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