Originally Published PMPN January 2006
Track and Trace
RFID: The Benefits Are Here to Stay
by Gregg Metcalf, Industry Market Manager
Nosco Security Protection and Nosco RFID Package Integration
Nosco Inc.
Both product tracking and authentication are possible—and realistic.
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| Labeling could incorporate a number of product tracking and authentication technologies. In this sample, security printing, RFID, and printed two-dimensional codes play significant roles. (click image to enlarge) |
RFID has been around for quite some time, but the pace at which this technology has changed has certainly quickened over the last three years. For instance, RFID is now being implemented for pharmaceutical track-and-trace applications. Just a few years ago, many thought this technology was five to 10 years away, but speed-of-light changes have made this technology viable and real for the industry today. The market has certainly changed, and we are moving into a new period of technological development.
THE NEW ERA
EPCglobal has made significant progress in helping the market develop RFID for track and trace. Its Gen 2 standard is complete and ratified. This standard provides the industry with a common methodology for the development and use of RFID. Gen 2 tags, hardware, and software are available for purchase and use. In 2006 we will certainly see the widespread adoption of Gen 2 for case and pallet use.
EPCglobal also has certified various hardware and software products for Gen 2 use. This gives the industry common ground when looking at the infrastructure needed to adopt the technology. To further support the expanding growth of RFID, EPCglobal has accredited four test centers around the world for RFID analysis.
This new era began when FDA suggested widespread RFID deployment by 2007 at the item level. Even though RFID is not a “silver bullet,” most have acknowledged this technology to be best suited to meet industry needs. To supplement this request, several states have been hard at work developing drug pedigree legislation that requires document or electronic distribution records. As of November, 10 states have passed pedigree legislation: Florida, California, Nevada, Texas, Indiana, Oklahoma, Arizona, New Mexico, Iowa, and Virginia. Nineteen other States have similar legislation pending. Florida’s law, for which the rules have just been published, will be the first to go into effect July 1, 2006. The states are moving quickly to protect the supply chain.
Many thought the RFID tag was not ready to support case, pallet, or item-level implementations. However, much has changed recently in this technology sector. We now have tag manufacturing capacity in the United States in the billions to meet not just the general industry requirements, but also to support the expected 10 billion per annum usage in the U.S. pharmaceutical supply chain. In addition, RFID tags are getting smaller. Tags are available now in sizes of 1 in. or less in size, meeting the needs of the pharmaceutical market. Tags are also less expensive. Recently, many of the reputable leaders in the market announced tag prices of less than 10 cents. This is a substantial reduction from the 30-cent-plus range previously found in the market. Tags also have a wide assortment of chip technology available with various memory and authentication capabilities.
THE PHARMA MARKET DAWNS
Numerous case and pallet implementations have taken place over the last year in order to meet Wal-Mart, Target, and Department of Defense mandates. In addition, we have seen the dawning of the item-level implementation at numerous leading pharmaceutical companies. These companies have chosen to gain experience and learn about the technology so they are ready when the pedigree legislations go into effect (not to mention the FDA request for 2007 deployment). Currently, it is estimated that 30 to 40 pilots are in progress at the item level.
This would not have been possible just several years ago. However, the Gen 2 standard makes case and pallet implementation much more doable. In addition, the EPCglobal Health and Life Sciences Business Action Group is fast at work to develop a standard methodology for item level in the pharmaceutical market. It seems clear now, at least to start, that frequencies for tags are also getting sorted out. Case and pallet implementation will certainly be at the ultrahigh-frequency (UHF) level. Item-level implementations are currently at the high-frequency (HF) level, and the advantages of this technology in the near term will likely continue that trend for the foreseeable future.
The pharmaceutical industry is currently evaluating whether one technology, like RFID, will be the solution for brand protection and supply chain benefits, or whether a second technology for serialization or authentication will be necessary as a secondary security feature. Many feel that a second technology will provide redundancy to the RFID tag. Some feel that this redundancy is necessary for progress in read rates to exceed 95%, but it is still not able to guarantee 100% readability. Others feel that this redundant technology, like variable bar coding, may well provide a bridge to RFID. Building RFID infrastructure in the pharmaceutical supply chain will take time. Still, others believe that the pharmaceutical industry will need to focus on one technology to make it successful. Some contend that implementing multiple technologies is too difficult, time-consuming, and costly. Even though these issues are unsettled, it’s clear that the pharmaceutical market has made great progress just in getting to the point of dealing with implementation.
BENEFITS ARE CLEAR
Although the full range of RFID benefits will be better understood over time, the industry is beginning to comprehend the payback of technology and infrastructure investments. Brand protection benefits are well documented, and supply chain transformation results are available. At EPCglobal’s recent U.S. conference, Gillette and Johnson & Johnson talked about the benefits they are seeing for distribution and inventory control. A recent study by the University of Arkansas, conducted for Wal-Mart, showed that out-of-stock occurrences have been reduced by 16% when RFID is deployed. In Europe, where RFID deployment is slightly ahead at the consumer goods level, sales have increased by 4% to 6% as a result of better supply chain management of RFID-tagged items. Furthermore, current estimates say that 3% to 5% of supply chain costs can be reduced with a track-and-trace technology like RFID.
To support the health and life sciences sector, EPCglobal has created a value model for the industry to ascertain the anticipated results associated with an RFID implementation. This value model is available to all within the EPCglobal community.
THE FUTURE WORLD EXPERIENCE
In 2006 we will see the continued implementation of RFID for cases and pallets on a widespread basis. In addition, 2006 will surely see many more item-level pilots. Pharmaceutical companies will want to learn about RFID in their own worlds. Issues regarding redundancy and bridging to RFID will likely get resolved in the next year.
Over the next three years, we will see the widespread deployment of RFID to meet pedigree and FDA requirements. Costs will continue to come down, and read rates will continue to rise. The benefits for brand protection and for the whole supply chain will be better understood. The pharmaceutical market will likely be operating according to both standards and generally understood guidelines. Soon, more than 10 billion pharmaceutical cases, pallets, and items will all have smart labels enabled with RFID technology. And they won’t just be authenticating products, but also tracking and tracing their progress through the supply chain.
Gregg Metcalf is industry market manager for Nosco Security Protection and Nosco RFID Package Integration. With 20 years of printed packaging and security technology experience, Metcalf works with pharmaceutical and medical device manufacturers to better understand, select, and implement brand protection and RFID technologies.
Nosco helps pharmaceutical manufacturers and distributors better understand, analyze, acquire, and integrate RFID technology into printed packaging components. These include labels, cartons, and Fix-a-Form multipanel products. Nosco has been a printed packaging provider to the pharmaceutical industry since 1932. Metcalf can be reached at gmetcalf@nosco.com.
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