Smart Labels

By Steve Katz | January 14, 2011

Brand owners are using smart labels to ensure product authenticity and value, while improving productivity and the customer experience.

Above: This picture, courtesy of Newgistics, is designed to show its' products relevance to customer service, finance, marketing, IT, operations, and logistics.
Once upon a time, the term "smart label" was used to describe packaging technology that utilized RFID to transmit information. And while it still does, things have changed, and today the smart label name is used well beyond RFID. Smart labels now encompass a variety of labeling technologies, used in a wide range of markets and applications. The operative word here is smart, and these labels can do things that make smart business sense for brand owners.

Transmitting information, generally, is a label's primary function – whether it's smart or not. After all, a typical label's purpose may or may not be to provide end users with a product's name, descriptions, ingredients, expiration dates and so on. But a smart label has the ability to take this information exchange several steps further. Applications are numerous, and they can go much further than telling a brand owner where in the world a given product is.

Bielomatik Jagenberg
Max Golter, VP sales for Bielomatik Jagenberg, Windsor, CT, USA, provides a concise smart label definition. "A smart label is a label capable of providing more information than the wording describing the product. The addition of a transponder enables the label's ability to share the product description, to differentiate it from counterfeits, prevent theft, and determine its whereabouts," he says.

Golter says that the technology behind the original smart label – an RF and RFID transponder – has come quite a ways, as has industry standards. "In the early part of this past decade, one could expect 70 percent yield,andlack of standards created incompatible transponders with various readers. The price of the transponders was also three times greater at that time. Today we can enjoy 99.5 percent yields, huge leaps in standardization, and transponders costing around 7 cents," Golter says.

Bielomatik Jagenberg specializes in manufacturing machinery that allows label converters to enter the smart label market, and Golter says a lot of additional consideration about the company's machines must be made versus a conventional press. "Great care must be given to avoid destroying transponders which are placed between the label facestock and the release liner. The machine needs to be able to read each smart label in order to determine whether it is a functional or defective smart label.

"Bielomatik has been building smart label converting machines since 1997. With 13 years of experience, a lot has been learned in order to manufacture smart labels at the fastest possible speeds while protecting the transponder. The ability of the RFID readers used, to sequentially read each smart label, with each being a moving target, will determine the machine speed. Additionally, the proper foresight must be provided in the design to prevent static electricity, roll nips, and web paths from destroying the transponders," Golter says.

Bielomatik offers an entry-level machine that will take diecut labels coming from a printing press and place pressure sensitive transponders between the label and liner to create smart labels. Golter says, "On the high end, we offer machines capable of accepting dry or pressure sensitive transponders, the ability to work with continuous substrates followed by diecutting, and the flexibility to produce smart labels, tickets, hangtags and cards."

The apparel industry, Golter notes, is providing a surge in smart label demand. He says, "The application which really stands out at the moment is in the form of item level apparel tagging. Since this is one of the first item level applications requiring enormous quantities of transponders, demand has soared. To put this into perspective, imagine a pallet with 40 boxes of shirts with 20 shirts in each box. Until recently, that pallet would require one smart label for the pallet and 40 smart labels for each box of shirts resulting in a total of 41 smart labels. Now, with each shirt requiring a smart label, the result is 841 smart labels – for just a single pallet." Other prominent applications can be found in the automotive and aircraft industries, to keep track of parts, Golter adds, "And pharmaceuticals and library books would also fall under this category."

Cost, once a prohibitive factor, has come down considerably, thus paving the way for increased smart label usage. "When considering the cost to produce a smart label – facestock, release liner, adhesive, transponder and converting costs, the transponder is the most costly part. In 2004, the cost of a transponder was about 23 cents. Today the transponder costs about 7 cents. With the price coming down, new doors have opened to applications for which the pricing was previously too high. Costly pharmaceuticals and electronics are not too sensitive to the smart label costing 10 or 40 cents.
Inexpensive items can now start considering whether to use smart labels. With more and more adoption of smart labels being used on products, the increase in demand for transponders will drive volume which will result in further reductions in smart label costs, provide faster return on investments for equipment, and increased profits."

InkSure Technologies
Brand protection and anti-counterfeiting are major areas of application for smart labels, and there's more to these crimestopping labels than the track-and-trace ability of RFID.

InkSure Technologies, New York, NY, USA, has developed a technology that helps end users determine if products are counterfeit or genuine. The basis of this technology is covert optical codes, or taggants – invisible codes that can only be detected by forensic-level readers specially programmed to read the specific code combination made for the individual customer.

