Playing Tag with Packages Is More Than Just Fun and Games

Playing Tag with Packages Is More Than Just Fun and Games

by Tim Freeze and Todd Huffman

Over the past several years, a growing number of retailers have installed electronic article surveillance (EAS) systems in their stores, and have increasingly pressured manufacturers to place small electronic sensors (EAS tags) that the systems can detect on their product packaging.

For manufacturers of vitamins, herbal supplements, natural cosmetics and other products that can be easily concealed and often carry high "ring points," EAS tags are an effective way to minimize the incidence of shoplifting and employee theft, and to increase sales by permitting aggressive open merchandising in the retail environment. Many manufacturers, however, have yet to realize the full value that product tagging is capable of providing, and not just in the area of EAS. Next-generation tags with increased functionality are opening up a host of valuable new applications, especially for brand protection and supply-chain management.

Early Uses of EAS

Introduced 30 years ago in response to the growing problem of retail theft, EAS systems consist of three basic components: an inexpensive electronic sensor (tag) attached to the product to be protected, a detection system placed at store exits and a removal or deactivation device located at the point of sale. "Active" EAS tags on products set off retail alarm systems when the they come in contact with doorway and gate alarm systems, so that only those products that have been purchased--and have had their tags removed or deactivated--will pass through retailer doorways unnoticed.

Two major types of EAS tags are used in the United States today: acoustic-magnetic and radio frequency (RF). Acoustic-magnetic tags consist of two metal pieces in a relatively thick plastic cavity that are "excited" by a low-frequency radio signal generated by a transceiver at a store's entrance. The transceiver pedestal looks for a single frequency to set off the alarm. The deactivation process shifts the tag's frequency, so that it does not set off the alarm.

RF tags, by comparison, are paper-thin and contain a passive resonant electronic circuit. When the circuit in the tag or label is not electronically deactivated or manually removed, the RF field created by detection sensors is interrupted, causing an alarm.

At first, only a few retailers asked for EAS tags on product packaging, and most manufacturers ignored their pleas because they could not afford the added costs. But, as more retailers recognized the value of different applications and began installing EAS systems, they began requiring manufacturers to tag products bound for their stores. Some retailers went so far as to refuse new business opportunities to manufacturers who did not tag their products; others dropped product lines that did not comply with their EAS programs.

Manufacturers were forced to pay retailers to apply the tags manually to their products, usually in the retailers' distribution centers or at the store level. Adding insult to injury, customers soon noticed that retailers often placed tags on top of labels and text, obscuring the products' brand identity, covering important dosing and safety information and marring the packaging.

In 1993, Mebane Packaging, a Westvaco Packaging Resource, developed a method of applying the thin RF tags to folding cartons during the converting process. This approach is known as "source tagging," because it takes place at the source of manufacture or packaging. With in-line and off-line tagging capabilities, manufacturers could apply the tags to carton exteriors or interiors, place them under product labels or incorporate them as actual components of the packaging.

Source tagging eliminated costly retailer tagging. Because source tags were an integrated part of the packaging, they were not as vulnerable to inadvertent deactivation or removal as manually applied tags. In addition, the source tags do not obscure brand identity, instructions or other pertinent information on the package, enhancing the package's shelf presence.

Advanced Technology Delivers New Benefits

Recent advances in RF technology are now providing natural product manufacturers with a host of additional source tagging benefits.

One significant new advantage is currently available in EAS source tags based on Gen3^™ technology, which was introduced in April 2001 by Checkpoint Systems Inc. By offering "off-on-off" functionality, tags based on this technology give consumer product companies greater product-handling flexibility and minimize liability concerns over false alarms in the retail environment.

Why is this necessary? Currently, the two most widely used types of EAS tags are not compatible. As a result, manufacturers who sell to retailers with different types of systems--or with no EAS systems at all--must keep up to three separate inventories that are suited to the various situations.

EAS source tags using the Gen3 technology, however, ease this inventory dilemma. They can be applied in the "off" position and switched "on" with an RF signal at any point in the supply chain. Manufacturers could apply dormant tags to all products, and give their customers using RF-based EAS systems the means to activate the tags upon receipt. This prevents tag pollution, a process that occurs when non-EAS retailers or different technology retailers sell merchandise with "live" tags, which can trigger alarms when consumers subsequently enter EAS-protected stores.

