EPC and RFID to revolutionize corrugated packaging.

Editor's Note: This article is based largely on roundtable discussions at the 2003 TAPPI Corrugated Division Conference, held in Dallas, Texas in October 2003. A sidebar to this story includes updated news and information on RFID.

EPC stands for "electronic product code." It is basically a chip with a small amount of data on it. Eight or nine of them could fit in the "D" for Denver mint mark on a dime. For Wal-Mart Stores, which will require the 100 top suppliers to its stores to begin phasing in the technology on product cases and pallets in January 2005, the tiny devices could boost annual revenue companywide by up to 4%. That's 4% of US$ 256 billion.

EPC is an enhancement of the Universal Product Code (UPC)--the bar code. It uses a chip and radio frequency identification (RFID) to create an information structure that will help improve supply chain efficiency. Since RFID tags will eventually be placed on or in corrugated packaging, there are major implications for corrugated container manufacturers and their customers.

HOW WILL EPC TECHNOLOGY BE USED?

In distribution centers, the technology will be used to automate inventory count, said Rich Fletcher, visiting scientist at the Massachusetts Institute of Technology (MIT). "The primary part of that is verification of receipt for faster receiving and shipping," he said.

In retail stores, EPC will help keep shelves filled with products for sale, reducing the number of out-of-stock items. "Where we see the biggest improvement is in reduced inventory levels," Fletcher said, because staff will know which merchandise is available to refill shelves, where to find it, and which items actually need to be reordered. Theft prevention and product tracking are additional in-store applications.

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Down the road, EPC will be used to automate checkout at stores. Products may also be able to communicate with "smart" appliances, so that your refrigerator could order another dozen eggs to replace the carton you just finished.

SETTING THE STANDARD

For the past few years, the Auto-ID Center has conducted much of the research to develop the EPC network and standards. Its administrative functions shifted to EPC global in the fall of 2003.

EPCglobal is a joint venture between the Auto-ID Center, the Uniform Code Council, EAN International, and EPCglobal, which will be the organization that actually administers the use of this standard and this technology, explained Bud Babcock, customer packaging and product identification manager at Procter & Gamble.

Auto-ID Center, headquartered at MIT, continues the research function and was renamed Auto-ID Labs. It includes research labs in England, Switzerland, Japan, and Mexico. The labs have been working together to make sure that, as the standards are developed and put into use, they will function globally.

Each center has a specialty, Fletcher said. The lab in Japan, for example, has focused on the software infrastructure and how this information is distributed in databases on the Internet. The center at Cambridge University is focusing on how to use RFID in manufacturing processes. The lab in Switzerland is looking at the business models for RFID.

ROLE OF WAL-MART AND THE GOVERNMENT

In the past several years, the big push to develop and actually begin using EPC technology has come from Wal-Mart and the U.S. Department of Defense (DoD), among others. Beginning January 1, 2005, DoD is requiring its vendors to mark goods and materials with RFID tags. The military has been using active RFID (battery-powered tags) for almost a decade. It has allowed commanders to keep better track of major items and cargo in transit during operations in Iraq, for example.

Wal-Mart will begin phasing in the EPC system in its north Texas stores in January 2005, "Probably by the end of 2006 we will have all of our stores outfitted with RF readers," said Ron Moser, strategy manager in Wal-Mart's logistics information systems department. It will probably be several years after that before the technology is used for scanning at the checkout counter, he said.

"We are working with our top 100 suppliers to begin tagging cases and pallets beginning in January 2005." Moser said. That initial group of 100 has now grown to about 110, with the addition of other companies that see the benefits of the technology. "By the end of January 2006, we will have all of our suppliers applying tags to cases and pallets moving through our distribution system," he said.

"Our initial focus has been within our distribution centers and our stores," Moser said. In receiving areas, readers can be located at door portals and on conveyors to read the product as it comes in. "The product type--if it is liquid, metal--does cause some interference with being able to read all tags that are on a pallet of merchandise," Moser said. Rather than trying to read every carton, the system will read pallet and case tags. The company will use electronic advance-ship notification information to provide additional information about the contents of the pallet.

On the shipping side, however, "where we're shipping individual cartons out on our conveyor system, we're able to read 100% of the cartons on the outbound side," Moser said.

