Originally Published MDDI May 2005
Don't Be Shortsighted About RFID, Experts Say
Are you implementing radio-frequency identification (RFID) because Wal-Mart or another major customer says you have to? If so, you are doing it for the wrong reasons, and you might be missing out on a chance for significant supply chain efficiencies, two experts said at an Institute of Packaging Professionals (IoPP) conference in March.
A number of major retailers have begun requiring suppliers to implement RFID systems to better track products and alert store personnel immediately when an item is out of stock. This movement will affect makers of over-the-counter medical devices, if it hasn't already. In addition, if the systems catch on in the retail world, they could spread to hospitals and other facilities where devices are shipped.
Michael Putman, product marketing manager for Markem Corp. (Newton, MA), said the current practice of having warehouse personnel slap RFID tags on boxes for retailers that require them is inefficient and shortsighted. “It gets you to compliance, but you have to take the long view, and the details absolutely matter.
“The implementation process requires data integration, which is not easy,” said Putman, speaking at IoPP's Eastern Equipment Seminar in Secaucus, NJ. “But you have to think strategically about how to get return on investment from this.”
He said “slap and ship” is merely the first of four phases of RFID implementation, and only the final two will bring any benefits to the manufacturers of medical devices and other products. “Slap and ship” is a problem because it's a process for which the warehouse is not designed. Also, because it's manual, it creates a bottleneck.
The second phase is scaling the “slap and ship” process up to accommodate higher volumes, he said. That includes tagging multiple stock-keeping units at multiple distribution centers. “That brings some benefits, such as being able to link EPC [electronic product code] data into your customers' systems, but there is no benefit to your overall enterprise.”
The third phase, then, is crucial. That, Putman said, involves moving RFID tagging to packaging lines. “You can put an applicator on your packaging line and apply tags at line speeds, and then verify that they're good. Not only does that eliminate the bottleneck in the distribution center, but you can start to associate EPC with batch and lot information in a more precise way,” he said. “That allows full traceability from production to distribution to the customer. But there will be costs to retrofit your packaging lines, and the benefits will mainly be internal.”
To get the full range of benefits RFID can bring, companies will need to move to the fourth phase, which is using RFID data with partners. “If you can associate EPC data with the entire manufacturing process and tie it to a batch and lot, and then share that information with your customers, you have an extended track-and-trace system in place,” Putman said. “That means your recalls will be more limited, you will reduce the number of times your product is out of stock, and you can plan manufacturing and shipping based on customer demand. But to make this work, we need common data formats, and there is work to be done with standardization.”
Other practical considerations come into play as well, he noted. These include figuring out where on the package is best to place the tag, especially on packages containing liquids or metals. Bottle labels can be hard to read, and metals can cause interference. As of now, he said, the best practice for figuring out what tagging procedures work best is “statistical testing of tag rejects.”
Another challenge, said Mark Roberti, founder and editor of RFID Journal (Hauppauge, NY) is developing RFID systems that can accommodate frequencies anywhere in the world. In the United States, the frequency range for RFID is 902–950 MHz, but in Europe, it is 866–868 MHz and in Japan, it is 952–960 MHz. “To accommodate today's global manufacturing and shipping, we need to create an antenna that can work at all of these frequencies,” he said.
Also, he said, the day will come when RFID tags are not applied like a label but are integrated into the material of cardboard boxes, or into the ink printed on them. “The benefits of that are that it will cost less than sticking a label on, and that there is less risk that tags will be damaged,” Roberti said. “Plus, there would be no delay in packaging line speed.”
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