McDonald’s China and Cainiao partner on RFID chips to improve supply chain efficiencies

McDonald’s China unit has partnered with Cainiao, Alibaba Group Holding’s logistics business, to improve supply chain efficiency using radio frequency identification (RFID) chips and other technologies.

Under a deal signed on Thursday, McDonald’s China will deploy Cainiao’s RFID technology in its supply chain with built-in tags on food packages, allowing the company to track products from factories to restaurants, according to a statement by the Hangzhou-based logistics firm.

A trial project of the RFID technology helped reduce the time needed for stocktaking each day from 1 hour to 15 minutes for restaurants while improving the accuracy of inventory data by 30 percent, according to the statement.

RFID is a third-generation identification technology, after bar codes and QR codes, and has been widely adopted in supply chain tracking. With a built-in microchip, data is transmitted through radio frequency signals.

Apart from deploying RFID technology to improve efficiency in inventory and logistics, McDonald’s and Cainiao will also explore digitisation and automation technologies in the supply chain, Cainiao said.

The deal between McDonald’s China and Cainiao comes as the logistics firm prepares for an initial public offering (IPO) in Hong Kong after submitting its A1 filing to the city’s stock exchange last September.

Cainiao aims to raise at least US$1 billion, subject to market conditions, according to sources cited in a Post report that month. The listing is part of a group-wide restructuring of Alibaba as the e-commerce titan seeks to free up decision- making amid increased competition across its businesses. Alibaba also owns the South China Morning Post.

Established in 2013, Cainiao serves as the logistics backbone of Alibaba’s huge e-commerce empire, handling more than 4 million cross-border parcels on a daily basis in 2023. Alibaba announced it would spin Cainiao off in the restructuring announced in March.

Cainiao moved into the RFID field with the launch of its own tags in 2021, which it said could achieve 99.9 per cent recognition accuracy. The company announced in April last year that it had produced and sold over 100 million RFID tags in just two years.

McDonald’s China has a network of more than 5,500 restaurants and over 200,000 employees serving more than 1 billion customers each year. It has also been stepping up efforts to digitise its operations in the country, which is the fast-food giant’s second-largest market globally.

Last month, McDonald’s China said it would work with Huawei Technologies to build a native app based on the next iteration of HarmonyOS, the Chinese telecommunications equipment and smartphone giant’s self-developed mobile platform.