"Many of our suppliers are working with their packaging suppliers to have [radio frequency identification] tags fixed or embedded prior to them receiving the packaging. As the percentage of tagged vs. non-tagged packages increases it will be advantageous for other suppliers to look to their corrugated suppliers to provide this service."

Wal-Mart Spokeswoman Christi Davis Gallagher says board converters will play a key role in RFID promulgation. If you're concerned about cost vs. benefits, not to mention standards, she wants you to know that these issues are being ironed out.

"We haven't seen a product where we couldn't find a tag that would deliver the read performance needed to facilitate process improvements," she says. "In fact, many packaging companies are carrying out lots of research in this area. With the recent ratification of the Gen 2 tags, this will allow the cost of tags to come down. This will in turn lower the cost for our suppliers and create a truly 'global' tag."

Remember The Barcode Whether or not you believe Gallagher's assessment of RFID's strategic value to converters, the history of barcodes has shown that the best way to benefit from technology is to find a direct, intrinsic benefit first, not to wait for benefits to "trickle down" — or up — the supply chain. For corrugated and folding carton converters, their benefit from RFID might come from the retail end of the chain.

Do RFID Benefits Offset Costs?

When barcodes came out, their primary application was inventory management, and they worked. At the same time, retailers gleaned detailed insights about market forces. Scanner data generated by retail sales have been tracked and analyzed by Information Resources Inc. and A.C. Nielsen for years. This information has helped these market research firms explain what impact promotions and in-store marketing efforts have had on consumer behavior.

Benefits on Display This kind of information will become much more important to box makers as they expand their services into corrugated displays. With the rise of the TiVO generation, consumers are forsaking televised commercials and making their buying decisions while in the retail environment. Displays are doing the selling that TV commercials once did. RFID represents an opportunity to measure the activity these displays generate.

"The RFID chip is just another step forward, and the beauty for the makers of displays is not whether they worked, but what works and when, and did the display get put up?" explains Peter Hoyt, executive director of In-Store Marketing Institute, Skokie, Ill. "Without knowledge about whether displays are getting up, no one can embrace these displays wholeheartedly."

Tags with associated sensors can indicate package temperature, movement and other variables.

Walgreens participated in a six-month pilot involving RFID-tagged displays in 20 Washington, D.C. stores. Strategically mounted RFID scanners monitored the movement of goods out of 60 tagged displays. Some promotions resulted in a 250 percent rise in sales. In fact, 20 percent of the displays exceeded expectations, while another 20 percent performed poorly, even when supplemented by ads.

The message for suppliers of corrugated displays is they now have a way to measure the effectiveness of their designs and to use those data in measuring the value they add for their retail supplier customers. This is a big step out of the commodity box mindset.

"For the corrugated company, I can see how this will lead to greater use of corrugated merchandising, better, more strategic, more thoughtful and effective use, which will only make it more essential," Hoyt says.

On top of that, he adds, corrugated is the most cost-effective material for displays.