Radio frequency identification (RFID) technology, which dates back to World War II radar systems, is increasingly being used to track goods throughout complex global supply chains. Avery Dennison RBIS, a $1.5 billion division of Avery Dennison, has become a major provider of the technology, particularly for applications within the apparel industry: For more than a decade, Avery Dennison RFID has worked with leading global retailers and brands, including Decathlon, Macy's and Marks & Spencer, to improve inventory speed, accuracy and visibility from manufacturing source to shopper. In the past few years, the company has formed strategic partnerships aimed at using RFID to create an ‘Internet of Clothing,’ increasing the sustainability and traceability of apparel manufacturing.
Recently, the label giant has also been exploring the technology’s potential to address a monumental issue affecting a host of industries across multiple sectors: food waste.
We caught up with Francisco Melo, Avery Dennison’s VP and general manager of Global RFID, to learn more about the potential applications and benefits of this versatile technology.
RFID technology has been around for decades. How did Avery Dennison make the connection between RFID and food waste?
Francisco Melo: While it's true that the technology has been around for many years, it's only been the last 12 years that you actually have the standards in place that allow you to have consistency of performance. And over the past several years, you've also got an increasing volume and a decreasing price that enabled it to achieve levels which spurred the adoption in a number of areas. Historically, the technology has been used for distribution centers at cage pallet level, that has proven to not have a clear ROI; only when it migrated to understanding the benefits you can have at item level is when it started to be adopted.
[RFID] gained significant adoption over the last years in apparel and footwear, and as it did so, obviously costs went down, performance went up and the capabilities overall improved. That's when our team started looking into ways and means of addressing some of the technological barriers that food proposes in terms of using the RFID technology to monitor and be able to track and trace food items — [for example], items [containing] water or sometimes even metals propose different challenges. Basically, that's what we've been doing over the last couple of years — perfecting, improving and innovating around ways of being able to use the technology for food items.
Tell us more about how it works.
FM: The base benefits RFID provides are accuracy and visibility. So, with that in mind, if you think through one of the biggest challenges — why there is a significant level of food waste in the supply chain — it’s because of inaccurate information along the supply chain. So, oftentimes you're in a busy store and someone goes back and grabs the cart, pulls it to the front and replenishes the shelf, and didn't necessarily see that that cart wasn't exactly the last in, first out — it was exactly the other way around. So, the cart that stayed in the back, which no one saw because there isn't sufficient validation oftentimes, is the one that is going to expire sooner — and by the time you notice, it's too late. Either you have to go into markdown, which obviously is a fundamental challenge for the already thin margins of retailers; or eventually it has to be discarded, which is obviously much worse. Not only is it hitting their bottom line, but it has impacts on the environment from a waste perspective. So, that level of accuracy and validation that the technology provides is the backbone.
What have the findings been so far for retail, grocery — or the food waste space, overall?
FM: In a couple of food pilots that we did with a couple of retailers, the preliminary analysis points to a 20 percent reduction in food waste — which is very, very significant. Furthermore, it allows you a significant reduction in the stock management process, so labor costs that go with managing the shelf life — which is very labor-intensive — it’s about a 50 percent reduction there, as well. So, when you look at all of those and the fact that you have up to 99 percent visibility and accuracy, that provides so much information for the retailer that they can act on the information much earlier. They know what they have and where they have it and if something has been wrongly positioned, or not pushed from back to front, it allows them to take action, to mark items down or to make sure they get redirected to someone else that can make good use of them.
Are there still kinks or challenges to work out before RFID can become a broadly adopted solution to retail food waste?
FM: There definitely are, [but] I think Avery Dennison just literally overcame a pretty significant one, which is around how we can make the technology safe — from a food perspective and from a user and consumer perspective. We literally just completed the first version of that, which is a microwave-safe solution — so, you can ensure if you put these tags [on an] item, and then someone accidentally puts it in the microwave, that it’s not going to cause any issues either to the equipment or the consumer. So, that was one of the main barriers, [which] we have literally just overcome with final testing and final approval of the product — we will be launching very soon, so we’re very excited about that.
We believe that for broad adoption in category-specific items, where the level of complexity and perishability is such that it falls into the ‘sweet spot,’ such as meat and poultry … In those categories, yes, I would say we have overcome all of the kinks and barriers.
Now that RFID is being used pretty widely in apparel and now food, what other applications do you see for the technology? Especially where Avery Dennison is concerned?
FM: I think we see more and more this trend towards the ‘Internet of Everyday Things,’ versus just IoT, where we’re seeing an increasing number of applications and sectors and industries that can truly benefit from this technology; if you’re familiar with [our] Janela initiative, a platform that allows you to track what we call ‘digitally born’ items, which are items that have a unique digital identity — RFID is one of the means to achieve that.
[There is] going to be a natural evolution of the technology into new areas — think about adding sensors to the technology, so not only do I know exactly what item it is and where it is, I also know what temperature it’s been kept all the way from its point of manufacture. Obviously, you wouldn’t do that to a single item of a very low value, but you could do that for a box that’s carrying a number of items from a factory. That level of providing additional information, providing sensory capabilities, that’s the natural evolution from a technology standpoint.
From a broader adoption perspective, we’re increasingly seeing interest from other areas, such as airlines, for bag tags. Most people that travel at some point or another experience the loss of a bag — how bad that is from a consumer experience perspective and it’s also a cost for the airline. So, addressing those kinds of concerns with a technology that allows you to have that accuracy and visibility across the supply chain has been increasing. Another area that we’re seeing great interest is in cosmetics, where you have items that are perishable and extremely complex and oftentimes when you go into a store, it’s hard to find exactly what you want because there are so many.
Going back to food — you can provide information about a product that might be specific to the way you like things or the allergies you have, as well as the end of life — how should I dispose of this? Or, if I found this to be open out of the freezer, what should I do? So, helping the consumer make the right decision around an item — that’s another area where we’re seeing a level of interest.
[Another] thing that we’re seeing is an increasing interest of brands, particularly sustainability-conscious brands, that say, can we use the technology to [let consumers] know what to do with an item at end of life? Brands want to be connected to the consumer all the way to that stage to help the consumer do the right thing. Obviously, that implies that the item itself needs to have a permanent identity throughout its lifetime, all the way from inspection to end of life; we’re working through that at the apparel stage, looking at the life of a garment — but also in other areas, as well. I think that’s going to be increasingly, from a trend perspective, something that we’re going to see [in terms of] consumer interaction.