Unlike the technology used in previous EAS source tagging systems, the Gen3 platform eliminates the additional step of orienting tags to the signal in a specific way. In addition, it is not limited by production rates. In high-speed manufacturing environments, for example, tags can be activated on conveyors traveling up to 400 feet per minute, or in bulk cartons up to three feet across.

Looking Beyond EAS

Still, some product manufacturers and retailers today require even greater sophistication in their product-tagging initiatives to achieve a broader range of business goals. One application under development is packaging that contains Checkpoint's ExpressTrak^™ chipless RF intelligent tags, which can transmit multiple frequencies as unique product identities when queried by a transceiver. RF tags enable product manufacturers to verify the authenticity of their products in the global marketplace to stem losses from product counterfeiting and diversion, which have grown substantially in recent years. It is now estimated that consumer product manufacturers worldwide lose between 15 percent and 35 percent of brand revenue annually from brand theft. There are an estimated 60 countries worldwide in which counterfeit items are sold, comprising approximately 5 percent of worldwide commerce.

Another area of great promise is in the development of "smart packages" with integrated RF identification (RFID) chips, which will enable product manufacturers to read and write data to the tags and to retrieve the data at any point in the product life cycle.

Here is how a smart packaging system might work: manufacturers would specify placement of RFID tags in or on product cartons, product labels or the product themselves, creating a unique identity that catalogs the product name, case quantity, price and warranty information. When the boxes arrive on retailer loading docks, the receivers know exactly what the cartons contain, and this data can then be sent back to the manufacturer's enterprise resource planning, supply-chain and billing systems.

On the store shelf, a small RFID receiver could track every time an RFID-tagged item is removed and send that data via radio frequency to a local server, which would relay it to Internet-based supply-chain-management applications. An RFID-equipped retailer would then be able to track when it is out of a particular SKU and program the system to order more automatically. Data sent to in-store computers could also let store personnel tell customers exactly where out-of-stock items are--on a truck en route to the store, at a distribution center or in shipping and receiving--and when they will be on the retail floor. Like EAS tags, these devices can also trigger alarms when someone tries to leave the store without paying for an item.

Not Without Challenges

As RF product tagging momentum continues to build, it establishes the necessary base for this next-generation technology and paves the way for product manufacturers, retailers and distributors to see greater operational efficiencies--and greater profitability.

The future of RF tagging is not without its challenges. One of the biggest challenges is the need to establish industry standards that will make RF-tagging efforts more consistent. After several years of grappling with the issue, multiple technologies still exist, which means that tags and readers from different vendors continue to be incompatible. Nevertheless, as retailers have become more aware of the possibilities, the pressure on manufacturers and their suppliers to develop cost-effective, functional solutions has continued to mount.

Ultimately, the EAS, brand protection and supply-chain-management solutions developed and implemented by packaging providers will need to be demonstrably and verifiably cost-effective, scalable, "upgrade-friendly" and technology-neutral, meaning that they will be applicable to locations and situations around the world, and capable of working with other systems.

Still, product tagging has come a long way from the ubiquitous "alligator" hard tag that, for many years, was a mainstay in the worldwide apparel market. With more and more applications for RF technology emerging everyday, many experts predict the worldwide RF-tracking market will grow from $27 million in sales in 2000 to 10 times that size by 2004.

See you later, alligator. Product source tagging is moving on to bigger and better things.

Tim Freeze is manager of Products, Solutions & Systems for Mebane Packaging, a Westvaco Packaging Resource. He is also a member of the Institute of Packaging Professionals (IoPP) Electronic Surveillance Packaging Committee. Todd Huffman is manager of Customer Solutions for Westvaco's Consumer Packaging Group. For more information on Westvaco's source-tagging capabilities, please contact Freeze at (919) 304-0397 (tefreez@westvaco.com) or Huffman at (804) 230-6763 (thhuffm@westvaco.com).

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