AN OBJECT LESSON

For the infrastructure that needs to be built to support EPC use, MIT has proposed an object class, service, local and global object-naming service, which is very similar to how the Internet runs, Babcock said. It involves interconnected, local servers scattered throughout the world that recognize and interpret what a chip is telling them.

"It's basically a distributed database and large lookup table," Fletcher said. "With EPC, if you have a reader in your store and you put a box with a tag on it, that box has a certain ID, that gets relayed to the lookup table and it goes out to the Internet and pulls down the information that you need, wherever it is."

"The object type identifies a tag as being a pallet tag, a case tag, an innerpack tag, or a unit tag," Moser explained. "Based on the application, we want to filter out those tags that we don't care about, so we can reduce the amount of tag activity that is coming at a reader." A reader might be able to read 200-800 tags per second. "If a pallet is going past a reader on a forklift doing 10 miles an hour, I've got about 3/4 of a second to read everything on that pallet," he said. If there is too much information bombarding a reader, it may miss the most important bit of data--the pallet tag. Filtering allows the reader to focus on the dozen or so pallet and case tags instead of unit tags.

"At the store level the product will be coming in through the back room, where readers at the receiving doors will read the cartons as they come off our trailers. We will also have readers that go out to the sales floor so we can track cartons as they come into the back room and move out to the sales floor," Moser said. The stores will also have readers at the corrugated balers or compactors, so "we can record that a carton has been destroyed and is no longer being tracked."

A practical consideration is how to manage all the data and how to share it, Babcock noted. There are also physical tag considerations. "If I have an aluminum Coke can and I put a chip on it, is that going to work?" he said. "Is there going to be too much interference? How do I do that? There are some environmental ramifications--not only from a recycling standpoint, but also considering the work environment. Under what conditions--such as if it is too hot, or too cold--will it not work? Readers are also under development. How close do you have to be before you can read? Can you read multiple tags simultaneously?"

A bar code doesn't really "care" what kind of box it is on; an RFID tag does. That is because the RFID tag uses electromagnetics to read an entire stack of boxes at once, Fletcher explained. The electromagnetic fields penetrate through the stack of boxes and sees all the boxes that are in that stack. "As we know, there are different kinds of materials. Paper towels are very different from bottles of shampoo or raw meat, so we're trying to understand how all these things work together," he said. "It's not about just the label, but the packaging materials. Packaging is really crucial to the performance of these systems--not only in making them work, but also in the possibility that the packaging can improve the performance of these systems."

"These chips don't have any power on board, so there is no battery," Fletcher said. "The chip get its power to operate from the reader; if it's not near a reader, it can't turn on." The kind of tag being used for this application also contains very little information (64-96 kb), Fletcher noted. Also, they are purposely made very cheap, ideally costing only about 5 cents each, though current costs were closer to 30 cents each earlier this year.

DoD's technical specifications for passive RFID tags include an operating frequency range of 860-960 MHz and a minimum read range of 3 meters. Initially, class 0 and class 1, 64-bit and 96-bit EPC tags will be acceptable. The military will shift to UHF Gen 2 EPC tags and readers when those pass development. Wal-Mart will likewise shift to the 96-bit, Class 1, v. 2 when it becomes readily available.

As 2005 begins, hundreds of companies will need to be adept at various bits of EPC technology. Many more will need to be using or providing the technology by 2006.

"The earlier in a supply chain that you apply a tag, the more value there is; the more value there is to Procter & Gamble, the more value there is to Wal-Mart," said Guillermo Gutierrez, International Paper's marketing manager for Smart Packaging. "I think there will be an evolution, but source tagging will be pushed back ultimately on packaging manufacturers," he said.

WHAT YOU WILL LEARN:

* Why Wal-Mart and other retailers are promoting EPC technology.

* The benefits and limitations of EPC technology and its implications for corrugated packaging.

* How EPC and RFID tagging works.

ADDITIONAL RESOURCES:

* Visit Wal-Mart's web site for news about the company's EPC initiative: www.walmartstores.com.

* Learn more about EPCglobal at www.epcgloablinc.org.

* Department of Defense policy guidelines, FAQs, and technical information on RFID tag use can be found at www.acq.osd.mil/log/rfid/index.html.

* Learn more about EPC tag date specification in a white paper at www.autoidlabs.org/whitepapers/MIT-AUTOID-WH025.pdf.

