Most people are familiar with barcode-based solutions offered by carriers for tracking parcels. These barcode solutions provide visibility when parcels (or containers) are scanned along their journey. Barcode scanning has served the industry well for many years, but the growing information needs of shippers are pushing the industry to develop new technologies, known as intelligent packaging, to better meet those needs.
Enter Intelligent Packaging
Intelligent packaging contains an instrument, typically electronic, that records and transmits information about that package and events that have affected it. For example, a radio frequency identification (RFID) tag contains a computer chip that records data unique to that package and an antenna that transmits data in response to a signal received from an RFID reader. RFID-based intelligent packaging lets you not only track the movement of goods, but interact with them as well. RFID offers new applications for shippers and mailers that improve upon basic barcode tracking.
Intelligent packaging has been in use for several years in handling high-value or high-security items such as defense department material. Technological developments that are driving down costs make it an area of exciting innovation for shippers and consumers. Intelligent packaging does not always involve RFID, however. Examples of non-electronic intelligent packaging include adhesives that indicate tampering, microbial sensors that detect spoilage or temperature fluctuation, packaging materials that absorb moisture and oxygen and tags that indicate physical shock. These are important innovations for industries that routinely ship perishable or high-value goods, including consumer-packaged goods, electronics and pharmaceuticals. The Alexandria, Virginia-based Envelope Manufacturers Association (www.envelope.org) even has member companies experimenting with �electronic� paper, which can store magnetic data in the paper itself.
Radio frequency-based technology has been in use for several years in familiar applications such as loss-prevention tagging in retail stores, toll payment collection systems such as E-Z Pass and automated payment such as ExxonMobil�s Speedpass System. RFID-based intelligent packaging promises a major leap forward for the shipping industry.
Pieces of an RFID System
An RFID system includes tags, readers, communications networks, servers and information systems. Technological advances in each area are driving interest in RFID. The RFID tag includes three main components: the chip or other element that records the data, an antenna to transmit (and possibly receive) the data and the substrate that carries the tag, such as an adhesive-backed label. Although the data carrier and antenna are frequently a silicon chip and copper wire, a variety of alternatives are being developed in the attempt to reduce the cost and simplify the production process.
RFID tags alone do not deliver the data. An RFID reader must be within range of the tag. The RFID reader needs to communicate with software known as middleware that will direct the transactional information to appropriate data systems. And of course, the reader needs to have a communication link to those data systems, either wireless or across a wired network.
How is Intelligent Packaging Used?
The promise of RFID is based on a broader �interrogation� field and the ability to encode more data than in a linear barcode. Scanners �look� for barcodes; readers �listen� for RFID tags. This typically allows RFID tags to capture information about all of the items in a container or make it easier to locate an individual container or package on a warehouse floor. The increased data capacity of RFID tags compared to linear barcodes means that additional important information such as product source, destination, expiration date and handling instructions can be included.
The U.S. Department of Defense and major retailers have concentrated on container, pallet and limited case-level RFID tagging, seeking to improve inventory, payment and warehouse management operations. Item-level RFID tagging to manage store stocking and improve the accuracy of point-of-sale operations has significant promise, but full implementation is still several years away.
These initial applications are helping to identify and overcome problems associated with implementing RFID. Advances include cutting the time RFID readers need to acquire tag signals, improving read rates in all kinds of environments, shielding signal interference and developing inexpensive tags that are hardened to withstand reuse or in the case of single-use tags, are landfill-friendly.
Are the Standards Standardized?
The development of a coherent set of standards is key to the widespread adoption of RFID. Communications protocols and frequencies between tags and readers must be consistent. Data content must be controlled so that tags identify themselves and their content in a way that is understandable to the readers and does not conflict with other tags in the system. The International Standards Organization (ISO) (www.iso.org) and EPCglobal (www.epcglobalinc.org) are working to standardize requirements.
