RFID in highly perishable food supply chains – Remaining shelf life to supplant expiry date? Martin Grunow a , Selwyn Piramuthu b,c,n a TUM School of Management, Technische Universität München, 80333 Munich, Germany b Information Systems and Operations Management, University of Florida Gainesville, FL 32611-7169, USA c RFID European Lab, Paris, France article info Article history: Received 30 May 2013 Accepted 30 August 2013 Available online 11 September 2013 Keywords: RFID Perishable supply networks Remaining shelf life abstract RFID (Radio-Frequency IDentification) has been proposed as a leading technology that could help reduce wastage in perishable food supply chains. This is due to their cost-effective ability to reliably identify tagged items as well as gather information on their ambient conditions through appropriate sensors. We model and study the utility of sensor-enabled RFID-generated item-level information in a highly perishable food supply chain from several perspectives including the distributor, retailer and consumer. With specific focus on expiry date and remaining shelf-life, we develop conditions under which the incorporation of RFID could benefit distributors, retailers and consumers. We also consider RFID investment decision in a highly perishable food supply chain. & 2013 Elsevier B.V. All rights reserved. 1. Introduction The recent large-scale introduction of RFID tags in retailing (e.g., Wal-Mart) and other applications (e.g., the U.S. Department of Defense) occurred primarily through mandates. However, the sheer number of RFID tags used in these applications, the concomitant decrease in unit RFID tag cost due to volume and technological advances and related network effects, and the beneficial characteristics of RFID tags have precipitated in large- scale use of RFID tags in other applications. Given the relative high cost of RFID tags (vs. bar codes) and the fine margins, they are primarily used at the pallet level in retail applications. Item-level tagging is only done when appropriate as dictated by the applica- tion and when the cost is justified. Evidence suggests that there is clearly a push toward item-level RFID tags to capture finer- granular information on items as they move through supply chains (e.g., American Apparel, Trasluz). Although item-level identification using radio frequency means has existed for about seven decades and their commercial use for about four decades, their widespread commercial use only began less than a decade ago. Researchers and practitioners are still exploring the dynamics associated with the use of item-level information in applications including supply chains (Bose and Yan, 2011; Gaukler et al., 2007; Gaukler and Hausman, 2008; Gaukler, 2011a; Lee and Ozer, 2007; Zhou, 2009; Zhou et al., 2009, 2010). Retail stores such as American Apparel credit item-level RFID use to improved inventory management, reduced shrinkage (e.g., due to theft, misplacement, process errors) as well as fewer stock-out situations. Unlike other supply chains, highly perishable food supply chains incur additional constraints that are directly related to their degradation, and therefore depreciating value, over time. For example, the value of a banana drops precipitously when it crosses a certain degree of ripeness until it reaches a point after which it can no longer be sold. We model and study some of the dynamics of RFID implemen- tation in highly perishable food supply chains. Clearly, the impli- cations of RFID-generated item-level information in these applications are different (vs. a manufacturing supply chain) given their characteristics. Specifically, we consider item-level RFID tags and their benefit from the perspective of a retailer, distributor, and customer in a highly perishable food supply chain as well as a firm's RFID investment decision (vs. bar code). We consider these scenarios (retailer, distributor, customer) independently of one another. Our analysis can be readily extended to the entire supply chain. Upon RFID deployment, the differential costs and benefits experienced by different nodes in a supply chain have been the subject of study in several research publications (e.g., Gaukler, 2011b; Whang, 2010). Gaukler (2011b) evaluated who (between retailer and supplier) pays for RFID tags with the premise that only the retailers benefit from RFID. We claim that the benefit to different players (e.g., distributor, retailer) are essentially different Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/ijpe Int. J. Production Economics 0925-5273/$ - see front matter & 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.ijpe.2013.08.028 n Corresponding author at: Information Systems and Operations Management, University of Florida Gainesville, FL 32611-7169, USA. Tel.: þ1 352 392 8882; fax: þ1 352 392 5438. E-mail address: selwyn@ufl.edu (S. Piramuthu). Int. J. Production Economics 146 (2013) 717–727