By Mark Roberti

When the Auto-ID Center first talked about the adoption of Electronic Product Code technology in the global supply chain, many people predicted that companies would start by tracking pallets, then cases, and years later—when tag prices came way down—items. It hasn't quite worked out that way. Many companies are moving directly to item-level tagging, because that's where they see the biggest return on investment.

Item-level tagging has the most appeal in industries where the average item costs $30 or more, such as apparel, footwear and pharmaceutical drugs. But some companies are starting to look at tagging lower-cost items.

The pharmaceutical sector was the first to examine RFID's item-level benefits. For the past three years, drug makers have been exploring RFID's ability to reduce counterfeiting by enabling companies to track individual bottles of drugs as they move through the supply chain and collect the data needed to create electronic pedigrees—secure documents that verify the history of a drug from the time it is created until it reaches the customer.

Purdue Pharma is tagging each bottle of the painkiller Oxycontin that is shipped to Wal-Mart pharmacies, and Pfizer has been tagging individual bottles of Viagra shipped to the United States.

In other industries, companies see the benefits of item-level tagging within their own operations or with a limited number of partners. The benefits differ from industry to industry. In the apparel sector, a big driver is the ability to better manage the many sizes, colors and styles of clothes in inventory, so they can be shipped to the right store on time. Lemmi Fashion, a supplier of children's clothing, has been using RFID to track inventory being shipped from Asia to its warehouse in Germany. RFID has enabled it to increase the number of items it can handle in its warehouse from 5,000 to 15,000.

The Council of Supply Chain Management Professionals (CSMCP) and the Voluntary Interindustry Commerce Solutions Association (better known as VICS) have provided funding for the University of Arkansas' RFID Research Center and an apparel retailer to study the benefits of item-level tagging and how it might solve problems apparel retailers struggle with, including inventory management.