Retailers and suppliers worldwide are being galvanised to phase out barcodes as Wal-Mart and Gillette develop new radio-controlled technology.
Wal-Mart is likely to introduce smart tags to its supply chain next autumn as a result of successful trials in the US on high value lines
Wal-Mart has reported a 20% cut in labour costs and access to 30 times more data from its pilots in its Oklahoma distribution centre, run in partnership with suppliers.
The radio frequency tags have been applied to cases at point of manufacture, enabling the supply chain to store to be fully automated as products pass through without the need for unloading for checks. Tags also curb shrinkage because products are easier to track.
The project, which will be completed in July 2003, is being run in conjunction with suppliers including Gillette and Procter & Gamble, and leading authorities at academic institution the Auto-ID centre.
Peter Abell, research director, retail industry service, for tagging research firm AMR, is affiliated to the Auto-ID centre and worked on the barcode invention.
He said early problems with standardising the radio frequencies of tags were being resolved as tag readers could now communicate on all frequencies.
He said: "Tag prices are now in the 15c range. That is galvanising suppliers and retailers. RFID technology will be in transition for the next 10 years, and the tags will cut between 6% and 10% from supply chain costs."
He said Wal-Mart had claimed it would shave 6% by using RFID, and that Procter & Gamble had said tagging would save 10%. Abell said the cost of setting up a source tagging system at a depot was $2m with running costs $1m a year after that. The investment would be recouped by labour savings, added Abell.
M&S, Tesco, Waitrose, Safeway, Sainsbury, Unilever, Kimberly-Clark, Home Depot, Metro, Pepsi, Gillette and Eastman Kodak have now all experimented with source tags.
Metro is to unveil a "store of the future" in Germany on April 15. It will use RFID source tags on all higher value lines.
Tags in supermarkets could bring better availability and protect against shoplifters.
Tills could be phased out, said Abell.