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Packagers in search of the 5-cent



Published July 20, 2005
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More than 300 people from around the world, all interested in radio frequency identification (RFID) and its impact on a multitude of industries, packed the ballroom of the Marriott Hotel in Cambridge, MA, in late March to find out where the technology is today and where it will be five minutes from now.
Scientists, ink makers, chip manufacturers, military personnel and representatives of consumer products companies took the stage during the two-day event. A handful of prominent label converting firms were represented as well, among them Dow Industries, Graphic Solutions Inc., CCL Label, and Argent Tape & Label.
The consumer product manufacturers were among the most popular speakers. Tom Torre, B2B supply chain innovation manager for Procter & Gamble, spoke of the company’s intense interest in RFID and its plan for implementation of electronic tracking and response throughout its manufacturing and shipping network.
EPC — electronic product code, as Torre called it — will address high out-of-stock product levels, will correct unreliable forecasting and inventories, and will counter theft and counterfeiting. Theft, he said, is a $50 billion retail supply problem worldwide.
Procter & Gamble (P&G) is a founding member of the Auto-ID Center at the Massachusetts Institute of Technology, a think tank of large companies at work to promote RFID and establish standards.
A key driver for manufacturers such as P&G, Torre says, is tag cost. “Economics require a 5-cent tag, or less, to start at the case/pallet level; and a 1-cent tag at the unit level.” He added that it will not be easy for suppliers to produce a smart tag that costs 5 cents. “It isn’t here yet, but I have it on good information that it is achievable in the right quantities. Otherwise, we wouldn’t be investing so heavily in EPC,” he said.
Attendees were eager to listen to Chris Desrosiers, director of retail customer development at The Gillette Company, because Gillette had just made big headlines in the packaging business with bold announcement. The company, whose brands include Gillette, Braun, Duracell and Oral B, signed a deal with Alien Technology, a chip manufacturer, to purchase 500 million RFID tags — that’s half a billion — for installation in its packaging.
“I can’t talk about the cost,” she said, “but low cost is a reality for us.” Field trials are under way for the RFID program with Wal-Mart in the US and Tesco in England.
Desrosiers explained that billions of dollars are lost in the supply chain each year through routine failures and theft. Each step of the chain — manufacturing, packaging, warehousing, transportation, customer distribution, store inventory and store shelf — presents an opportunity for a product to get lost. The causes of lost revenue, she said, include inaccurate data and data entry, inventory inaccuracies, failed or late deliveries, theft, incomplete deliveries, and inefficient stock replenishment.
The hope is that RFID tags on cases and pallets will lead to a recovery of a large piece of that lost revenue.
Terry Hennessee, the inventory shrink manager for Lowe’s Companies Inc., told the audience that the home improvement products company intends to use RFID to solve significant product shrink. Hennessee divides shrink into three areas: operational shrink (non-theft related losses of product or inventory dollars) which accounts for 40 percent of the company’s inventory losses; internal theft (losses caused by dishonest acts by employees), accounting for another 40 percent of loss; and external theft (by customers and non-employees), which makes up the remaining 20 percent.
RFID, he said, will enable Lowe’s to track product quantities on a daily, weekly and monthly basis by store, as well as conduct research on all transactions for an item over a 33-week period.

Conductive ink
Steven Ludmerer, president of Parelec, Rocky Hill, NJ, presented details on his company’s inks, which are used to print RFID antennas instead of producing tags using etched aluminum or copper antennas.
According to Ludmerer, Parelec’s Parmod Silver Ink cures at a much lower temperature than other such inks, and hence can be run at faster speeds. The conductivity, he added, can be from three to 10 times that of other printed inks. Right now screen printing is the predominant application method, but the company is working on inks for use in gravure, flexo and inkjet presses.

New consortium launched
The conference saw the appearance for the first time of a new group called SAL-C, the Smart Active Label Consortium. An international interest group, SAL-C’s goal is to promote and develop the use of smart active labels, which it defines as “fully active” as well as “semi-active”.
Right now, passive labels are available in the marketplace. By the end of this year, semi-active labels will be in production, and fully active labels are predicted to emerge by 2005. These are described as batter-assisted back-scattered passive labels, which have enhanced functionality and greater performance than standard passive labels.
More information about the Smart Active Label Consortium is available at the group’s web site: www.sal-


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