The appeal is spreading, but RFID for beverages still poses problems

Anything worth doing is worth doing well. It’s an old adage, but certainly applicable to the current state of Radio Frequency Identification (RFID) technology. Originally designed to streamline supply chain management, RFID has had its share of supporters and detractors, and even though criticisms have slowed the adoption of this technology, it hasn’t halted its process of innovation.

According to RFID: Technology, Applications and Market Potential, a new study from BCC Research, the global market for RFID hardware, middleware and IT market reached $640 million in 2005. In 2006, the global market is projected to grow to more than $713 million, and is forecasted to reach $1 billion by 2011, an average annual growth rate of 8.0 percent.

Retail RFID is currently estimated at just less than 27 percent of the overall RFID market, and supply chain management (SCM) applications, when considered as separate from warehouse and transportation, represent a little more than 15 percent of the overall RFID market.

Retail applications and supply chain management applications are each growing at a considerable pace. The retail market segment has been driven by mandates from retail giants like Wal-Mart, Target and Metro. Since inventory control is a major financial concern, the return on investment for this sector is more apparent than in others.

Propelled by retailer mandates, as well as ISO regulations, many suppliers have either already implemented RFID or are in the midst of doing so.

“[Wal-Mart’s] announcement obviously gave passive RFID technology a kick start,” says Mark Dessommes, marketing director at LXE Inc., Norcross, Ga. “The announcement has required companies to purchase RFID equipment in order to become compliant, spawned countless trials and some full-blown implementations [as a result of the trials].”

Despite the number of retailers mandating or even leaning toward RFID, adoption is causing suppliers to take a close look at their bottom-line return on investment. “With more manufacturers being required to comply with the Wal-Mart mandate, more ideas are being trialed that involve RFID, and more and more trials are moving from trial mode to full implementation … not at the speed some experts predicted, but it is happening,” Dessommes says. “Manufacturers and suppliers also are looking at innovative ways beyond SCM to use RFID data to generate ROI, such as promotion management.”

The prevailing impediment to item-level tagging has been the “high” cost of RFID tags. Three years ago, ARC Advisory Group, a Dedham, Mass.-based research firm listed the average unit price of a tag at $0.91 for a passive HF tag and $0.57 for a passive UHF tag. The firm expected that by 2008, the unit price would drop to nearly $0.30 each for passive HF tags and an average of $0.16 for passive UHF tags. That cost continues to decline, but not at the rate manufacturers and suppliers had hoped.

In May, RSI ID Technologies, a Chula Vista, Calif.-based manufacturer and systems integrator of standards-based, turnkey solutions and tags for RFID, data collection and product marking, launched its iTrack product line, which offers the first finished, second-generation label for less than $0.10. The new label, made specifically for tracking products at the item level, leverages Gen 2 UHF technology and works on items that historically have been challenging, such as unique packaging designs, liquids and on metallic products.

 “We have seen a noticeable decrease in RFID Solution component prices, from tags to readers to software,” observes Andrew McGrath, senior product manager for RFID solutions at Manhattan Associates Inc., Atlanta, Ga. “With the innovative solutions available in the market today, many organizations can see how their RFID investments can lead to true ROI. These efficiency gains will be realized by turning the vast amounts of RFID read data into information that can be used by businesses to make better, more informed decisions.”

As with any technology that has begun the maturation process, there comes innovation on what’s considered to be “the norm.” Tagsys USA, Cambridge, Mass., recently announced the availability of its AK Family of UHF Gen 2 tags, which feature The-Package-Is-The-Tag integrated packaging approach for item-level RFID. Touted as the world’s first Adaptive EPC Gen 2 family of tags, the tags consist of two parts: a universal low-cost and ultra small UHF “Kernel” module converted into the package; and an adaptive antenna that is customized to be incorporated within the packaging of the item and also placed in close proximity to the AK Tag module.

According to the company, the adaptive antenna allows the tag to become an integral part of the packaging. It is fully adaptable to customers’ packaging shapes, materials and sizes, as well as the nature of the goods inside the packaging. It is also fully adaptable to the customer’s industrial environment, processes organization, reading distances and conditions, privacy requirements and region of use.

The tag customizability provides economies of scale and lower costs while allowing customers to deploy tags to meet their specific needs by using an antenna that is delivered in different form factors and using materials such as conductive ink, aluminum or copper.

The liquid aspect of beverages can pose tricky problems for accurate and reliable RFID implementation. The radio frequency absorption and reflection characteristics in beverages and beverage packaging present more challenges with tag placement and tag read issues.

