RFId adoption in the FMCG supply chain: an interpretative framework

Purpose – In 2003, Walmart issued a sensational RFId mandate for its top 100 suppliers, including a detailed deployment plan under compelling deadlines. After seven years, very little of that mandate has become a consolidated industry practice. This paper aims to try to offer a complete and thorough explanation of the reasons behind this fact, providing a sound strategic view of what is happening and could happen in the future. Design/methodology/approach – The study is based on a twofold methodological approach: first, it relies on an in-depth literature review covering the assessment of RFId applications in the fast moving consumer goods (FMCG) industry; second, it leverages on a five-year research program carried out by the RFId Solution Center of Politecnico di Milano in cooperation with GS1 Italy, which provided both quantitative data (used to develop and feed an analytical profitability assessment model) and qualitative knowledge to understand the “soft” implications of RFId adoption in the industry. Findings – Despite the great potential of RFId technology, there are still some significant barriers preventing its diffusion. Case-level tagging is required to enable a substantial redesign of the supply chain, but profit-sharing and reading reliability should be carefully considered to ensure economic and technological feasibility. The comparison with the fashion industry evidences some key success factors of RFId; while some of them are industry-specific, others can be replicated in the FMCG as well, but further efforts are still needed. Originality/value – This is one of the first attempts to provide a comprehensive analysis of RFId potential in the FMCG supply chain, taking into account all the major factors involved. Moreover, the quantitative results illustrated in the paper could be a valuable support to companies in defining their RFId strategies.