RFID ? Revolutionary Technology or Just another Hassle

                      Hoping to get a grip on where radio frequency identification (RFID) is headed, Pallet Enterprise has explored the technology with four experts. RFID has become a hot topic for packaging users as major retailers and the U.S. Department of Defense have begun encouraging and in some cases mandating its implementation.

                      RFID are small tags fitted with an electronic chip. These tags serve as an electronic license plate identifying a particular item or load as it goes through the supply chain. RFID tags are scanned by readers that connect with databases providing real time tracking information. Depending on the design of the tag, it can be either powered by the reader or have its own power. Tags can also be used to store data or simply be a serial number for tracking.

                      As more and more companies look to use RFID, it will definitely have an impact on transport packaging and the pallet industry. Each of these experts provides a unique perspective on the technology and how it can be either a boon or a bust depending on how companies prepare for it.

Per Ohstrom – Representative for CHEP USA

                      CHEP operates the largest private pallet pool in the world and has been a leader in the development of RFID technology for packaging.

Pallet Enterprise: What are the latest developments in CHEP’s RFID offerings? Where is the service offered?

Per Ohstrom: The Plus ID product offer with the RFID pallet, we are ready to offer throughout the U.S. and a number of other countries around the world. In terms of practical trials, they are ongoing. Because of how the industry is working this, Texas has by far become a cluster of this kind of activity.

Pallet Enterprise: How is CHEP applying the tags to pallets? Is it being done by hand or some automated process?

Per Ohstrom: It is being done by hand, but it is being done in a rational way. It is being done in an assembly line process, but it is not automated. The volumes just don’t justify automation yet.

Pallet Enterprise: How many pallets has CHEP tagged or is planning on tagging?

Per Ohstrom: I can’t give you an exact number but it is in the tens of thousands.

Pallet Enterprise: How much customer interest have you had in the Plus ID offer at this point?

Per Ohstrom: We have a couple of customers that we are working very closely with. They are testing our product in some substantial volumes. Then we have many customers that are still kind of evaluating if they should use a tagged pallet or whether they should tag a conventional pallet that they acquire in some other way. The great advantage of using our pallets is that you can get 100% read because of the design of the antennae on the chip and the placement of the tag. All the supply chain gurus tell us that it is really important to get a 100% read because if you get anything less then you are not going to be able to get the full benefits out of the RFID.

Pallet Enterprise: Are you claiming a 100% read on any kind of product load because some companies have had problems reading through liquids and metals?

Per Ohstrom: Yes, regardless of product load.

Pallet Enterprise: Is CHEP offering a 100% read guarantee since it seems so confident in its technology?

Per Ohstrom: I guess it depends on what you mean by a guarantee. It is in our specification that when a pallet leaves our facility, all of them are fully functioning. We test them all before we send them out. The solution that we have arrived at we believe is the best one. But we do not reimburse customers in case it is not a 100% read because there might be other factors outside of our control. You could poke the tag with a forklift tine. You could drop the pallet. There are a number of things that could actually physically damage the tag. As far as tag placement goes, it is by far the best protected location that we have for the tag and also the one that gives the best reads.

Pallet Enterprise: A number of companies are talking about using the slap and ship method of tagging. This usually means placing the tag on the load and not the pallet itself. What is CHEP’s viewpoint on this method? Will it have a significant impact on customer acceptance of CHEP’s Plus ID offering?

Per Ohstrom: In the short term, it is going to promote the use of the Plus ID offering because we get away with using only one tag. And since it is re-used, once we have enough pallets that are tagged, we will be able to offer a service that is priced significantly lower than the slap and ship option. This is true because we reuse tags and typically when you use the slap and ship method you have to use two tags.

Pallet Enterprise: Please describe the type of tags that CHEP is using. Is it a proprietary design?

Per Ohstrom: We have worked with a couple of different suppliers. We are now looking at the next generation tag. All of our tags are fully within the EPC standards. We have been part of that standard setting body for a couple of years…We do have patents pending on how the tag is applied to the pallet. But the tag itself is similar to what is available in the market. It is not a customized tag. We have covered it a little bit better.

Pallet Enterprise: Has CHEP done any studies about how many times you expect to reuse a tag before having to replace it? If so, what have you found? How does it compare to damage rates for pallets?

Per Ohstrom: As long as the tag doesn’t get physically damaged, you can pretty much use it indefinitely. It is a passive tag so it doesn’t have a battery. The damage ratio that we are counting on for the tag is much, much lower than our damage ratio for pallets.

