With predictions running at an RFID market worth up to $3bn by 2005 will it be chips with everything by the end of the decade asks Pauline Covell?

Armed with a hand held computer I open my fridge door. On my screen a warning flashes up – ‘Smoked ham should be eaten today, black cherry yoghurt is past its use by date and, by the way, you are out of skimmed milk.’

An idle piece of fantasy perhaps? Not really – the Radio Frequency Identity technology that could make it happen is there but the infrastructure and proven cost effectiveness up the supply chain is not.

Several hurdles have to be jumped – or gently climbed over – before individual packs or ‘smart packs’ with integrated RFID are a reality. Designed to enable product manufacturers to read and write data to the tags, the smart pack will then allow data to be retrieved at any point in the product life cycle.

Global standards have to be agreed, retailers and suppliers must be convinced that the investment will bring real business benefits and cost of tag production has to be reduced. Most important of all is the ability to integrate the data by building the required infrastructure.

Many suggest it is only a question of time before the supply chain starts to reap the potential rewards that RFID will bring, initially through applications in the closed loop returnables sector such as pallets, crates and trays.

Just how might a smart packaging system work? Says MeadWestvaco, a US pioneer in the application of Electronic Article Surveillance field: “Manufacturers would specify placement of RFID tags in or on product cartons, product labels or the product themselves, creating a unique identity that catalogues the product name, case quantity, price and warranty information.

“When the boxes arrive at the retailer, the receivers know exactly what the cartons contain and this data can then be sent back to the manufacturer’s enterprise resource planning, supply-chain and accounting systems. On the retail shelf, a small RFID receiver could track every time an RFID-tagged item is removed and send that data by radio frequency to a local server which would relay it to Internet-based supply chain management applications.

“An RFID-equipped retailer would thus be able to track when it is out of a particular SKU and program the system to order more automatically.

“Data sent to in-store computers could also let store personnel tell customers exactly where out-of-stock items are – on a truck en route to the store, at a distribution centre or in transit and receiving – and when they will be on the retail floor.

“Like EAS tags, these devices can also trigger alarms when someone tries to leave the store without paying for an item.”

Time to revert to reality. Says Martin Swerdlow, CEO of the UK-based independent tracking and tracing company Integrated Product Intelli-gence: “A more efficient supply chain is a more secure supply chain and that leads to improved business processes.”

In a move that is designed to explore the crime-prevention benefits, Woolworths is about to go live on a pilot trial, partly funded by the UK Home Office’s Chipping the Goods Initiative. Co-ordinated by IPI, results are expected by the end of February next year.

“Orders for a store of such things as music CDs are picked and packed into the plastics totes and loaded onto dollies.”

Tagging with battery powered RFID tags is said to allow the dollies to pass seamlessly without portal constraints. “They will be checked onto the vehicles and checked in at the store.”

Christoph Kauer, business line tags and labels general manager at chip specialist Philips Semiconductors Identification, explained the issues surrounding the use of the technology: “Standards have proved to be a key issue in the development of RFID.

“Within this arena you have to consider the frequency regulations in different countries and the technical standards that dictate how readers communicate with the tags.”

“Physics has a huge part to play in RFID.” The operation is based on four frequencies – 125KHz, 13.56MHz (the most commonly used today in supply chain applications), UHF (860-930MHz) and 2.45GHz.

Technical standards are different for each frequency. ISO 18000 is the base standard with ISO 18000-3 being the standard for 13.56MHz. The most advanced RFID frequency in terms of use is 135, which can be used all around the world and has been for 12-15 years.

The biggest in passive ID, where most of the current supply chain applications are accounted for, is 13.56 and is harmonised around the world. “UHF is coming up but is probably three to four years behind the others in use.” It also uses different frequencies in Europe (868MHz) and the USA (915MHz) and cannot be used at all in Japan.

“Why have four frequencies?” asks Christoph Kauer rhetorically. “Basically, they allow different functions in different environments. For example you can achieve a longer reading distance with UHF than with 13.56, but it is not suitable with all materials or in a humid or wet environment.”

