Shockwaves were felt throughout distribution and logistic departments within the industry when in June of 2003 Bentonville, AR-based Wal-Mart announced that beginning in January 2005, Wal-Mart was going to mandate that their top 100 venders begin providing products tagged with RFID (radio frequency identification) — both at the case and pallet levels. While the technology has been available since the 1950s, the Wal-Mart mandate put RFID front-and-center, and garnered press in everything from Fortune to the New York Times.

• Quality — RFID tags help deliver a fresh product to customers and reduce or eliminate product loss. RFID eliminates manual logging to make more effective use of time and personnel.

• Accountability and traceability — RFID record keeping builds long-term data records that benchmark performance and pinpoint supply deficiencies. RFID also provides records for supply-chain deviation and what types of corrective actions must be performed.

• Safety and reliability — RFID is a cost-effective method to answer consumers’ and regulatory agencies’ growing demands for safe and traceable products. RFID also automatically maintains cold-chain safety records and easily complies with Hazard Analysis and Critical Control Point (HACCP) requirements. And in the event of a recall, RFID simplifies the recall process by allowing individual products to be tracked from the store to the pallet to the distributor to the plant to the individual batch.

At its core, RFID is a technology that can identify, trace, track, locate, and protect perishable products during their journey through the supply chain. Utilizing radio frequencies, information is transmitted instantly from the tag to the reader. Current non-food applications for the technology include highway EZpass transponders, garment alarms, and Mobil’s SpeedPass. In addition to destination location, RFID promises benefits to the food industry because the technology can also be used for temperature monitoring. Temperature loggers (as part of a product tag/transponder) provide temperature vs. time logging with configurable interval and alert thresholds.

With the technology, a shipment of frozen poultry can be sent from a processor in Pennsylvania to a retailer in Oregon. The retailer, distributor, and processor are concerned with keeping the product within the necessary temperature range while it is in transit. RFID allows all parties to monitor the product’s location and temperature in real-time. Knowing exactly where in the supply chain a product is enables retailers to better manage their in-store inventory, and keeping detailed, real-time records of a product’s temperature gives added assurances to the processor that their product is arriving to the retailer in top-notch shape as intended. In the event of spoilage, distributors can point to the RFID-generated information and determine whether the spoilage occurred during transit, and if so when and where the product’s temperature rose above the required level.

Like other progressive technologies, RFID requires the support of a major processor or retailer to build momentum for widespread acceptance. RFID can thank Wal-Mart, as its mandate for a 2005 implementation is forcing its suppliers to comply or risk losing its biggest account — as well as other retailers to catch-up and implement the technology as well.

“This was not a case of fixing flaws in our supply chain, this is a measure to improve what we already have,” explains Gus Whitcomb, a Wal-Mart spokesperson. “RFID brings better supply-chain visibility— and with it the ability to tackle the age-old problem of merchandise availability. In the early stages, we’ll be able to know whether product is at a distribution center, in a store’s back room or, thanks to directional readers at the doors of that back room, on the sales floor. Down the road, as reader capabilities grow, we’ll be able to know exactly where in the back room the product is. Emory University said in 2002 that the average retailer looses four percent of sales due to out-of-stocks. RFID will help us have the right product in the right place at the right time. That will help our sales. We’ll also see improved inventory levels.

“When a customer comes to a store and doesn’t find the product they want, typically two things happen,” he adds. “One, they buy a similar product, which damages brand loyalty. Two, they walk out of the store without buying anything. That hurts sales for everyone. We think improved merchandise availability holds tremendous potential for suppliers. However, we also believe the biggest benefits from RFID are realized by those companies that find ways to implement the technology into their own processes rather than just to meet a Wal-Mart initiative.”

The Wal-Mart solution is simple. Beginning on Jan. 1, 2005, there will be pallet and case RFID tagging on all products from the store’s top 100 U.S. suppliers. There will be a regional implementation rollout starting in Texas with three distribution centers and 150 stores. For the next two years implementation will spread, and by the end of 2006 Wal-Mart will require all products from all suppliers in all regions in the United States be RFID- tagged. Wal-Mart relays that the Texas implementation will serve as a way to help RFID suppliers evaluate their programs and determine what, if any, changes must be made to their systems.

“The mandate for our top one-hundred suppliers in November [2003] was to evaluate their products to determine what made sense to tag, and come back to us by February [2004] with their merchandise-tagging plan,” relays Linda Dillman, Wal-Mart’s chief information officer. “It took us a little longer to get through all the tagging plans. Some suppliers will tag one- hundred percent of their product, and others two percent. In aggregate, the total volume will be a little more than sixty percent going through those facilities in January. It’s three distribution centers — less than three percent of our distribution centers — and 150 stores, less than five percent of our stores and clubs. That felt like the correct amount to really give suppliers some incentive to view their organizations.”
Whitcomb says so far the only implementation hurdles have been communication.

