Keeping Better Track From Factory to Checkout

[R.A. Hettinga]

<http://www.nytimes.com/2004/11/11/technology/circuits/11howw.html?8cir=&oref=login&pagewanted=print&position=>

The New York Times

November 11, 2004
HOW IT WORKS

Keeping Better Track From Factory to Checkout
By BARNABY J. FEDER

IKE investing or hitting a baseball, using radio scanners to wirelessly
identify consumer products is simple in concept but dauntingly complex in
reality.

 The current form of the decades-old technology, now known as radio
frequency identification, or RFID, has three building blocks: small tags
built around microchips that carry a digital identification code; scanners,
which are also known as readers; and networking hardware and software to
link scanners to computer databases.

 The biggest challenge for retailers and their suppliers has been melding
the building blocks into systems that are reliable without being cumbersome
or unduly expensive. Unlike the RFID systems that automatically collect
tolls from motorists or control access to buildings, those designed for
commerce call for disposable, batteryless tags that are tiny and
unobtrusive. And since the tags are meant to be slapped on every pallet or
carton or even on every item, they must be cheap enough for businesses to
buy them by the hundreds of millions.

Perhaps most important, retailers need software capable of filtering out
huge amounts of data while recognizing relevant information - when an item
has unexpectedly disappeared from a shipment, for example.

 "It's been very hard to do an intelligent investigation into how you need
to change the business because the technology is not good enough yet," said
Simon Ellis, supply chain futurist for  Unilever, the consumer products
company. "It's costing over $1 a case, which is fine for a pilot test. But
there is no technology to get labels onto our production-line products."

 The ultimate goal of an RFID system is to track individual products all
the way from manufacture to sale. Under such a system, every item would
have a tag embedded in its label or attached separately. The tag consists
of a microchip and a flat ribbon of antenna; the microchip would contain a
unique code identifying the manufacturer, type of product and individual
serial number in a format approved by EPCglobal USA, a nonprofit group that
has been developing retail RFID standards.

As the item moved through the supply chain, scanners in doorways, on
loading docks or at other handoff points would capture the movement. Radio
waves from the scanners would be picked up by the tag's antenna, providing
enough energy for the tag to broadcast its identity back to the scanner.

Data would flow through the Internet or other networks to corporate
computers, but if the tags had read-write capability, status updates on the
item could be added to the tag itself as well.

 Once products reached the store, scanners in the stockroom could track how
rapidly they are moved to shelves, and scanners on shelves could monitor
when shoppers removed them. Finally a checkout scanner could ring up
everything in a shopping cart as it was wheeled toward the door.

Such technology could speed up checkouts and returns, but the bigger
economic impact would be in keeping store shelves filled with the products
consumers want. Right now, according to the Grocery Manufacturers
Association, stores are missing products consumers want to buy about 8
percent of the time on average and up to 15 percent of the time when the
product is being promoted.

RFID tracking would also make a big dent in theft and counterfeiting,
according to proponents of the technology. And, they say, the tags would be
designed so that consumers could easily disable them after purchase. That
will not mollify privacy advocates, who object to manufacturers and
retailers building up electronic records of shoppers' buying habits, but it
could calm fears that individuals or institutions outside the store could
use the tags to spy on consumer behavior.

So much for the vision. Today's tags are too expensive to put on every item
(the cheapest cost about 20 cents each). An effort by  Wal-Mart to force
its suppliers to use RFID has focused on handling tagged cases, cartons and
pallet loads of goods rather than individual items.

"Even Wal-Mart is still discovering what this technology can and cannot
do," said Omar Hijazi, an RFID specialist at the consulting firm A. T.
Kearney.

With standards not yet settled, few individual items being tagged and
retailers not yet demanding RFID tags at more than a few test distribution
centers, manufacturers have put off automating RFID tagging. Instead, most
are resorting to "slap and ship" strategies in which tags are applied to
items involved in tests just before they leave the warehouse.

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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'