(Sept. 24) Universal Product Codes, Price Look-Up numbers and the proposed Reduced Space Symbology bar code soon will be joined by a new consumer goods identification system — electronic product codes.
The Auto-ID Center at the Massachusetts Institute of Technology, Cambridge, Mass., is developing microchips or “smart tags” in which a 96-bit code of numbers called an ePC is embedded.
The tags can be placed on pallets and in cartons. Perhaps someday they’ll be on individual products. They’re scanned by a wireless frequency reader that transmits the code to the Internet, where the “real” information on the product is stored.
The data that could be accessed is almost unlimited, say those working on the project. The tags could help track pallets and cartons and can be programmed to record a variety of information and tell where and when product was produced, temperature and expiration dates.
According to the Auto-ID Center, the technology will enable businesses to save billions of dollars in lost, stolen or wasted products. Down the road, smart tags could help pinpoint products involved in a recall and could serve as homing devices for items that are stolen.
Long term — perhaps more than a decade away — is the possibility that consumers might be able to point scanner-equipped cell phones at a product in the supermarket and learn more about it from the manufacturer’s Web site. Or purchases could be automatically scanned and billed to shoppers’ personal accounts as they leave the store. And “smart shelves” may be able to tell manufacturers when it’s time to restock.
“Auto-ID technology will change the world by merging bits and atoms together to form one seamless network that interacts with the real world in real time,” touts the center’s Web site.
TESTING THE TECHNOLOGY
While much of this technology remains to be developed, some aspects of the program are being tested now. Phase one of an Auto-ID Center test began in October 2001 and involved tracking pallets of participating manufacturers to determine where product was at any given time. Phase two, conducted during the past summer, tracked individual cartons.
“If these technologies can be proved in the field (outside the lab), they have the potential to significantly improve supply-chain management,” according to the center’s Web site.
The center is sponsored by more than 50 corporations, including Wal-Mart Stores Inc., Bentonville, Ark.; Chep, Orlando, Fla.; and Alien Technology Corp., Morgan Hill, Calif.
Bill Wertz, senior public relations manager for Wal-Mart.,. sees possibilities for ePC technology.
“If this technology proves to be as good as its advocates believe it can be, we can make some improvements in our supply chain and lower some costs,” he says. “If we can know where everything is and anticipate where it’s going, we don’t have to have as much in the system to take care of unexpected shortages.”
Wal-Mart has successfully tracked pallet loads of goods using ePCs, and during the summer was testing to see if individual cartons could be tracked, as well.
So far, those pallets and cartons do not include produce.
“We don’t even know at this point if produce is something that lends itself to this,” Wertz says. “That may be down the road. It depends on how well this second phase of testing works.”
But Ron McCormick, Wal-Mart’s vice president/divisional merchandising manager of produce and cut flowers, is optimistic that the system will be applicable to produce. “I believe that the concept of (radio frequency identification) technology allowing us to better track product is hugely important for the produce industry,” he says. “I believe it will quickly become a valuable tool to maximize supply chain efficiency.”
Traceback capabilities are especially important as the industry works to improve food security, he says. By providing a view of the supply chain from the field to store, the technology can help reduce costs and offer fresher produce at lower prices.
Chep also was testing the technology on reusable pallets this summer and, if the results are favorable, the company may expand it to plastic containers, says Deb Spicer, vice president of global corporate communications. The company hopes to achieve several goals through the use of ePCs:
- To automate the capture of customer data, such as cycle time;
- To improve asset control by tracking the lifecycle of individual pallets;
- To enable adjust prices based on the time it takes a pallet to cycle through the supply chain; and
- To identify sources of pallet damage.
Chep is testing Auto-ID technology with 250,000 pallets in Florida until end of the year. The test involves 2,000 retailers and 34 manufacturers.
But radio frequency identification systems are not limited to the United States.
The company reportedly is putting tags on 3.5 million reusable plastic containers. The tags include product codes, quantities and expiration dates. The retailer expects to recoup its $3 million investment in the program within three years through handling efficiencies, reduction in spoiled food and fewer lost shipments.
Companies like Marks & Spencer and Chep seem to be on the right track.
It appears that the most common use for ePC technology at this point is with reusable plastic containers, says Tom Pounds, vice president of marketing and business development for Alien Technology.
“I think a lot of people are contemplating tagging those containers,” he says.
It makes sense to use the technology in conjunction with RPCs because the cost of the tags depreciates with multiple uses. Right now, Pounds says, Alien Technology is working to lower the costs of the tags, which actually contain a microchip and a tiny antenna.
He expects costs to be down to around 20 cents or 25 cents each by the end of year, even less when purchased in larger quantities. Within three years, they could cost as little as 5 cents to 10 cents.
Readers for the tags cost$1,000 in late July, Pounds says, but should drop to about $500 soon and eventually sell for $100. They’re available as handheld devices, similar to bar code scanners, and as stationary units, one version of which measures about 9 inches square and 1.5 inches deep.
The chips can provide a wealth of trace-back information, and someday even might provide temperature profiles of a product from the time it is placed on a pallet until it arrives at retail, Pounds predicts.
RSS IS HERE
Greg Rowe, director of food and beverage for the Uniform Code Council Inc., Princeton, N.J., says that while use of ePCs, especially for individual products, still is a long way off, the Uniform Code Council is preparing to launch what it calls a Reduced Space Symbology bar code — a 14-digit code to identify perishables.
RSS codes would expand the current 12-digit Universal Product Code to include supplier identification, exact weight, unique item identification and an expanded price field, and could be ready for implementation within five years.
They would be placed on Price Look-Up stickers and could be scanned at checkout rather than being keyed in, a process that would reduce the chance of checker error.
Rowe says ePCs, unlike RSS bar codes, would be “basically null and void” for individual produce items.
“If you’re selling produce by weight, you can’t utilize ePCs. You still have to take that to the front end,” he says.
Ted Mason, director of electronic payment systems network services and emerging technologies for the Food Marketing Institute, Washington, D.C., says he is not aware of any talk of using ePCs for individual produce items.
“We’re still working on getting it down to the pallet level and then down to the case level,” he says. Using it with produce “is beyond the discussions at this point.”
But microchips never will be placed in food items, he says. “They will always be in the packaging or the container,” he says.
Phyllis Kim, spokeswoman for Auto-ID Center, says manufacturers and retailers must evaluate ePC technology from a cost standpoint and for practicality before it is implemented for any application. She says retailers may not find it worthwhile to track an individual piece of fruit, and applications other than for tracking may be a decade away.
She also says she does not expect ePCs to replace UPCs or other product identification codes.
FMI’s Mason says the end result of all this technology may not be an emergence of one system but hybrids or “a migration of several technologies.”
Wertz of Wal-Mart emphasizes that, while some of the more exotic applications for ePCs may indeed be possible someday, “We certainly aren’t there yet.”
“We’re taking it a step at a time,” he says. “A lot will depend on how many companies adopt this technology and find it worthwhile to invest in.”
Wal-Mart joined the MIT consortium because the company believed the potential advantages of the technology were worth exploring, “but that’s the extent of our involvement,” he says. “We’re not necessarily advocates of the technology or leading an effort to secure its implementation.”
Meanwhile, the Auto-ID Center is working with FMI to set up a symposium in the fall of 2003.
“We’re hoping there may be opportunities to demonstrate how the technology will work,” says the center’s spokeswoman. “There might be a demonstration on how it would work across different applications.”