“Communication has been the biggest challenge,” he relays. “There has been so much misinformation circulating about what we are doing and what suppliers need to do that it has caused unnecessary hurdles. We’ve done our best to try and correct that by meeting directly with all suppliers involved and being available to them whenever they need us.”

The technology is applicable, affordable, and is gaining in popularity. For proactive suppliers looking to be one of the first on the block to incorporate RFID, here is what you will need:

• RFID tags/labels — The tag is at the heart of the system. The tags consist of an antenna used to transmit production information and an integrated circuit or inlay on a chip. Most tags are passive; however, the active tags use batteries and allow data to be captured and recorded at various points of a product’s distribution. Most tags are converted into pressure-sensitive labels that also hold human readable text and a bar code. These “smart labels” can be automatically applied and allow manufacturers to integrate with a variety of supply-chain management systems while the industry makes the switch to RFID.

• Label applicators — RFID tags can be supplied preprinted in roll form, so traditional label applicators may be fitted to apply RFID tags to cases and/or pallets. However, some are looking to print-and-apply labelers to attach the RFID tag to the product. This solution gives the flexibility of also printing variable information on the label, as well as writing the RFID tag at the same time.

• Middleware — RFID middleware is the software layer that resides between RFID readers and enterprise applications. Middleware allows users to transfer the collected data into the information necessary to make immediate supply-chain decisions.

• RFID readers — Readers are the devices that receive and process data from the RFID tags. A variety of readers are available in both stationary and portable designs.

• Tag printers —RFID printers focus on transferring information to the RFID label and also program the chip inside the label.

• Chip antennas —  RFID tags require antennas connected to their embedded microchips; however these components do not need to be purchased separately because a RFID tag will already have this. Advancements will come from thin-film batteries that have the potential to bridge the gap between low-cost passive RFID transponders, which have a limited read range, and more expensive active tags that can broadcast a signal further and be read more consistently. NP

Technology suppliers contributing to this feature include:• Laudis Systems, phone (732) 225-5333 or visit www.laudissystems.com• Computerway Food Systems, phone (336) 841-7289 or visit www.mycfs.com• eMerge Interactive, phone (817) 732-6536 or visit www.emergeinteractive.com• Norseman Plastics, phone (416) 745-6980 or visit www.norsemanplastics.com• Datamax, phone (407) 578-8007 or visit www.datamaxcorp.com

RFID will make bar codes extinct. Here’s why:
* RFID eliminates the need for line-of-sight reading
* RFID tag information can be easily changed or updated via a rewrite function
* RFID tagged products can be read at the item, container, or pallet level
* RFID tags can be easily integrated with sensors to measure temperature, detect chemical or biological agents, and monitor other environmental characteristics

The past two years have seen RFID technology evolve from engineering experiments to tangible applications. Here are the milestones in the technology’s acceptance and usage:

• Tesco, the British retail giant, conducts a pilot program with tagged packages of Gillette razors and “smart shelves.” The shelves are equipped to register movement of RFID-tagged products on and off the shelf.

• Drug store chain CVS tests a system on prescription drugs in two of its North American pharmacies. CVS cites improved customer service as the primary motivation, but it adds that quality control, patient safety, and other cost savings were additional benefits.
• The Red Cross says it plans to run a pilot test using RFID to track blood packets.
• John Hopkins hospital becomes one of the first medical centers to use RFID tags to keep track of medicines.

• U.S. Department of Defense asks its top 100 suppliers to use RFID tags on cases and pallets by Jan. 1, 2005. DOD says RFID will improve automation of the receipt, storage, movement, and shipping of materials in the field and at its maintenance facilities.

• Wal-Mart informs its top 100 vendors that they will have to label pallet loads and individual cases with RFID tags for circulation through Wal-Mart’s distribution centers.

Looking for more information on RFID? Check out these sources:

• The “RFID FAQs, not Fiction” primer from The Association for Automatic Identification and Mobility. Call (724) 934-4470, or visit www.aimglobal.org/technologies/rfid/rfid_faqs.asp

• Research from BRGTownsend Inc./Packaging Strategies examines individual RFID components and their role within a total systems solution. Call (610) 436-4220 x 11, or visit www.packstrat.com
• The Smart Active Labels Consortium, call (781) 876-8833, or visit www.sal-c.org

Looking to make the switch to RFID tags? Here is a step-by-step process of how to implement this technology.

• Business case analysis — Define project scope, costs, potential application solutions, anticipated ROI, implementation hurdles, and timeframes.

• Proof of concept — Prove RFID concept as viable within enterprise, test-selected technologies and communications, test integration of RFID data with trading partners.
• Pilot — Pilot RFID application in controlled environment.

• Deployment — Deploy in side-by-side manner with existing operations. Deployment decision based on expected ROI, technology availability, customer requirements and least disruption to other operations.

• Transformation — Replace current radio-frequency processes with more efficient scan-free processes and eliminate many manual tasks.