Being able to achieve this longer distance is the reason why Electronic Article Numbering International in Europe [of which e.business is a member in the UK] and the Uniform Code Council in the USA have been very keen to sort out the standard for UHF.

Their approach is enshrined in their global tagging programme joint initiative or GTAG, as it is known. “Loading doors in warehouses are around 3m wide,” explains Christoph Kauer. “Technically UHF can read a pallet or a long container coming through that width and 13.56 can’t. That’s why it’s needed for supply chain RFID.”

Between last December and February this year, the efforts to have one approach to the UHF standard took a decidedly good turn. Six manufacturers – Bimec, Intermec, Philips, Rafsec, TagSys and Texas Instruments – combined their original separate propositions to the standards authority.

Following analysis, the GTAG project team decided that the proposal was very close to the needs stated in the GTAG minimum protocol and performance requirements from which its submission was derived. And, following a series of meetings in Brussels between the manufacturers and GTAG, the submissions were combined to produce a unified technical approach. All being well the new standard ISO 18000-6 should be up and running next year.

Comments UCC senior vice president Dennis Epley: “The recently achieved alignment with the vendors is a significant mile-stone in the GTAG project.”

So all is well on the UHF front? Well, yes and no. The only problem is that the distances capable of being read can only be used in the USA and not in Europe.

Why? Because the frequency regulations mean that Europe can at present only use the lower end of the scale – that is the less powerful 860MHz rather that the 930 used in America. That’s an ongoing issue where EAN and its members are lobbying the regulators (see e.business sidebar story).

Philips, in announcing its I*CODE HSL (high frequency smart label) chip is the first to release a product that supports the standards developments in ISI 18000-6 (for UHF), the technical foundation for GTAG.

“Sample products have been supplied and it will be commercially available next year,” says Christoph Kauer. “We can now supply chips for all high volume smart tag and label applications and it completes our product portfolio to all relevant frequency bands.”

At first sight the easiest issue or hurdle to understand is the current cost of RFID. The silicon chip is the most expensive part but assembly, connecting to the antennae, lamination, personalisation and testing also feature strongly. There are several methods used to place the chip on a substrate, which is how they are supplied to the RFID tag producers.

The most common approaches are flip chip bonding and pick and place (robotics). How can this cost be reduced? Two other methods have been announced – Alien Technology’s fluidic self assembly and the vibrating method being advocated by Philips. It is understood that these latter two rely on high volume production.

At the beginning of this year Alien Technology and Rafsec announced a joint development agreement focused on manufacturing tags at very low cost. Rafsec’s parent company, UPM-Kymmene, has simultaneously made an equity investment in Alien Technology.

The FSA process promises to address two key problems facing RFID manufacturers claims Alien – the high cost of ICs used in RF tags and the reasonable limits to production capacity – which it says are both due to constraints inherent in the pick-and-place assembly approach used to make tags today. With sufficiently high volume, Alien plans to package small ICs at lower cost.

“Alien’s approach to IC packaging is extremely well suited to RFID,” says Rafsec’s president Timo Lindstrom. “We are very pleased to be working with them to break the fundamental constraints that have kept costs high and limited the growth of the smart label industry.”

Rafsec, which has produced smart labels that enable radio identification of products since 1999, brings to the partnership a new additive antenna manufacturing approach that prom-ises an increasingly cost-effective and environmentally friendly way of producing RFID tag antennas.

It has also developed lamination, converting and quality assurance technologies that are especially designed for smart label manu-facturing, making use of the expertise of parent company UPM-Kymmene.

In Europe Rafsec’s vice president of sales and marketing Peter Gawley told Packaging Today International: “Things are happening as we speak in RFID. At Marks and Spencer, for example, 3.5M crates used for fresh produce have been tagged using 13.56MHz.

“At £5/crate there is a need to start to manage the asset as well as maintain stock rotation. All the information is on the tag. It also enables the inventory to be managed much more effectively.”

SCN Containers has recently announced what it claims are industry’s first returnable pallet boxes with built-in Tag-it RFID labels from Texas Instruments as standard.

The Rehau Raubox multi-trip folding pallet containers tagged in the base conform to the 13.56 standard ISO 18000-3 (15693) and are designed for easy contactless identification and tracking throughout the supply chain, warehousing and contents identification. They can be supplied as part of a fully integrated system with fixed and hand-held readers.

