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Getting a Read on RFID Smart Packaging (Part 1 of 2)

This is the first article of a two-part series examining the disconnect between the potential and the actual utilization of "smart packaging" -- those corrugated boxes, pill bottles, and other containers in which RFID is embedded in the packaging itself. Today RFID Update considers if different smart packaging technologies are actually ready to market.
Oct 22, 2007This article was originally published by RFID Update.

October 22, 2007—In February 2006 Smurfit-Stone Container, the world's largest manufacturer of corrugated boxes, demonstrated smart boxes with Gen2-standard RFID inlays embedded directly in the paperboard, so no separate smart label was needed to identify the box. About six months later, Weyerhaeuser, the largest (by revenue) box maker in North America, acquired OrganicID, which developed conductive materials that can be printed directly on packaging to provide RFID identification. Today if you search for "smart packaging" or "intelligent packaging" on either company's site you'll come up empty. You'll get better results at International Paper, but the $22 billion conglomerate has already pulled the plug on its once-ambitious RFID division (see RFID Systems Integrator ASURYS Shutters).

In general, "smart packages" refer to corrugated boxes, pill bottles, or other containers for which RFID is inherent to the packaging itself; "smart labels" refer to the traditional standalone RFID tags that are applied to packages in a separate step of the manufacturing or shipping process (think slap-and-ship).

Research firm NanoMarkets predicts $1.1 billion worth of RFID smart packaging products will be sold by 2011. Developers of RFID smart packaging technology say several product categories have been commercialized and others will be soon. News of promising new developments appears regularly; news about actual users does not.

The recent announcement of new smart packaging technology by Domino Integrated Solutions Group and HIDE-Pack is a perfect example: the companies estimated their smart box material provides 35 percent cost savings compared to smart labels, that it performs very well, and that it has users, but they cannot name who those users are (see New Smart Boxes Provide Alternative to RFID Labels).

If smart packaging technology is ready and the market appears strong, where are the end users?

"We believe inclusion in packaging is the Holy Grail for the RFID industry and have said so for some time," Mike Liard of market research firm ABI Research told RFID Update. "On paper, smart packaging makes a lot of sense. But there's a path ahead before it's adopted."

There are two general types of RFID smart packaging technology. In one, traditional RFID chip-antenna inlays are embedded directly into packaging material, which can include paperboard products and plastic bottles. The other involves printing on packaging with conductive ink that can be picked up by an RFID reader.

Each approach eliminates the need to apply a separate smart label to the package, which proponents say offers a number of benefits. Smart packaging is more cost effective than smart labeling because there are no separate labels or printer/encoders to purchase. Also, RFID smart packaging is more environmentally friendly in that there is no label backing material to dispose of. Finally, it is easier to integrate into legacy processes because packaging can be processed at production speeds and no separate labeling step is required.

Embedded inlays provide performance comparable to current smart labels and are available in Gen2 and other standard formats. Printable electronics are far less mature and don't match the read range or memory of traditional RFID. High frequency (13.56 MHz) versions of printable tags are just recently being promoted for electronic ticketing, product authentication, and other short-range applications, but not for supply chain carton and consumer packaged goods identification (see Organic Growth: Conference Tries Printed RFID Tags for a recent user profile).

Embedded RFID providers appear closer to competing for traditional smart label applications. Texas Instruments manufactures RFID inlays for both smart labels and smart packaging, including the inlays used by Smurfit-Stone Container's offering last year. Rafael Mena of TI told RFID Update said embedded RFID inlays are a viable technology. "There is a place for smart packaging," he said. "There is a market for both [smart packaging and smart labels]."

Commercialization also appears close for plastic pharmaceutical packaging. Brian Chisholm of Rexam told RFID Update that by the end of the year the company will have machinery that can embed RFID inlays in packaging and perform 600 reads per minute. Owens-Illinois gave a well-received prototype demonstration last year at a major industry event (see Major RFID Innovation for Pharma Item-Level Tagging) and was since acquired by Rexam, one of the world's largest packaging providers.

"Things have been a little slow on the RFID adoption front, partly I think because pharmaceutical companies are unsure of how to approach the California pedigree mandate," said Chisholm (see RFID Solution Announced for California e-Pedigree Reqs for information on the mandate). "As the industry matures, smart packaging is the natural progression. Honestly, I don't see any technical issues right now that would pose a huge hindrance to adoption."

Part 2 of this series on smart packaging will cover the outlook for adoption and how the technology's emergence could impact traditional RFID smart labeling.
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