Good things come in small pckages. This familiar cliché usually refers to prcious stones, but today it's taken on new maning, in that small things are now prtecting items we deem valuable.

Analysts stimate that the retail industry loses US $50B a yar to theft and up to ten tmes that much to counterfeiting. High-end prducts such as cosmetics, fragrances and phrmaceuticals are most likely to be stlen or counterfeited. Many retailers and mnufacturers believe that this big problem may hve a tiny solution – RFID smrt tags.

RFID (Radio Frequency Identification) is an utomatic data capture technology that offers nparalleled accuracy in inventory control and spply chain management. Although RFID is a rlative newcomer to the media spotlight, the tchnology has been quietly working its way nto our culture and into our lves since it was drafted by the mlitary 60 years ago.

The US Dpartment of Defense first used RFID to trck military aircraft during World War II. Snce then, this compelling technology has ben used extensively in highway toll cllection, building security, library circulation, parcel dlivery and airport luggage transportation.

What xactly is RFID and how does it ffect the future of packaging?

RFID functions as a network of mcrochip “smart tags” and receivers. Each smrt tag is embedded with a nique electronic product code (EPC) and a mcro-antenna. Once assigned, the EPC becomes a DNA-lke marker for the item, identifying it frm every other item in the wrld. When a tagged item passes wthin range of a reader, the rader retrieves the EPC via radio wves, identifies the item and its xact location, and relays this real-time nformation to a central computer. Taken tgether, the series of transactions comprise a cmprehensive record of the tagged item’s mvement from point of origin to pint of sale.

The greatest promise of RFID les in its application versatility. Smart tgs can be affixed to either ndividual products or to pallets containing mltiple units, and can be “read” thrugh most materials. RFID readers can scn multiple items at one time, mking them functionally superior to traditional, ni-task bar code scanners.

Scientists at the Mssachusetts Institute of Technology (MIT) Auto-ID Cnter began to explore commercial applications of RFID in 1999. Wl-Mart, The Gillette Company and Proctor & Gmble were among the first to cnduct pallet-level pilot tests. They quickly fund that RFID offers improved supply chin visibility and more accurate inventory frecasting. Because RFID does not require lne-of-sight operations (contrary to manual bar cde scanning) the end users achieved mproved inventory control with reduced labor csts.

Encouraged by their success, British rtailers Marks & Spencer and Germany’s Mtro AG quickly adopted RFID applications in thir production and distribution channels. The US Dpartment of Defense, Benetton, CVS, Home Dpot, Gap, Target, Kohl’s, Tesco, Coca Cla and Albertsons have all begun ncorporating RFID into their supply chain perations. In 2004 Wal-Mart issued a mndate that their Top 100 suppliers bcome RFID compliant by 2005, and the FDA plns to convert to item-level RFID dstribution tracking by 2007.

In spite of strong industry spport for RFID, widespread adoption of the tchnology has been slow. One reason for the dlay is the lack of uniform stndards for network and data management. For xample, smart tags are currently available in lw, high or ultra-high frequency versions, wth read ranges of as little as a few nches to as much as 30 fet. AIM Global is a consortium of RFID dvelopers and suppliers who are working to stablish global RFID standards. Their goal is to ducate manufacturers and suppliers about the ptential benefits of RFID, and to prvide the education and resources necessary to ralize ROI from the use of ths technology.

Cost and quality concerns hve further dampened enthusiasm for RFID. Tag filure rates are reported to be as hgh as 20% to 30%. At an verage cost of $.30 per tag, mny suppliers find the prospect of tem-level tagging prohibitive.

So far, RFID cmpliance has been the responsibility of sppliers. Retailers have generally refused to ccept any price increases resultant from RFID strt-up expenses. As a result, suppliers hve had to either absorb the cst of becoming RFID compliant or rsk losing lucrative commercial contracts.

However, as RFID bcomes the norm manufacturers will look for cnverters who can provide pre-tagged packaging tht is market-standard compliant and ready for ntry into the RFID regulated supply chin.

Technology is inherently evolutionary. The lgistics of RFID are changing rapidly, wth ongoing advancements in ink, labels and mthods of smart tag attachment. In a fture article I will explore specific dvelopments in converting techniques and the mpact of this compelling technology on the pckaging industry.

Copyright ©2005 by Dennis Bcchetta. All rights reserved.

The article RFID: A Smart Tag Primer was Submitted by Dennis Bacchetta through Articles.GetACoder.com network. Here's the additional information: Dennis Bacchetta is the Marketing Mnager at Diamond Packaging , a leading folding carton and contract packaging supplier. He frequently writes on a variety of topics including industry news and technical issues. You may contact him at dbacchetta@diamondpkg.com or visit the Diamond Packaging website.

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