Terrence Belford
Financial Post
A Canadian wireless David has teamed with a U.S. paper Goliath to
revolutionize packaging. Their aim is to make the cardboard boxes that
consumer goods come in almost as smart as the people who buy things -- and
maybe, in some cases, even smarter.
SAMsys Technologies Inc. of Markham, Ont., has partnered with International
Paper Co. of New York to supply tracking readers for tiny chips or targets
that the company has embedded in its packages and containers.
The technology is called radio frequency identification (RFID). The chips
can be programmed to send out a variety of relevant data and a constant
radio signal. A reader picks up this signal and uses it in a variety of ways
-- some that stagger the imagination.
For retail stores, warehouses, logistics and supply chain experts, RFID
beats bar code identification hands down, says Cliff Horwitz, chairman of
SAMsys.
Bar code readers operate only on line of sight. With RFID, a package or
container can be hiding on the bottom level of a pile of boxes, and the
reader will still do its job.
International Paper says it is committed to spending $US2-billion on smart
packaging before the end of 2004. Steven Van Fleet, the company's director
of silent commerce, says 25% to 30% of these funds will be devoted to the
sale of RFID readers, and SAMsys will be its primary supplier.
In a world where RFID readers and tags are readily available, SAMsys has an
edge. Almost all existing systems involve proprietary technology. Companies
sell readers that only work with their own tags. SAMsys has, in effect, made
its readers flexible -- they can handle tags created by most manufacturers.
"While the others argued about establishing standards, our approach has been
to create technology that can read multiple proprietary targets," Mr.
Horwitz says.
International Paper first came across RFID through its support of research
at the Massachusetts Institute of Technology. Mr. Van Fleet paid a visit to
the Auto-ID Think Centre in 1999.
"That night I experienced an epiphany," he says. "RFID could transform the
packaging industry." It is the very solution any company wants if it is
turning out 30 billion packages a year.
One of the applications International Paper has tested is called Smart
Shelving. The company attempted it first with a cosmetics manufacturer. It
wired readers into the shelving containing the cosmetics in various stores
across the United States, and then inserted smart targets in the packaging.
The result was the equivalent of making each package talk to the store's
managers -- via the in-store computer -- even if an item was moved a few inches.
"If people picked up an item to look at it and then put it back in the wrong
place, that was reported to the computer," says Mr. Van Fleet. "The staff
could then immediately go and rearrange the shelf. If people can't find
something, they won't buy it."
Smart shelves, for all their razzle dazzle, are only a tiny part of what
RFID will do to revolutionize packaging in the next decade, says Mr. Horwitz.
"The impact on things like supply chain management will be profound," he
says. "We can make it so that nothing will ever get lost or misplaced again."
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