Pallet Enterprise: In the Plus ID pallets, is the center block a block or is it circular in shape?

Per Ohstrom: It is a square block. The tag is applied onto the square center block. And it is applied in a V shaped around the corner. This helps improve the read capability.

Pallet Enterprise: Where does the CHEP offering fit in as far as helping companies achieve a positive ROI with RFID?

Per Ohstrom: There are a couple of ways to approach ROI. I saw that there was something out in the press today explaining how manufacturers are unhappy with the ROI on tags and they see it purely as a cost and do it only because large retailers demand it. But we approach it in a different way. We really see that there are supply chain efficiencies that can be had when you RFID tag shipments. When you look at the typical steps in a supply chain, I’ll just give you a few examples – replenishment goes to order processing to order fulfillment then to delivery and installation and then returns management. In each one of these you can have performance that is in the 90s. Even if you are in the 90s, your overall performance is much lower. So a customer places an order, and for example, only 67% of the time is the order filled correctly because all of the components that go into it have a margin of error. A typical order performance from a manufacturer into a super market is still probably around 50%. So anything that you can do to increase order performance is going to save money throughout the supply chain.

Pallet Enterprise: How is CHEP’s Plus ID service priced? How does it compare to the slap and ship approach?

Per Ohstrom: It is value priced. We really price it differently in different circumstances. It depends on what kind of relationship we have with the customer. It is a premium service. We do charge more for it that is always true. We increase the issue fee by a certain percentage. We don’t charge to replace the tag if it comes back damaged because that would be too much detail in accounting.

                      Whether or not the CHEP service is cheaper depends on the number of tags being used. If you get away with using just one tag, that may be a pretty low out of pocket cost. But how do you protect that tag from weather, cold, snow and humidity? So you have to look at the system cost. You can’t really look at the cost per shipment. We have identified some savings in various areas. On inventory visibility, we estimate that you can reduce inventory by about five percent because of increased accuracy across the supply chain. On the labor side, we estimate that you can save between 7-20% and most of that is in receiving and dispatch…

Pallet Enterprise: Do customers need to be able to interface with your database to use RFID tagged CHEP pallets? Or does a customer’s ability to track the load depend on its own software?

Per Ohstrom: It is based on their software. And there is something called the EPC network, which is kind of like an RFID internet. The EPC network exists outside of each supply chain. It is not controlled by any participants within the supply chain. Just like the Internet, it is not really owned by anyone. There is a company called Savant that manages the system. When the tag is read at any point along the supply chain, the information from the read is sent to the EPC information service. IT is like an external, secure repository that maintains the information as the asset changes location. Frequently, companies keep the tag information in their own internal information management systems.

Pallet Enterprise: If this technology is really great, why is CHEP only launching it as requested by customers and not across its entire pool?

Per Ohstrom: CHEP has 80 million plus pallets. The shear cost and effort to tag them all would make it prohibitive. From an asset management perspective, it would be nice to have all our pallets tagged, but that is not what is going to drive the tagging of our pallets.

Pallet Enterprise: One RFID expert recently told me that he believes a small percentage of companies will utilize the technology really well, a majority will utilize it a little bit and there will be some that will spend a lot of money and not get much out of it. Do you believe this is an accurate picture of what is likely to happen?

Per Ohstrom: I think so. You can connect that line of reasoning with the benefits of the technology. The more you use RFID, the more you can actually leverage your RFID investment. We estimate that you can reduce distribution cost by 8% and out of stocks by 4%. The basis for these numbers is a study by IBM Business Consulting Services and our own internal studies.

One of the benefits that you get out of RFID that you don’t get out of any other approach is the traceability. This isn’t a benefit you can easily measure in dollars and cents. But when there is a food safety issue, it is really priceless to be able to trace.

Pallet Enterprise: Looking into your crystal ball, how long do you think it will be until most things that are shipped to major retailers are tagged at least at the pallet level?

Per Ohstrom: I think that within the next five years all cases and pallets will be tagged. And a lot of items will be tagged as well.

Pallet Enterprise: The higher the value of the item, the more likely it is do be tagged…right?

