The decision follows a recent pilot of RFID tagging that involved Chep and other firms, including Telstra and Masterfoods, which are all keen to promote the tiny radio tags in the supply chain.

Chep Asia-Pacific information systems manager Murray Fane said there were a number of obstacles to be overcome first, including finding two or three customers willing to introduce an RFID system.

"We really want to drive this forward, not just wait until people come to us.

"It's up to us to find some ways to make that happen," Mr Fane said.

The key to RFID uptake in the supply chain was simplicity and that Chep and its partners were able to demonstrate the ability of the technology to streamline processes during the recent pilot, he said.

The pilot was an extension of the National Demonstrator Project that was carried out last year by RFID proponent GS1 Australia and a number of local logistics firms, retailers and manufacturers.

The extension pilot group reaped a 28 per cent improvement in efficiency using RFID to replace time-consuming paperwork.

"With Chep the principles of control mean you have to count pallets meticulously. There's quite a lot of paperwork throughout the supply chain, not just at Chep but at hauliers and receivers. There's also quite a bit of data entry," Mr Fane said.

Chep would be able to independently use RFID to monitor outgoing pallets, Mr Fane said, but that the true benefits of the technology for supply chains would only be reaped when an array of suppliers and customers had deployed the tags.

Chep was exploring several strategies to encourage its customers to take up RFID, including sharing the cost of tags.

He noted that Telstra's recent move to develop radio frequency identification products, so it would provide connectivity and allow firms to lease RFID readers, would spur take-up.

Before Chep can move to commercial use of the technology, however, it must finalise production of the tags needed to make its proposed electronic proof of delivery system work.

Chep expects to team up with a tag manufacturer and to use its global business, which owns about 200 million pallets, to generate the economies of scale needed to make tags affordable.

The company also has to complete the installation of RFID readers in its service centres and refine the software that will drive its supply chain system.

However, Mr Fane said, the recent NDP Extension pilot had proved that the technology could deliver benefits in the supply chain and he was optimistic that Australia would move quickly to embrace RFID.

"In this project we were consistently able to get 100 per cent.

"Having seen that makes me much more positive we can build on that.

"We can stop messing around with tags and concentrate on getting business benefits from making it work," Mr Fane said.

"That's challenging, but it's a completely different kettle of fish.

"I'm much more confident that we can now start moving ahead with RFID in the Australian marketplace and I think we'll see a lot of activity coming up over the next six to 12 months."