RELATED ARTICLE: NEWS AND VIEWS OF RFID

Editor's Note: The following is a digest of recent news and commentary on RFID from various sources.

Companies adopting RFID despite challenges

"Many companies across a variety of industries are either deploying RFID systems or plan to adopt the product-tracking technology, despite concerns over the high costs and lack of good integration tools and standards. A survey of 135 attendees at a September Frontline Conference and Expo confirms the findings of analyst firms, which say RFID mandates from the federal government and major retailers are driving suppliers to the technology sooner than many would like."--Information Week, September 30, 2004

International Paper rolls out RFID ware-house tracking

"International Paper, Stamford, Connecticut, USA has developed a warehouse tracking system using RFID to manage warehouse inventory. Currently being used for tracking large paper rolls at the company's Texarkana, Texas bleached board mill, the system covers all stocking, storage, movement and shipping within the facility. It provides real time inventory routing instructions and movement confirmation to forklift operators without the need for manual compliance." (IP is expanding the system to additional warehouses)--Frontline Solutions, Sept. 21, 2004

RFID standard finalized as rollouts continue

"Wal-Mart, the major retailing force behind the adoption of RFID, has announced an expansion of its plans to roll out RFID for secondary packaging. The initial phase involves shipments by Wal-Mart's top 100 suppliers to Wal-Marts and Sam's Club stores in north Texas by January 2005. Further phases will include:

* RFID implementation in up to six distribution centers and up to 250 Wal-Mart stores and Sam's Club locations by June 2005.

* Implementation in up to 13 distribution centers and up to 600 Wal-Mart stores and Sam's Club locations by October 2005.

* RFID tagging of cases and pallets by Wal-Mart's next 200 suppliers by January 2006."--Food & Drug Packaging, August 2004, pp. 13-14

Wal-Mart: 'Smart' tags test goes well

"Wal-Mart Stores Inc. said a pilot program to introduce RFID tags, a technology that is intended to replace bar codes, to its stores and distribution network has begun without a major hitch.

The Bentonville, Arkansas retailer's launch of the tags began late last month with a small group of stores and distribution centers in the Dallas area.

'To date, no glitches--only positive glimpses of what's to come,' Wal Mart Chief Information Officer Linda Dillman said Tuesday."--Seattle Post-Intelligencer, May 20, 2004

Stora Enso and Stockway to develop RFID-based smart packaging solution

"Stora Enso and Finnish specialist software provide Stockway have started cooperation to develop a smart packaging solution based on RFID. Among other benefits, Stora Enso's smart packaging application will create added value for customers through improved logistics, better product safety and online control over the supply chain.

Smart packaging provides interactive features in the packages, which enable trading partners to trace and track products throughout the supply chain. Stora Enso's trace and track application will be based on Stockway's RFID software Trackway."--Press release, May 18, 2004

Vermont Senator calls for Congress to take action on RFID

"Vermont Senator Patrick Leahy has called for congressional hearings to discuss the issue of RFID technology and whether federal legislation should be enacted to protect consumers' privacy.

'The RFID train is beginning to leave the station,' he said last week during a conference on video surveillance held at Georgetown University Law Center. 'And now is the time to begin a national discussion about where, if at all, any lines will be drawn to protect privacy rights.'

The hearings are not likely to be held during this session of Congress because of the limited time available, a spokesperson at his office said."--PromoXtra Online, March 30, 2004

Survey: RFID adoption will surge in 2004

Packaging Strategies and Cap Gemini Ernst & Young (CGE & Y) have found that the global packaging industry is bracing itself for the rapid adoption of RFID beginning this year. According to a Packaging Strategies/CGE & Y pulse survey of 275 participants attending the 17th Annual Packaging Strategies Summit Conference in March, more than half (54%) of those surveyed believed that Wal-Mart's 2005 supplier mandates will be a 'catalyst' for the evolution of RFID adoption in the industry, compared to less than one in six (15%) who feel it is 'overrated.' In addition, more than half of respondents (51%) believe RFID is 'a major business driver this year' or are initiating a program action plan in 2004."--Press release, March 26, 2004

ABOUT THE AUTHOR

Don Meadows, former editor of TAPPI JOURNAL, is editor/writer at CDC's National Center for Environmental Health and the Agency for Toxic Substances and Disease Registry, Atlanta, Georgia, USA. Contact him by email at [e-mail].

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