| Good things come in small packages. This familiar | | | | forecasting. Because RFID does not require |
| cliché usually refers to precious stones, but | | | | line-of-sight operations (contrary to manual bar code |
| today it's taken on new meaning, in that small things | | | | scanning) the end users achieved improved inventory |
| are now protecting items we deem valuable. | | | | control with reduced labor costs. |
| Analysts estimate that the retail industry loses US | | | | Encouraged by their success, British retailers Marks |
| $50B a year to theft and up to ten times that much | | | | & Spencer and Germany's Metro AG quickly |
| to counterfeiting. High-end products such as | | | | adopted RFID applications in their production and |
| cosmetics, fragrances and pharmaceuticals are most | | | | distribution channels. The US Department of Defense, |
| likely to be stolen or counterfeited. Many retailers and | | | | Benetton, CVS, Home Depot, Gap, Target, Kohl's, |
| manufacturers believe that this big problem may | | | | Tesco, Coca Cola and Albertsons have all begun |
| have a tiny solution - RFID smart tags. | | | | incorporating RFID into their supply chain operations. |
| RFID (Radio Frequency Identification) is an automatic | | | | In 2004 Wal-Mart issued a mandate that their Top |
| data capture technology that offers unparalleled | | | | 100 suppliers become RFID compliant by 2005, and |
| accuracy in inventory control and supply chain | | | | the FDA plans to convert to item-level RFID |
| management. Although RFID is a relative newcomer | | | | distribution tracking by 2007. |
| to the media spotlight, the technology has been | | | | In spite of strong industry support for RFID, |
| quietly working its way into our culture and into our | | | | widespread adoption of the technology has been |
| lives since it was drafted by the military 60 years | | | | slow. One reason for the delay is the lack of uniform |
| ago. | | | | standards for network and data management. For |
| The US Department of Defense first used RFID to | | | | example, smart tags are currently available in low, |
| track military aircraft during World War II. Since then, | | | | high or ultra-high frequency versions, with read |
| this compelling technology has been used extensively | | | | ranges of as little as a few inches to as much as 30 |
| in highway toll collection, building security, library | | | | feet. AIM Global is a consortium of RFID developers |
| circulation, parcel delivery and airport luggage | | | | and suppliers who are working to establish global |
| transportation. | | | | RFID standards. Their goal is to educate |
| What exactly is RFID and how does it affect the | | | | manufacturers and suppliers about the potential |
| future of packaging? | | | | benefits of RFID, and to provide the education and |
| RFID functions as a network of microchip "smart | | | | resources necessary to realize ROI from the use of |
| tags" and receivers. Each smart tag is embedded | | | | this technology. |
| with a unique electronic product code (EPC) and a | | | | Cost and quality concerns have further dampened |
| micro-antenna. Once assigned, the EPC becomes a | | | | enthusiasm for RFID. Tag failure rates are reported |
| DNA-like marker for the item, identifying it from | | | | to be as high as 20% to 30%. At an average cost |
| every other item in the world. When a tagged item | | | | of $.30 per tag, many suppliers find the prospect of |
| passes within range of a reader, the reader retrieves | | | | item-level tagging prohibitive. |
| the EPC via radio waves, identifies the item and its | | | | So far, RFID compliance has been the responsibility |
| exact location, and relays this real-time information to | | | | of suppliers. Retailers have generally refused to |
| a central computer. Taken together, the series of | | | | accept any price increases resultant from RFID |
| transactions comprise a comprehensive record of the | | | | start-up expenses. As a result, suppliers have had to |
| tagged item's movement from point of origin to point | | | | either absorb the cost of becoming RFID compliant |
| of sale. | | | | or risk losing lucrative commercial contracts. |
| The greatest promise of RFID lies in its application | | | | However, as RFID becomes the norm manufacturers |
| versatility. Smart tags can be affixed to either | | | | will look for converters who can provide pre-tagged |
| individual products or to pallets containing multiple | | | | packaging that is market-standard compliant and |
| units, and can be "read" through most materials. RFID | | | | ready for entry into the RFID regulated supply chain. |
| readers can scan multiple items at one time, making | | | | Technology is inherently evolutionary. The logistics of |
| them functionally superior to traditional, uni-task bar | | | | RFID are changing rapidly, with ongoing |
| code scanners. | | | | advancements in ink, labels and methods of smart |
| Scientists at the Massachusetts Institute of | | | | tag attachment. In a future article I will explore |
| Technology (MIT) Auto-ID Center began to explore | | | | specific developments in converting techniques and |
| commercial applications of RFID in 1999. Wal-Mart, | | | | the impact of this compelling technology on the |
| The Gillette Company and Proctor & Gamble | | | | packaging industry. |
| were among the first to conduct pallet-level pilot | | | | Copyright ©2005 by Dennis Bacchetta. All rights |
| tests. They quickly found that RFID offers improved | | | | reserved. |
| supply chain visibility and more accurate inventory | | | | |