Per Ohstrom: Well, maybe. It is an argument that you hear. But the reality is that the higher priced the item is the higher its opportunity to carry the cost of the tag. But some of the big benefits are in the really fast moving consumer goods, such as food products, razors or batteries. Because of the fast moving nature, you would be better to really know how quickly the items fly off the shelves. You could replenish in a much more efficient way. If I go to buy batteries at a hardware store and they don’t have my size or brand, that is a lost sale to the retailer. The consumer will just go somewhere else.

Pallet Enterprise: Well, that may be an advantage for the retailer. But it doesn’t seem like it would really matter to the manufacturer if the consumer will buy the product somewhere elsewhere as long as the person buys its brand. Where does the manufacturer benefit in this scenario?

Per Ohstrom: It is also in the interest of the manufacturer to have the right amount of product at the right place at the right price. If they can better forecast demand, they can also schedule production in an optimal way. They could be cynical and say that we don’t care where they buy our batteries as long as they buy our brand. But in reality, they are all very eager to please all of their customers. The manufacturers’ customer is the retailer not the consumer.

Dan Mullen — president of AIM

                      AIM is an international trade association for the automatic identification and mobility industry. This includes users, manufacturers and suppliers of RFID technology.

Pallet Enterprise: How many items do you believe are going to end up being tracked with a tag on the pallet versus the load itself?

Dan Mullen: At this point, the tag is primarily on the load and not the shipping platform, except for maybe CHEP. A lot of companies are looking at RFID enabled labels. A label has a tag integrated within it…Now I can see down the road the validity of integrating the RFID tag within the shipping platform because there are a lot of other uses in terms of managing the shipping platforms. You can use read/write technology to incorporate data about the load.

Pallet Enterprise: How much is RFID going to really be used? It seems like most companies have not really used the barcode to its optimum potential. Do you believe that the same thing will happen with RFID?

Dan Mullen: Whether its barcodes or RFID, it really comes back to whether they are fully investing in the back end to fully take advantage of the data they are getting out of the process…Until they start to tap into the data and some of the advantages that RFID offers that’s where the ROI is. I would like to see your data on people not taking advantage of the bar code.     My understanding that there has been a lot of companies that have taken advantage of it. Now it is ultimately up to the individual enterprise to make the best use of it. And I do think that RFID will follow a similar kind of evolution that barcodes did. It is actually very similar in a lot of ways with how standards have come about and mandates have forced people to take a more serious look at investing in it. Barcodes 25-30 years ago were a technology that was very workable, but we had a lot of the same questions about the cost, what is the ROI. But today, you will find a lot of enterprises that would say they do not know what they would have done without it because it helps them efficiently move their products through the supply chain. There will be naysayers. But there will be others who will invest more in taking advantage of the data, which I think will provide them some competitive advantage…I am certainly not a believer that you will see the barcode go away anytime soon. You will see the barcode and RFID co-exist in many applications for years and years to come.

Pallet Enterprise: If you were in the transport packaging business, what opportunities would you be looking for to use RFID to better serve customers, develop new products or services or enhance your market position?

Dan Mullen: I would certainly be investing some energy in how the tag might be integrated within the packaging or pallet. It could be an additional service to provide or a revenue generator. Really the cost of those tags is a more attractive business case because you can have tags integrated within the pallet and reused. What you see now is people talking about slap and ship. But the idea of slap and ship you are going to have labels put on the packages for one time, used and then destroyed. Tagging pallets or shipping containers is actually a service you can provide and could be a fee for service type offering. And it is a more cost effective way of using RFID.

Pallet Enterprise: Is there any good data out there about how much a tag can be reused in the supply chain?

Dan Mullen: Actually, RFID is a very robust technology. It’s just a matter of how you protect the tag. Tags easily can be reused hundreds of times in the proper type of packaging.

Pallet Enterprise: Except for CHEP, the wooden pallet industry has pretty much stood on the sidelines as far as the RFID issue. Have we missed the boat or is there a place where the industry can make a beneficial contribution for all parties involved?

Dan Mullen: I don’t think you have missed the boat at all. There certainly are ways for the industry to be involved, such as the standards process. For example, in AIM, we have an RFID experts group that is specifically looking at different ways of applying RFID…Having a real world discussion and role with customers is valuable…I don’t think they have to invest a big amount of money. They should invest some time in being informed about the demands of the technology on the pallet, package or case.

Pallet Enterprise: When it comes to recycling tags in boxes or cases, has anyone come up with a real good idea about how to do that? Can you economically recycle tags from packaging and cardboard boxes?