Standards exist for six classes of RFID chips and a variety of electronic product codes (EPC) that extend the traditional universal product code (UPC) to enable unique identification of individual items. However, the marketplace is not sufficiently standardized to capture the full benefits of visibility across the supply chain. For example, the development of common international RFID tag standards is not yet complete, particularly in the areas of UHF, power limits and microwave frequencies (although low- and high-frequency standards are generally agreed upon). The software industry for RFID applications is still evolving. Forrester Research, Inc. (www.forrester.com) believes that the lack of global RFID standards, high chip prices and the still-young middleware market are among the biggest obstacles to widespread RFID adoption in 2005.
Innovation Drivers and Barriers
What is driving the move to intelligent packaging? Market demand for information. Firms are investing in intelligent packaging technologies with an eye on reducing costs and improving performance. In the US, much of the impetus for RFID adoption comes from mandates by Wal-Mart, Target, Best Buy, other major retailers and the U.S. Department of Defense. In the UK, retailer Tesco is a major proponent and is even pilot-testing item-level tagging of DVDs in some stores.
But many companies are concerned that the benefits of RFID do not yet justify the cost. Barcodes can be printed on labels at a cost of tenths of a cent, and the barcode reading infrastructure is well-established in most shipping operations. By comparison, the cost of the cheapest RFID tags is between 20� and 50�, and companies also must invest in new technology for generating, programming and reading the RFID tags. Of course, the cost of tags varies by class, function, frequency, power requirements and economies of production. We expect costs of both tags and readers to drop, while capabilities increase over time, as the market becomes more established.
What It Means for Package Shippers
On the one hand, package shippers should be evaluating RFID applications for use in their own operations. The key to making that decision is to understand the business application and the potential benefits. Here, the work of major shipping companies to deploy RFID tracking at either the individual package level or at the container level will be a key driver. In addition, shippers need to consider what it will mean for them as item-level RFID tagging becomes more prevalent in consumer goods. Since these goods end up being shipped through parcel delivery services, any RFID implementation needs to consider the entire supply chain and how �your� tags will respond to RFID readers in package shipping operations.
What does this mean for barcodes? Don�t throw away those printers and readers yet. In spite of their limitations, barcodes are still important to supply chain operations and will co-exist with RFID for many years. Barcodes will provide redundancy should the goods be handled in non-RFID facilities or if the RFID tags fail. In some cases, like a conveyor line, barcodes can be extremely effective to capture data. Companies such as Zebra Technologies, Inc. (www.zebra.com) and Intermec (www.intermec.com) offer smart label solutions that print barcodes and write RFID tags on the same shipping label.
What About the Postal Service
The United States Postal Service has extensive experience with RFID, including using it in a diagnostic capacity for more than 10 years. As part of its Intelligent Mail initiative, the Postal Service is keeping a close watch on RFID technology and has conducted several lab and �live� mail tests. The Postal Service actively participates on international standards bodies with input to RFID specifications and was a founding member of the AutoID initiative, which is now EPCglobal. Due to the size and depth of our network, broad deployment of RFID by the Postal Service is still a few years in the future � and initial deployment is likely to focus at the container level. In the meantime, the Postal Service continues to implement its OneCode Vision strategy that improves management of mail through enhanced barcoding, including nesting and tracking mail aggregates, such as tubs, trays, pallets and containers. This strategy allows the Postal Service to extend into RFID and align with its overall vision.
�Once we fully implement the OneCode Vision, the transition to RFID will be relatively straight-forward because our end-to-end data and coding infrastructure will be in place, and RFID will have matured sufficiently for us to justify the investment,� offers Charlie Bravo, U.S. Postal Service Senior Vice President of Intelligent Mail and Address Quality.
Whether used in shipping and logistics to identify locations of goods in the supply chain or more tangible applications such as consumer packaged goods, intelligent packaging offers exciting possibilities for logistics management with the promise of more current and accurate data. Cost savings (or avoidance) will be just one of the many benefits of intelligent packaging. Innovators also will find ways to employ the features and benefits on marketing of intelligent packaging, including using the �wow!� factor to improve product quality and attract new customers.
Jeff Freeman is Manager of Mail Technology Strategy at the United States Postal Service. For more information about Postal Service products and services, visit www.usps.com.