“Even with the advances in read rates with Gen2 functionality, UHF RF signals are still readily absorbed by liquids,” says Manhattan Associates’ McGrath. “Metal cans and packaging create RF reflections and ‘null spots,’ consequently reducing overall readability of tagged product. Passive tag UHF Gen2 technology is available for beverage packaging. Provided the tags and readers are optimally positioned, read rates can be very good in conveyor environments for single cases of product.”

Readability issues for beverages and other liquid products can be especially problematic for Wal-Mart suppliers, since the company’s RFID mandate is based on a frequency range that is affected by water and metals. This pitfall can present challenges pertaining to tag placement and application during the manufacturing process. “Struggles between tag placement and image marketing on the product need to be resolved in order to achieve a working solution for both parties,” says Steven M. Dods, product development manager, labeling at Diagraph, a division of ITW Co., St. Charles, Mo. “The good news is that there are methods to make the tags work on these types of products. While there are many advanced software programs on the market to identify the optimal location of the tag location for any given product, there seems to be a simple rule of thumb that works most of the time: place the tag in the air gap. On most liquid-based products shipped in cases or traypacks, there is usually a location at the top of the container between the products where there is an air gap. This location usually gives the best reception for the tag to communicate to the reader.”

But there are still issues related to reading a palletized population of tags, since the inner-most product containers are shielded from the reader by the surrounding liquids. “In some instances, reading may only be achievable through de-palletization or specialized antenna configuration tags,” Dods says. “The latter increases the tag costs beyond the typical $0.10 to $0.14 range by twofold. Many first-tier suppliers have come to understand this limitation, and have chosen the route of de-palletization. The important part to remember here, there are solutions for liquid products, so it is doubtful that they will ever be exempt from mandates.”

Beverage packaging at the traypack and case-level can use the same widespread RFID tag technology as non-liquid-based products, Dods points out. These tags are generally short double dipole antenna tags, which exist in sizes as small as 4 inches by 0.5 inches. “This type of tag is offered by four top providers in the industry at about $0.14 for low quantities,” he says. “This tag can have a white paper face to print information, such as the human-readable EPC number, or product name identification. The tag can be placed inside a larger sized label such as a 4-by-2-inch or 4-by-6-inch shipping license plate. There are alternate tag antenna configurations that increase antenna area and allow better signal reception on difficult products, such as liquids and metals, but at a cost of usually two times the standard ‘on-pitch’ tag. Typically, if there is any usable air gap in the product’s container, the standard tag will get the job done.”

In addition to the problems posed by liquids, beverage lines run at very high speeds and presently, most RFID systems simply can’t keep up. In response, Markem Corp., Keene, N.H., built the 800 Series High Speed RFID Applicator, which can tag cases in excess of 100 cases per minute, employs a patented system for rejecting bad tags and features a tamp applicator configuration designed to apply on-pitch tags such as the Alien “Squiggle” and Avery Dennison “Strip” without conversion — all of which allows flexibility in tag placement and potentially reduces tag costs.

Additional options for beverage manufacturers include lift-truck-mounted RFID readers, which are great for the improving speed and accuracy of full pallet shipping, receiving and general warehouse moves, as well as case some picking and quality control operations. The RX2 lift-truck-mounted RFID reader from LXE addresses a need for an easy-to-install, vehicle-mounted RFID reader for use with standard RFID-based forklift pallet applications such as shipping, receiving and picking. In addition, it can be used for put-aways in environments that use EPC RFID-based identification of pallet loads and locations. The RX2’s mounting solution requires no permanent lift modifications or lift-truck downtime for installation. Shipped ready-to-work with the Windows CE operating system and an 802.11 radio, the unit can run off its own battery or the lift truck’s power and supports the reading of EPC Class 0, Class 1 and C1G2 (Gen2) tags.

To date, the RFID market is growing steadily, although, not as fast as originally expected. Michael Putnam, Markem’s marketing manager, solutions, puts the still-burgeoning segment in perspective. “Keep in mind that barcodes took 25 years to really take hold,” he says. “Compared to that, RFID implementation is moving quickly. It just takes time for technology and standards to mature and for suppliers and customers alike to build systems that work as required.”

Despite the debates surrounding RFID, Wal-Mart seems to be moving ahead with its RFID initiative, announcing recently that it will add another 300 suppliers to the list of companies using RFID technology for its stores. The new companies will begin testing shipments next month and are expected to go live in January 2007. It also said it will be adding another 500 stores that will be capable of handling RFID-tagged items by the end of the year, bringing the total to more than 1,000.