An InkSure Technologies' reader scans a label
to determine its authenticity.
Tal Gilat, president and CEO of InkSure Technologies, explains that the taggants are integrated into packaging and labels during production, and can be integrated into any material, not just packaging materials. "A company sends workers into the field to do random spot checks to make sure that the company's branded items have the taggants in them. The taggants tell the end user if the product did, in fact, come from the factory. The spot checks are done by holding a reader up to the place on a product or packaging that a taggant should be. The reader searches for the taggant and lets the end user know within one second if the correct taggant was detected. If no taggant is detected, it means the product is a counterfeit. This is what we call a 'lock and key model', the taggant being the lock and the reader being the key," Gilat explains.

InkSure is coming out with a new reader this year called ScanSure. ScanSure will not only detect the taggant in the packaging, but also read an item's bar code and answerfour questions: Is the correct taggant in the label? (Is the item counterfeit or genuine?) Is this bar code legitimate? Has this item been diverted? (Is it in the correct location?) Has this bar code been read previously?

"Each of the four questions give important clues about the security of a company's supply chain beyond whether a product is counterfeit or genuine," says Gilat. "If the bar code is not recognized by ScanSure, it means someone created a fake bar code for the packaging. That is another sign of a counterfeit product. ScanSure can be programmed to recognize what factory or area a product comes from. If a worker knows that all items in a store are supposed to come from Factory A, and he finds an item from Factory B, then that means there is a breach in the supply chain. If ScanSure detects that a bar code has been read previously, that means that the product was already checked, which means that someone is reusing the company's packaging.

"These four pieces of information are analyzed to give a diagnosis of Okay (no problems detected), Counterfeit, Diversion, Third-shift or Expired. This information gives brand owners important clues about where they should investigate security breaches in their supply chain."

In addition to readers, InkSure offers track-and-trace systems. Track-and-trace combines an item's bar code and InkSure's taggant so that items can easily be tracked from a central office. This allows an end user to track items and make sure that they travel on the correct path throughout the supply chain. Track-and-trace combined with random checks offers an additional level of security.

Gilat says the biggest demand for the technology is in pharmaceuticals and tax stamps, with more government demand for tax stamps prompting the surge. Other markets include tobacco and spirits, pharmaceuticals, consumer goods, fuel and energy, and automotive parts.

There's also been a spike in demand for protection of pharmaceutical products, due to an increased interest from generic drug companies, Gilat says. "The conventional wisdom used to be that counterfeiters were interested only in high-profile and big-name brands. Over the years, it has been become apparent that counterfeiters will try to fake anything that can make a profit. Also, demand for generic drugs has increased in recent years because of the economic situation. This means very big profits for counterfeiters who can successfully fake generics. In many ways, generic drugs are easier to counterfeit because they invest much less in brand identity thanbig pharmaceutical manufacturers."

Online shopping has becoming increasingly more popular. Convenience is a factor, but also, in light of today's recessionary times, the experience provides an unparalleled method of shopping for the best price. However, the experience also presents an added cost – shipping. According to Newgistics, a United States Postal Service (USPS) Workshare partner, shipping costs remain the single largest deterrent for consumers purchasing online, and shipping/transportation costs remain the single largest line item in annual operations budget; representing as much as 40 percent of the total.

Newgistics, based in Austin, TX, USA, recognizes that these days, optimizing shipping and return costs is smart business, and to achieve this, the company has developed its own "SmartLabel" proprietary technology, a returns management service that Newgistics developed to assist companies in creating an enhanced return experience for their business and consumers.

The Newgistics SmartLabel bar code is applied to a pre-paid postal-based returns label that operates within the USPS' Parcel Return Service mail classification. The bar code allows companies to collect customer and/or order-specific information on a particular return transaction such as customer number, order number, product serial number, product description, etc. "The label can be generated at the time the order is placed by the end customer, or it can be generated at a later time through a set of web or API-based tools that we can provide for our clients," says Kevin Brown, director of marketing. "Once a customer decides to make a return for an unwanted item, should they elect to use the prepaid SmartLabel, they simply apply it to the outside of the shipping container and then tender it to the United States Postal Service at their home, office, the Post Office, or USPS blue box drop points," he says.

Additionally, customers can request a free Carrier Pickup from the USPS. Newgistics collects the return from the USPS and drives the package to one of its SmartCenter processing facilities across the country. "At which point we capture the data elements associated with the SmartLabel on a package-by-package basis and report that data to our clients who will ultimately receive the return merchandise," Brown says. "Because we provide detailed visibility to our clients in advance of their actual receipt of the return, they can execute any number of processes to help them improve internal operations which ultimately reduce costs as well as improve customer service through proactive notification/communi-cation with their consumers. The goal is to reduce costs, improve operations, create a better customer experience and drive both short- and long-term revenue growth and net income."

