Woolworths, one of the United Kingdom's leading general merchandise retailers, wanted to bring value back to stolen goods. Although police often recover stolen property, retailers get little or nothing back unless they can successfully prove ownership.

Two years ago, the company decided to tackle that issue as well as work to reduce the amount of merchandise leaked to black markets by tracking the whereabouts of its merchandise. In 2001, Woolworths launched a pilot project that was partially funded by the government's "Chipping of Goods Initiative," which aims to reduce property crime using Radio Frequency Identification (RFID)-based solutions.

The Woolworths project integrated RFID technology, a wireless wide-area network (WWAN), bar codes, and a global positioning system (GPS) to improve visibility. The retailer has been testing those technologies on shipments between its Swindon distribution center and 75 of its 800 retail stores.

Before the project began, Woolworths relied on a paper-based, manual system for tracking inventory. Now, however, the company is able to electronically track inventory both inside and outside the DC.

To make that possible, Sunnyvale, Calif.-based Savi Technology fitted 16,000 of its Series 600 RFID tags onto dollies that Woolworths uses to deliver tote boxes of merchandise to its stores. The RFID tags act as "license plates" that identify the dollies and transmit information about their location to automated readers.

Inside the DC, an automated stacker places tote boxes onto the dollies. The stacker sends order manifest details to an RFID control system, associating the merchandise with the specific dolly on which it has been stacked.

Tracking continues outside the DC to ensure that the dolly is loaded onto the correct vehicle. At this point, the driver receives a handheld device that serves two functions. It's GPS-enabled to track the vehicle's movements and ensure delivery, and it's also a portable RFID reader that verifies that the right dollies are delivered to the right stores. WWAN equipment installed in the vehicle transmits order delivery information back to the control system. "If the dolly gets there, it's a fair assumption that the item got there as well," says Geoff O'Neill, director of strategic projects.

Since launching the program, the U.K. retailer has moved about $244 million worth of merchandise with the ID-tagged equipment. Although it is too early to fully quantify the benefits, the project has garnered plenty of attention. Woolworths recently received the 2003 "Supply Chain Solution of the Year" award from European Retail Solutions, which honors retailers' use of information technology to advance business objectives.

But the project has earned more than just honors. With this system, Woolworths has managed to overcome a major roadblock of the RFID debate: cost. "By this association process we have managed to get item-level visibility without the cost of item-level tagging," O'Neill says.

And finally, Woolworths' test project has provided a model of RFID in action while many are still discussing the new technology. "This project … has demonstrated many things to both Woolworths and the industry as a whole," O'Neill says. "We have learned much about our own processes, RFID's capabilities, and the importance of integration with existing systems and processes, and other new technologies."