A Radio Frequency Identification (RFID) code of practice is being developed in conjunction with the Australian Retailers Association, EAN Australia and the Privacy Commissioner.

EAN Australia is a non-profit organization that administers the internationally recognised Electronic Product Code in collaboration with the Uniform Code Council.

Stephen Pereira, EAN Australia's chief information officer, said even though RFID technology has been around since 1945 standards were now necessary for its use in supply chain management.

"The Electronic Product Code is the business application of RFID technology for the supply chain; it's a number in a radio tag which uniquely defines a product," he said.

Australian Retail Association IT director, Chad Gates, said the introduction of RFID technology could potentially have a huge impact on Australia's retail industry.

"The grocery industry in Australia is worth $30 billion annually and if introducing RFID could enforce a 1 percent reduction in out-of-stock products then there will be a significant benefit; RFID would translate to lower prices in stock because the costs have been driven out of the supply chain," Gates said.

Initial retail trials have been conducted in the meat industry in Australia to track temperature but Gates said the real benefits will be realized in the grocery trade.

So far one technical hitch in introducing global RFID standards into Australia has been the level of power that reading devices can transmit on the designated 900kHz bandwidth as Australian devices have been restricted to using only one watt of power with a range of three to four metres.

The standard in the US is four watts.

As a result Australian retailers are watching RFID implementations in Europe with giants such as Marks & Spencer and Tesco which have been piloting tags in clothing, CDs and DVDs.

In the US Wal-Mart has already invested $US3 billion in RFID technology and issued a mandate to suppliers to comply with the new technology by 2005.

A spokesperson for the National Australian Retail Grocers Association said a similar mandate would be unsuitable in Australia and it would issue no similar specs or deadlines to local industry.

Coles Myer media spokesperson Scott Whiffen said an in-house RFID trial started in May, but no RFID-attached goods had been rolled out onto the trading floor as yet.

"Our pilot involves moving cages from one distribution centre onto a truck then onto a receiving dock which the equipment recognises," Whiffin said.

"We are not tracking what is contained in the pallet, just attempting to test the technology within our own environment."