Despite the fact that Newgistics and the USPS co-developed the PRS classification years ago, SmartLabel is not be confused with Parcel Return Service (PRS) – as Newgistics is one of three companies that currently offer a PRS-based service. Brown says, "Newgistics is unique in the fact that our SmartLabel service is about more than moving boxes, but is about using technology and data associated with the movement of a return package through our combined network with the USPS to drive value across the business."

PakSense, Boise, ID, USA, has developed a "fresh" smart label technology. The company is a provider of smart labels that detect changes in temperature, benefiting both the business and the consumer, in a variety of industries. It's a great fit for products transported long distances, shipped and stored in several different places along the way to the final destination.

PakSense offers time and temperature monitoring labels.
PakSense offers what it calls "time and temperature monitoring labels." Basically, these are flat adhesive labels, about the size and thickness of a sugar packet. Inside the label is a battery, a clock crystal and a memory chip. PakSense offers contact and wireless versions.

The labels come in a box of 50. A label is activated by pushing a button. They come preprogrammed with optional temperature readings.

A major market for this technology is the food industry. "In the produce industry, for example, a lot of products need to be shipped or maintained between 32° and 39° F," says Amy Childress, marketing programs director. "So the labels can be preprogrammed with those temperature ranges. They have alerts on the inside – lights that will flash if those temperature ranges are exceeded. So the user just snaps a corner and pushes a button to activate the label, and if the temperature goes outside of those preprogrammed ranges, the lights will flash," she explains, adding that if the label is flashing green, then all is well. "But if it's flashing amber, then it means that at some point, the temperature went out of range and you should download the data to find out exactly what happened."

PakSense labels can be programmed to whatever a customer wants in terms of temperatures and temperature ranges, as it all depends on the commodity. And the labels also do more than provide visual alerts – the memory chip is collecting precise data throughout the label's journey.

"When the label gets to its final destination, we have a reader that can be used to pull the data that's been stored in the label, and when you download the info with our reader, and connect it to any computer running Windows, we will automatically generate Microsoft Excel spreadsheets that graph your upper and lower temperature ranges, and all the temperatures that were experienced," explains Childress. "We also have a summary sheet that will show the highest, the minimum, and average temperatures, and any alerts that occurred. And we can include the raw data in five-minute intervals."

It's not just the food industry that's using these labels. There are quite a few temperature-sensitive products out there. PakSense has customers in electronics, plasma TVs, chemicals, paint, adhesives, pharmaceuticals, vaccines, blood, and insulin, and the floral industries.

Location of label placement, as well as how many should be used, is up to the customer. "You can put it on a product itself, or you can put it on a pallet. It all boils down to how expensive the product is you're shipping, and how important it is for the temperature to be maintained," Childress says.

Cortegra, a packaging and label converter in Fairfield, NJ, USA, specializes in brand authentication technologies for the pharmaceutical and related industries. The company has recently developed a technology that virtually turns every label into a smart label.

Cortegra's Biometric Authentication Technology makes "every label a smart label."
It's called Biometric Authentication Technology, and it's based on the unique microstructures of the packaging itself. The camera-based technology captures the information that's embedded in the package's structure and transforms it into a digital signature using Cortegra's proprietary software. The digital signature is based on the random characteristics of the structure and cannot be easily duplicated.
"Every label is a smart label in itself, because the structure of the material is different," says Narendra Srivatsa, director of packaging solutions. "A labeled product is made on the same machine – and for all outward purposes looks the same – but if you move the label a half inch, it's got a totally different structure. The technology utilizes the structural difference to make every label a smart label.

"The technology creates a unique ID for each product, and when you put it into readable form, it becomes part of your supply chain process. It's called biometric, because it's based on biometric markers – like a human fingerprint," Srivatsa says.

The technology can be applied to any market, because it works at the item level, "which makes it so powerful," he says. "It's currently being used in high security markets such as secured documents, currency and high-end cosmetics. There is no known method of counterfeiting this technology, and it can be used at multiple entry points in the supply chain," he says.

Biometric Authentication Technology, like all of Cortegra's smart labeling applications, is customized for specific customer projects. Srivatsa says, "The customer needs to figure out what makes sense, and how the process is going to be used. There is a lot than can be done, but you really need to measure value. It becomes an ROI discussion."