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Smarter Products Is Smart Business

Companies are gaining a strategic advantage by embedding RFID tags, and in some cases interrogators, in their products—and they're finding a return on their investment in areas that may surprise you.
By Mark Roberti
Feb 01, 2006—Back in 1999, Colder Products, a St. Paul, Minn., company that makes quick-release couplings and tube fittings, got a challenging request from one of its customers, Huntleigh Healthcare of Luton, United Kingdom. Huntleigh makes inflatable cuffs that go around limbs to immobilize them, and it wanted an easy-to-use coupling that would ensure only its cuffs were connected to its pumps.

Colder Products began searching for a way to create a smart coupling for Huntleigh. The company hired Rick Garber, a designer of electronics products by training, to head the project. He explored a variety of technologies and concluded that radio frequency identification offered the best solution. But there was one problem: Garber couldn't find an RFID vendor willing to develop an interrogator small enough to fit in the female side of the coupling (some of the connectors are smaller than a golf ball).

While many companies are struggling with how to put RFID transponders on products to track them through the supply chain, some forward-thinking manufacturers are embedding RFID in products.
Undeterred, Garber decided to build his own interrogator. He got in touch with Philips Semiconductors, attended a training session on how Philips' RFID chips work and designed a transponder based on the company's I-Code 13.5 MHz chip that could be baked into Colder's plastic couplings, as well as tiny interrogators that could be embedded in the female side. (Colder buys chips from Philips, has them bonded to an antenna of its design by a third party and embeds them in its products.)

Huntleigh never wound up using the RFID smart couplings, because it didn't need to collect data and because Colder designed a simpler, less expensive solution. But its challenge launched a whole new line of business for Colder Products that is boosting annual revenue. The company now has customers in the chemical, electronics, food and pharmaceutical industries that are using the RFID couplings to avoid expensive manufacturing mistakes and reduce their liabilities—benefits that far outweigh the small additional cost that an RFID transponder adds to the product. The male side of the coupling typically goes on a bag-in-box packaging containing liquid. Information about the date the liquid contents were produced, lot number and expiration date can be written to the transponder. The data is read as the two sides of the coupling are united, and software systems can be set up to alert a machine operator before the wrong liquid is used. So far, Colder has RFID-enabled two complete product lines, comprising 28 stock-keeping units. Another 30 SKUs will get the RFID upgrade in 2006.

"With the projects we have in design today, we expect revenues [from the RFID products] will easily double or triple this year from what they were in 2005," says Garber, who now manages Colder's smart technology business unit. "And in 2007, they will likely be double 2006."

While many companies are struggling with how to put RFID transponders on products to track them through the supply chain, some forward-thinking manufacturers are embedding RFID in products, such as cell phones, power tools and computers. Companies say that embedding RFID in their products enhances their ability to serve customers. RFID-enabled products are easier for companies to track, maintain and recycle, and they can boost workers' productivity. They can also be more fun or convenient for consumers to use (see "More Products Have RFID Inside" sidebar at end of article).
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