Dole: Let Us Thank RFID Technology

This past March, a Wall Street Journal detailed how Dole was using radio frequency identification (RFID) tags to better track its lettuce and other produce as it moved from the farm fields through the processing facility and, ultimately, to the store shelf.

The company took this action in response to the September 2006 crisis in which some of its bagged spinach was implicated in a serious E. coli outbreak that killed three people and sickened hundreds more.

RFID is on the case
Was the investment in RFID worth it? I'd say "absolutely," because just the other day, news broke that concerns of another E. coli outbreak had sparked a recall of Dole-grown lettuce. It's worth noting, however, that this most recent recall differs vastly from the one in September 2006, which had been initiated after serious problems arose. This time, the company took prompt and preemptive action before any consumers were known to have become ill.

On Monday, Dole initiated a voluntary recall. More significantly, the company was able to pinpoint precisely which bags of lettuce were most likely to have been exposed to the bacteria, and it knew exactly where those bags of lettuce were.

So detailed was the information embedded in each RFID chip that Dole officials knew that only bags with the production codes "A24924A" and "A24924B" were at risk, and that 528 bags had been distributed in Canada and 4,530 bags across eight states in the U.S..

The company was able to ascertain this much information because each RFID chip was capable of documenting where every head of lettuce was produced, which facility processed it, what production batch it was bagged in, and ultimately where each bag was sent.

No shortage of other opportunities
All this is significant because it demonstrates the incredible potential of RFID technology, not only to help large companies keep tight track of inventory, but also to lower costs by limiting recalls to only the products that are at risk. For instance, in Dole's case, the company didn't have to recall every single bag of lettuce across North America. And by being able to take such swift action, the company was also likely able to reduce its exposure to legal liability issues.

The folks at Dole didn't return my calls, so I don't know which company supplies it with RFID chips, but you can bet that many major manufacturers -- especially companies such as Mattel (NYSE: MAT  ) , which recently had to recall tainted toys, as well as Dell (Nasdaq: DELL  ) and Sony (NYSE: SNE  ) , both of whom experienced major problems with faulty batteries in the past year -- have taken note of Dole's ability to use RFID technology to engage in effective damage control.

The potential is there for RFID to benefit other industries as well. One industry that immediately springs to mind is the pharmaceutical sector. Pfizer (NYSE: PFE  ) and AmeriSource Bergen, among others, are already aggressively investing in RFID technology. Their reasons have more to do with preventing counterfeit drugs and keeping better inventories for logistical reasons, but you can bet they understand RFID's ability to help them effectively recall drugs in the event that one of their brands somehow becomes tainted (as with the infamous Tylenol case in 1982).

Foolish bottom line
All told, I think Dole's experience represents a watershed event for RFID technology. Companies engaged in manufacturing RFID chips -- including Intel (Nasdaq: INTC  ) , IBM (NYSE: IBM  ) , Zebra Technologies, and Printronix -- can expect more manufacturers to come knocking on their doors in the near future, because this latest E. coli scare confirms that RFID has proven its merit in real-world situations. As I mentioned last week, however, it's important for investors to distinguish between the future potential of RFID technology used to track commercial products, and the technology that is being implanted in animals and humans by companies such as VeriChip (Nasdaq: CHIP  ) . As I explained here, that latter category could be facing some serious issues.

Interested in reading more about RFID-related Foolishness? Check out these articles:


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