In line with the retailer's Secure Supply Chain initiative, the retailer will attach RFID tags to its own shipping trays and pallets at its national distribution centre in Milton Keynes before being loaded and sent through its supply chain to retail stores.
"What customers want to know when they shop at Tesco is that the items they want to buy are available and on the shelves," said Tesco IT director Colin Cobain.
"By extending our use of radio barcodes in our Secure Supply Chain initiative, we will be able to improve on-shelf availability while reducing shrinkage. We will start with using radio barcodes on high value goods and plan to expand our roll-out across our entire supply chain over the next few years."
As part of this rollout, Tesco will also equip its 40 Tesco trunk distribution centres with RFID technology in order to arrival and departure of the tagged trays and pallets.
The move follows German retail chain Metro Group's decision to carry out a complete RFID rollout, something that again will affect hundreds of suppliers around Europe.
This particular rollout is scheduled to begin in November when 20 consumer products suppliers to the major international retailer will place RFID tags on pallets of goods, with another 80 suppliers scheduled to follow next year.
By January 2006, Metro Group plans to have 300 suppliers sending RFID-tagged pallets and cases to its distribution centres.
And Wal-Mart, the biggest retailer of them all, is now just months away from its deadline for the top 100 suppliers to put tags on all pallets and cases. In Europe, legislation enforcing manufacturing traceability comes into force in January 2005.
Tesco has yet to name which company will supply the tags and readers for its planned deployment, but has selected RFID middleware specialists OATSystems to provide the software infrastructure for its RFID system.
"OAT has superb expertise and proven RFID technology, and are able provide the scalable RFID framework which is important to us in rolling out our Secure Supply Chain initiative throughout our international business," said Cobain.
"This will lead to a more efficient supply chain, greater accuracy of orders and deliveries and even though this trial does not involve customers, they will find improved availability of products in our stores as a result of this initiative."
At Tesco's UK national distribution centre alone, OATSystems software will be collecting and filtering data from 200 read points.
OATSystems says it has been trialing its software with Tesco since the start of the year. Throughout 2005 and 2006, the company plans to deploy the technology at all its Tesco supermarkets and Tesco Metro stores.
"Tesco's decision to standardise on the OAT Foundation Suite underscores the company's commitment to deploy RFID across its supply chain," said Prasad Putta, co-founder of OATSystems.
"As such, it marks an important milestone for the industry and continues OAT's pattern of standard-setting, industry 'firsts.' We are thrilled that Tesco has selected OAT to work with them on this exciting initiative."