Corrugated and folding carton converters are on John Seaner’s mind these days. Seaner, vice president of industry development for EPCglobal U.S., the standards making organization that wants to spread radio frequency identification (RFID) throughout all industries, has paper and packaging on his 2006 industry focus list.

Having made its mark in retail, consumer goods, healthcare, aerospace, defense, and logistics, packaging is the next logical target for the purveyors of RFID data communications. It makes supply chain sense.

More than 1,600 supply chain experts from around the world are helping build EPCglobal standards to support global, multi-industry deployment of this technology. At the EPCglobal U.S. Conference in Atlanta, September 13-15, the organization and affiliated technology vendors reached out to potential industry partners to convince them that RFID is the wave of the future.

“Our mission is to build standards that facilitate and accelerate global multi industry adoption,” EPCglobal President Chris Adcock says. “There are more than 600 EPCglobal members around the world. Standards are essential to commercialization.”

Important Partners—Three of the vendors on the show floor told OBM that packaging converters and manufacturers of converting equipment will be important partners in their commercialization plans in the coming months and years.

Symbol Technologies, Rockville, Md., has established a strong installed base of barcoding systems around the world. Its new business model for RFID is to work with label converters in making inlays that can be attached to external packaging. The next evolution of this will be source tagging, or, embedding an RFID tag into the packaging itself.

“The ultimate vision is printing the antennas onto the package and applying the chip,” says Philip Lazo, vice president and general manager, RFID infrastructure, for Symbol. “That’s Horizon 2 or 3 technology, but there’s nothing I can see that will prevent us from doing that. We’re making big investments right now in figuring out how to attach chips to substrates at high speeds and at low cost. We have a technology called PICA, Parallel Integrated Chip Assembly, and we believe it will meet the demand of markets in five years. We also believe the demand for inlays could reach 100 billion units.”

To reach that goal, Lazo says Symbol has to get deeper into the supply chain. That means working with the manufacturers of paperboard converting equipment. He believes that working with partners who specialize in this part of the supply chain will be the tipping point in mass adoption.

Gaining Acceptance—Alex Stuebler, business manager for Siemens Energy and Automation Inc., Norcross, Ga., expects that the upcoming Pack Expo in Las Vegas will prove how important the packaging partnership in the supply chain is to widespread RFID acceptance.

“Consumer packaged goods (CPG) manufacturers will ask packaging converters to provide RFID capability so they can be compliant with Wal-Mart,” he says. “But you don’t want an offline slap and ship solution in highly automated packaging environments.”

Siemens’ vision is to offer a retrofit kit for converting equipment. Development, however, will come in stages. The first stage will involve applying a label to the outside of the corrugated box. Then, as the tag technology evolves from silicon-based technology to polymers, Stuebler sees it moving inside the corrugated box. The key will be enabling packaging lines with RFID technology without slowing them down. Folding cartons will then be the next focus for Siemens.

“We talked to a prominent CPG company yesterday, and they don’t want their product engineers worrying about RFID readers and tags and productivity,” Stuebler says. “They want to know at the end of the day that the packaging will have a tag that’s good and they can send it to Wal-Mart. Within 18 months we may have packaging solutions that aren’t slap and ship.”

What’s in it for Converters?—Wal-Mart and Procter and Gamble may have plenty to gain from RFID adoption, but other than adding value for these customers, will packaging converters share in the wealth? Some other value added services converters are offering may be a good fit with RFID. Take inventory consignment, for example.

Suppliers who maintain ownership of their products until the customer uses them are adding RFID tags to consigned inventory. When the customer pulls a pallet load out of the warehouse, that pallet tag is read as it passes the dock door.

“That read tells me what the customer’s use model is — how often they pull that particular inventory and put it into production,” explains Mike Fisher, RFID business development manager for Intermec North America, Everett, Wash. “When it’s pulled, that starts the billing process, but it also gives me visibility to real time usage information. That can translate into cash flow advantages by reducing handling and inventory costs.”

Proof of Concept—There was ample evidence at the EPCglobal conference that this wasn’t idle vendor chatter. End users and product manufacturers who spoke at the event say that RFID represents a golden opportunity for packaging converters.

Kathy Smith, special assistant at the U.S. Dept. of Defense (DoD), says the DoD wants to get to the point where war fighters don’t have to scan barcodes. As soon as they pull packages off a truck they’ll be read automatically and the DoD will know when to re-order. Embedded technology makes sense to Smith.
“When you look at what’s being done with tires, Michelin [a DoD supplier] found it was better to embed the tag in the tire rather than attach it,” Smith says. “Once they did that, they found they could put information about the tire in that tag and use that information for updates. I can envision a future where that is driven further back in the chain. This can become a value-added benefit paperboard converters could provide customers.”

Patrick King, with Michelin’s Global Electronics Strategies Division, agrees.
“Because the converters’ profit margins are razor thin, they are focused on this future space called printable chips,” he adds. “The tipping point will be when the converters send their boxes down one channel and then realize they can pull [data] back into their shops to pull costs out.”

Dick Cantwell, chairman of the EPCglobal board of governors and vice president of The Gillette Co.’s global value chain, explained how that’s done. Gillette started within its four walls, then found opportunities for operational savings.
“By putting EPC on pallets, cases and inner packs, we know that a shipment of our razor blade cartridge refill packs went from our DC [distribution center] to our retailer’s DC in three days and three hours,” he says. “It then took about a day to load it onto a trailer for shipment and then it took another two days to reach the retailer’s store. It then took the store three hours to be restocked. That’s information we never had before. EPC data have given us visibility into what goes on with store promotions and helped us improve promotional execution.

“Long term we want to integrate the EPC tag into the packaging, into the corrugated board if we’re talking displays,” Cantwell continues. “That will give us a cost advantage by streamlining operations and getting product out the door. Our packaging engineering designers are talking to the corrugated box suppliers to look at future solutions incorporating EPC tags into the packaging.”
As these kinds of opportunities head up the supply chain toward packaging suppliers, RFID’s momentum is sure to gain speed and strength.OBM