Some cheesemakers around this medieval town recently began adding a new ingredient to their age-old recipe for Parmigiano Reggiano: a computer chip.
In a cavernous warehouse, where 200,000 wheels of top-grade Parmesan are stacked on shelves five meters high, a worker stands ready to scan incoming cheeses with a hand-held radio frequency identification reader. The chips, known as RFID tags, are embedded in the rind of many of the freshly made wheels. The tags hold information about where the cheese was made, on what day, even what the milk-producing cows had been eating -- all of which can affect the way the cheese looks, how it tastes and what it will cost.
The ability to easily access that information is beginning to transform the way the Parmesan cheese business runs. Use of the RFID tags is helping to block wheels of counterfeit Parmigiano Reggiano from Eastern Europe that routinely flood supermarkets around the world. Buyers of specialty foods, including restaurant suppliers and gourmet stores, no longer worry that expensive cheeses they buy will be switched with inferior ones because the chip, buried within the parmesan's rind, gives it a unique identification.
"We calculate that [RFID] will eventually reduce our operating costs by up to 50 percent," said Carlo Buttasi, the technical director of the Mantua milk-producers consortium, which sells cheese under the brand Virgilio.
In many industries, such as pharmaceuticals and apparel, many expect RFID technology to revolutionize inventory management even more than the bar-code system it appears destined to replace. RFID tags can be read quickly and can contain vast amounts of information, making it easier to track an item from factory to supermarket checkout.
But while cheesemakers in northern Italy are making strides with their specialized use of the technology, more ambitious efforts, by giant retailers such as Wal-Mart Stores Inc., are hitting snags. Wal-Mart has had to repeatedly scale back its plans for its suppliers to begin using RFID as the technology is tweaked to handle the demands of high-speed warehouses.
Most of Wal-Mart's top 100 suppliers met a January deadline to begin tagging at least some of their products. But, for now, most of those suppliers see RFID more as a cost than a benefit.
The cheesemakers illustrate how innovative RFID usage is bubbling up from the bottom, not necessarily trickling down. Smaller companies are making great strides as they adapt the chips to their own needs.
RFID is encountering some of the same hurdles that bar-code technology hit decades ago. The first bar-code patent was awarded in 1952, but the first optical bar-code reader wasn't installed in a supermarket until 1974. The first RFID patent was granted in 1976, but it wasn't until 1996 that the industry agreed on a standard for the radio frequency which let the chip and a computer swap information.
And bar codes started at the checkout counter, so retailers could adopt one set of standards and practices before the technology filtered down to their suppliers. RFID, by contrast, is starting in the backroom and working its way forward to the consumer. That means different industries are developing the technology in their own way, making it difficult to ensure a smooth chain from manufacturer to retailer.
"At the global level, for Wal-Mart to get together with its suppliers and enforce its standards and get its distributors to work together is not easy," said Roberto Tunioli, the chief executive of Bologna, Italy-based Datalogic SpA, the company that developed the RFID application for the Parmesan cheese farmers and also sells the technology to varied customers, including auto manufacturers and cell phone makers. "But for a few cheesemakers in Mantua to agree on something is a snap."
For the cheesemakers, RFID presented a solution to some ancient problems, like keeping track of precious inventory. The Mantua cooperative collects wheels of Parmesan and a similar cheese, Grana Padano, from 94 farms in the area and sells them to supermarkets and distributors. Each wheel is branded with a serial number that is burned into the rind, then transferred to the cooperative's temperature-controlled warehouse where it is aged from 6 to 36 months. As it ages, it undergoes a weekly brushing and the serial number grows less visible, making it difficult to track.
That creates problems, because the wheels of cheese can have widely varying qualities and, consequently, prices. A prized 30-kilo wheel of parmesan (about the size of a car tire) can fetch $358. Assuring the best price is crucial for the consortium, which had revenue of more than $381 million last year.
The quality of the cheese is judged by a variety of factors, including color and even the sound made when struck with a rubber hammer. Each wheel is also X-rayed when it arrives in the warehouse and before it leaves to help judge whether the aging process is uniform.
Two years ago, the cheese consortium decided to experiment with a new system. With an initial investment of about $68,000, it launched a year-long pilot program at a few farms. Datalogic designed a chip that could be encased in casein, a material in the (usually not eaten) Parmesan rind, so that it wouldn't affect the aging process or the taste. Buyers remove the chips before cutting up wheels into smaller pieces for retail sale. The consortium is rolling out the RFID program throughout the rest of its farms, and expects investment to total $179,000, plus a cost of 60 cents per chip.
Already, the tags are making it simpler to track each wheel. If the quality of a wheel falls during aging, the cheese can be reclassified. RFID has also created an additional guarantee for customers.
Otomo Jun, a buyer for Okura Food Sales Co. of Japan, usually tours area cheesemaking facilities , inspecting each wheel as it comes off the farm in order to snag promising ones. Japanese supermarkets -- Okura's customers -- sell the cheese for up to $119 a kilo, and value color and shape as much as taste.
Jun will buy wheels of cheese and then wait up to two years for them to age, hoping his high-priced wheels won't get accidentally switched with others whose serial number has worn off.
That helps with his picky Japanese customers, too. "The first thing they ask for are the documents that guarantee authenticity and quality."