) is a technology that hooks miniature antennas up to tiny computer chips smaller than a grain of sand to track items at a distance. CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering), argues that the technology raises privacy concerns because RFID tagged items can be monitored invisibly right through items consumers normally consider private, like clothing, purses, backpacks and wallets.
Indeed, a major concern is that the RFID chip could result in every product on earth having its own unique ID. The use of unique ID numbers could lead to the creation of a global item registration system in which every physical object is identified and linked to its purchaser or owner at the point of sale or transfer.
CASPIAN's stance has been supported by a number of recent reports highlighting potential weaknesses in the concept. A survey from Forbes last year suggested that while bringing huge benefits in terms of traceability and access of information, there are still flaws in the concept.
For example, a consumer wishing to pay less for a product could alter the price of a particular product by taking out a hand-held personal digit assistant (PDA) equipped with an RFID reader and scanning the product's tag. He could then replace that information with data from the tag on, say, a €3 carton of milk.
If the checkout stand is automated, then the store's computer system will be none the wiser.
But as far as retailers are concerned, their primary motivation is building customer loyalty and trust. In driving through these traceability measures down the supply chain, they are attempting to put into place guarantees that if there is ever a recall, then any problem could be contained quickly without losing credibility.
A study conducted by consultants at Kurt Salmon Associates in the Metro Group's Future Store showed that the availability of goods increased significantly as a result of RFID. Out-of-stock-situations fell by between 9 per cent and 14 per cent. The waste of goods was also reduced by up to 18 per cent.
Nonetheless, as the Metro roll-out suggests, it seems inevitable that RFID will extend from being primarily a supplier-based technology to being embracing fully by every aspect of the food supply chain. The potential benefits in terms of traceability and complete supply chain integration are enormous. And by the time products on the shelves RFID tagged, the issues of fraud and personal liberty should hopefully have been addressed.
Metro Group, the world's fourth-largest retailer with a turnover of more than €54 billion, aims to become the first in the business to install RFID technology throughout its entire process chain.