(June 30) NEWARK, Del. — Radio frequency identification technology is here to stay.

Gary Fleming, vice president of industry technology and industry standards for the Produce Marketing Association, said the technology is more than just the latest fad.

“A lot of mandates are being issued through company regulations and/or customer requests,” he said. “It’s not just an emerging technology.”

Fleming was speaking as part of a Webcast the association hosted June 29.

Fleming said 141 companies participated in the Web-based seminar, which was designed to educate industry members about the current state of RFID as well as take a look at the hurdles the industry has yet to face.

“It’s not without its challenges,” Fleming said. “Within the industry, we have some problems with unique product identification, especially at the item level. That’s going to create some challenges.”

John Healy, chief executive officer and principal of 360Solutions Group, Washington, D.C., highlighted more of those challenges when he presented the findings of the research he has been working on for the association.

Healy said the produce industry is still at the earliest stages of development in RFID technology.

“We’re at the very threshold of the RFID technology curve,” he said. “We found no produce company that has already fully deployed RFID technology throughout their supply chain.”

Healy added, however, that there are several companies that are doing laboratory tests and pilot tests and that shipments using RFID technology are expected to begin by fall.

Healy said that 65% of the produce companies surveyed said that RFID technology will be in widespread use in three to five years.

But before that can happen, Healy said there are still many obstacles the industry must overcome. One of the biggest of which is simply getting the RFID tags to work properly for produce.

“Produce is not the same as dry grocery,” he said. “It has different supply chains and operating environments. The dry grocery side is a more predictable environment.”

Among the more unpredictable aspects of the produce supply chain is the presence of water. Produce is by nature a moist commodity, and RFID tags have difficulty reading through water.

“Water absorbs radio frequency energy,” Healy said. “That, in turn, effects the ability to read the tag and retrieve the information on the tag.”

Healy said other problems include orientation of the tags on the pallets and cases, load density, and the variety of packs and sizes available in the produce industry. All of these factors can hinder readability.

One of the biggest issues facing the industry, however, is cost.

Ron McCormick, vice president and divisional merchandise manager of produce for Wal-Mart Stores Inc., Bentonville, Ark., said the start-up costs, even for a retail giant, can be tremendous.

“There are the research and development costs, the cost of readers, retrofitting facilities, and support costs,” he said. “It will be a significant investment.”

Tom Casas, vice president of information technology at Tanimura & Antle Inc., Salinas, Calif., said he believes the tags themselves will be the No. 1 cost factor.

“Once we get into an actual working environment and have to put tags on it, it could be very expensive,” he said.

Michael McCartney, founder and principal of Quality Logistics Management, Sausalito, Calif., said cost of the tags should go down once the second generation becomes available later this year.

“Then tag costs could drop from around 42 cents down to around 20 cents,” he said.

Healy agreed, adding that once the use of the technology becomes more widespread, this will also drive the cost down.

Healy said another major issue that will need to be dealt with is that of data synchronization.

Fleming said there are two organizations primarily responsible for this —EPCGlobal Inc., a worldwide organization dedicated to developing industry-specific electronic product codes; and the International Organization for Standardization, a Swiss developer of international product standards.

Fleming said PMA has been asked to serve on the executive committee at EPCGlobal and will be working to represent the produce industry as global standard codes are created.

“They are trying to harmonize the standards,” he said. “We are going to use PMA’s RFID Produce Action Group to get involved in the standardization process.”

While there is still a lot of work to be done, the panel agreed that the time for the produce industry to get involved with RFID is now.

C.H. Robinson Worldwide Inc., Eden Prairie, Minn.; Fresh Express Inc., Salinas; and Tanimura & Antle have begun working with Wal-Mart. McCormick urged the rest of the industry not to wait.

“We fundamentally believe this is technology that will change the history of the supply chain,” he said. “(The suppliers) have not been sitting back allowing this to happen. They have been actively involved, so that it’s an industry decision and not a Wal-Mart decision.”

McCartney said that, as far as the technology is concerned, the best is yet to come.

“We’re still dealing with the first generation of RFID technology,” he said. “That has taken us about 90 yards down the field, where we can score field goals. But rarely do we score any touchdowns. (The second generation) will establish new standards that will drive the prices down.”

PMA is planning quarterly Webcasts on the subject of RFID, though no future dates have been announced.