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Send to KindleRFID tags becoming easier to read
But Stockdale of Beaver Street Fisheries said that he had asked to be one of the 33 "volunteer companies" who had opted into the group because of the opportunities his company sees as inherent in RFID tags. "We see the global supply chain changing at an unprecedented rate" said the RFID implementation manager of the $500 million per year company which also markets meat.
Nonetheless Stockdale admitted that his company won't see a positive return on its investment in tags and readers for at least a year or two.
Keeping customers happy
That was one of the key messages coming out of the conference: Return on investment for packagers implementing RFID tagging is somewhere off in the future. Rather their motivation is to satisfy their customers--Wal-Mart and others such as Target and Albertson’s who have announced their own RFID mandates.
"The typical retailer loses four percent of sales because of out-of-stock product" Langford said explaining part of the retailer's rationale for RFID. "Imagine what one to two percent could do to your profit."
But while Wal-Mart will recover sales from reducing out-of-stock conditions to balance out its costs that won't be true for packagers at least in the near term. That is because the passive Class 0 and Class 1 RFID tags (they use different protocols and frequencies) and readers that are available right now are extremely limited in their network functionality--and expensive to boot.
So most companies have been forced to adopt what is called a "Slap and Ship" (S&S) approach. There is virtually no possibility because of data and network limitations for the tagging company to get a return on investment. And once implemented the tags and readers may become quickly outdated given the lightning speed with which technology is moving.
For example Langford kept referring to Generation2 tags which will use a higher UHF radio frequency and perhaps more important be acceptable internationally which the current tags are not.
Tag some or all?
One executive of a fruit packing company which sells into both the food service/institutional market and to retailers as well said he had been told that a S&S approach would cost 20¢ to 50¢ per case depending on volume. His company produces 20 million-plus packages a year which are shipped on half a million pallets. He wasn't sure how many cases that translated into. He said that he would probably use S&S on cases for all customers rather than just for customers that are demanding them.
Everyone expects the price of RFID tags to decline. Langford noted that one tag supplier was writing into its contract with buyers that the price of the tags would be below 5¢ per by the fourth quarter of 2006.
The price is going to have to come down substantially below that though for product manufacturers such as HP to realize the ultimate benefit of RFID technology which will come from tagging individual packages in order to reap the added benefit of theft and counterfeiting prevention.
Item tagging benefits
"Everyone is looking for the next level item tagging" admitted Edds who said all HP business units are implementing RFID tagging at some manufacturing locations. "There is a whole new level of opportunity when we do that. That will drive the magnitude of implementation." That will be particularly true for ink cartridges he explained which often disappear from store shelves in the pockets of thieves.
But Langford predicted that item level tagging is 10-15 years away. "For chewing gum and bottled water to be tagged the cost of the tag has to be less than 1¢ per tag" he said. "We're not going to be able to get [to that price] using silicon. We will probably have to put printed circuits on tags." But he did say that Wal-Mart might "cherry-pick" some "high-value high-theft" products for near-term package-level tagging.
Meanwhile Wal-Mart is more concerned with helping its suppliers figure out how to get Class 0 or Class 1 tags on cases. Moisture in liquid packaged products and metal packaging has caused problems for some RFID tag antennas and not just in cases of grouper.
Listening to Stockdale of Beaver Street relate his problems with the grouper tags and having to contend with cases of seafood stored at temperatures of -30°F O'Shea of Kimberly-Clark nodded knowingly. "The best place to put a tag might not be on the outside of a case" he said. "The interior wall of the case or inside the flap might be better."
K-C found that it had trouble reading tags on the outside of cases when those cases were stacked on pallets in such a way that the case butted up against the metal of a forklift. K-C has a laboratory in which it tests RFID technology. "We make that lab as dirty as possible" noted O'Shea. There are all sorts of electromagnetic energy sources that can limit readability of tags. "We even found the steel rebar in the foundation of our floor was causing a problem" he explained.
But Langford answered that new "agile" readers are removing that obstacle. Six months ago for example Wal-Mart was able to read only 30% of the tags on cases of consumer liquid soap because of the moisture in the product. "Agile readers now allow us to read 100 percent of the tags" he explained. "That was a big wow."
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