According to SCN Containers managing director Stuart Nicholls the incorporation of TI’s RFID tags as standard is a major new development that brings the benefits of radio frequency identification and tracking to many more users. The Raubox “now provides a future proof investment that allows users to upgrade to RFID at any time without the expense of adding tags or buying new pallet boxes”.

At the end of the day there is only one true way to get the production costs down and that is to increase the numbers. “It is a chicken or egg situation in one way,” explained Philip’s Christoph Kauer. “But there are many applications that could afford it on a smaller scale – by that I mean 10M-50M pieces a year. That would have the effect of bringing down today’s 50% price to 20-30 cents a tag.

“If these applications proved the point and we moved to a billion chips a year we would be talking of between 5-10 cents a tag. We have all types of concepts but hesitate to implement them because of the low volumes of today. We have a scaleable road map to shrink the costs down. We only need commitment from the market to go ahead now.”

Applications are beginning to happen. Claimed to be the globe’s largest provider of RF EAS systems, Checkpoint Meto offers expertise in incorporating RF security tags into products and packaging at source. It is also developing RFID applications to track, capture data and take inventories in one tag.

Business development director Simon Edgar comments: “We are currently having discussions with the leading retailers. Many have seen the benefits of a decrease in shrinkage achieved from EAS systems and now are beginning to appreciate the benefits of going into RFID.

“DIY specialist retailer B & Q EAS source tags a high percentage of its ‘vulnerable’ products. Here is an area where we could move from EAS to RFID in a logical way.

“We are looking at an integrated approach rather than one that is product led.

“I have no doubt that by next year we will have some good solid RFID field trials. And I believe the closed loop part of the supply chain will provide the area for growth. There are far fewer issues hindering introduction.

“A groundswell of interest from the retailers and apparel companies will be the catalyst for growth. Providing a proven return on investment is a crucial approach.”

Christoph Kauer added: “We are working on several 10M-a-year applications and I believe that in two to three years we will have 20-50 applications that are consuming 10M or 20M chips each in the supply chain environment.

“They are all likely to be on the 13.56 frequency. But we won’t be starting with chewing gum,” he quipped. Likely applications are in four main areas – reusable packaging and assets such as pallet pools, returnable trays and crates; in fashion, food and pharmaceuticals.

“We have a trial for shoes coming along and I see perishable, fresh produce becoming interesting as farm to fork tracking becomes essential with the requirements on health and safety of foods.”

RFID will offer benefits to the pharmaceuticals market. Here the stringent supply requirements of the F&DA and validation especially with the problems of the grey market are drivers. It also has good potential in the conducting of clinical trials.

Manager at Mead Westvaco Intelligent Systems Ronnie Hise says: “Consider this scenario. A consumer reports to his pharmacist that his recent purchase of “X” extra strength tablets does not seem to be as effective in relieving his headache.

“From the ePC number, the pharmacist is able quickly to determine the complete history regarding this bottle and the manufacturer is notified. A review of the quality control records indicates there may have been a problem with a machine that was used during several hours of the manufacturing run.

“The ePC numbers of all the products made with that batch of ingredient are quickly identified and the questionable products are immediately identified in the supply chain. Some are still in the manufacturer’s warehouse, some are in distribution centres and some have already been sent to several drug stores.

“A ‘surgical’ recall is issued, the product in question is identified on the shelves, in the back rooms, and in the distribution centres, by embedded systems, and all the questionable products are isolated within hours of the initial alert.”

And that fantasy of talking to my fridge? Says Peter Gawley: “We will only see a larger scale of RFID tagging of individual items in a few years time. Quite aside from the question of price is the question of infrastructure.

“What is impossible is for a Tesco to roll out individual products tomorrow even if the tags were down to 15 cents as the infrastructure needed to support that is immense. However, in the closed loop situation such as the M&S application, they will gain real business benefit.

“As the infrastructure is put in place the third party logistics companies will start to benefit from it, then the big suppliers such as Unilever and Procter and Gamble will put it in.”