Dan Mullen: Yeah, there is some work we are doing within the RFID Experts Group on that very topic. I don’t think that anybody has documented it yet. We will be publishing some guidelines and procedures. Some of the tags have different metals within them, so environmentally how do you deal with that? How can the tags be designed so that they can be easier to remove, dispose of or put into a recycling process? We’re in the early stages of that. But there is work being done on it.

Pallet Enterprise: It seems like the retailers and fast moving consumer good manufacturers have different ideas about how to deploy RFID. What do you think will happen?

Dan Mullen: I would suspect that a happy medium will be reached. I think it is natural for people to question how is this going to impact me. The consumer good manufacturers are the ones that will have to bear the brunt of a lot of the cost for the retail market…About a year ago, I read an article that said the barcode is going the way of the dinosaur. Every product in your grocery store is going to have RFID tags. I think that is way off base at this juncture. Right now cases and pallets are a good place to look to bring some additional visibility into the supply chain. And eventually, you will see on individual products that are ideally suited for it. And in some cases, individual products may never get close to having an RFID tag on them.

Pallet Enterprise: Some groups have tried to paint RFID as the next technology for big brother or major corporations to spy into our private lives. Has RFID gotten a bad reputation? And what is your organization doing to deal with this concern?

Dan Mullen: There has been a lot of misinformation out there. Many consumers already have an RFID tag on them. Things like a toll pass or a key with a tag inside it, access control pass to a building. The technology is not so much the question as what kind of data might people have access to. I think at the case and pallet level, the data is non-personal in every sense. It is specific to the products that might be on a case. And even that, the data only means something to the buyer. The tag only serves as a license plate; someone has to have access to the database for the tag to mean anything.

                      Likewise, if we get to the point that tags are on individual items at the point of sale, the data would only have to do with that product. We are trying to make sure that people understand the technology. It’s just not technically feasible to track people with RFID tags. The key is to understand the technology –, what it can and can’t do. It is not a technology that has unlimited capabilities in terms of read range. Many times the information on the tag is dumb. It is not

really relevant outside of a very specific application.

Ralph Rupert – Virginia Tech Center for Unit Load Design

                      Ralph Rupert manages testing at the center and specializes in packaging, materials handling equipment and RFID.

Pallet Enterprise: What appear to be the best practices as far as tagging pallets? What problems have you discovered while talking with packaging users out in the market?

Ralph Rupert: The biggest thing that we have discovered is that they are misusing the term pallet. Most of the time, they are talking about the unit load, not about what you and I would call the pallet. On the software or logistic side, there is not that much emphasis on tracking the actual pallet. When they talk about tagging the pallet, they are actually referring to the unit load, which could be a tag anywhere on that load. And most of the time, it is the slap and ship label, not a tag built-in or attached to the pallet itself.

                      When you are talking about tracking with the tag on the pallet not the load, the best practices seem to be in the middle of the pallet. But unfortunately, when you get into the warehouse, companies are looking at taking a palletized load through the reading device, and the fork tine interfere with the signal getting to the tag on the center block or stringer. The interference caused by the forklift itself is one of the biggest problems in terms of implementing RFID in the warehouse environment.

Pallet Enterprise: If metal causes that much interference, is the CHEP Plus ID offering a smoke and mirrors thing? Will tagging the pallet like CHEP has done not provide an accurate read rate? Will the pallet really play much of a role in the entire RFID issue?

Ralph Rupert: It’s an offering. But I won’t say it is smoke and mirrors either. It will work in the right application. If they put the pallet through a read devise that is not going to be interfered with by a forklift, for example on a conveyor, it will work…Because most everything is shipped in corrugated packaging, the corrugated industry is really going to be the bulk of where we see the implementation taking place. That is why I say the pallet implementation is pretty insignificant…The only entity really tagging pallets is CHEP. For the rest of the white wood pallet market, it doesn’t make sense to tag the pallets because many of them are designed for one-way shipments and are not as robust as the CHEP pallet. This makes it more likely that tags would get damaged.

Pallet Enterprise: There has been a lot of talk about the tag actually being printed onto the corrugated boxes in the future. How do you think the tags in the future will be applied to boxes? Where in the manufacturing/distribution process will it happen?

Ralph Rupert: Even if the technology develops, right now it doesn’t make economic sense to build the tags directly into the corrugated boxes. A major factor is the fact that application rates are too slow for the production speed of corrugated. Beyond that, if I put the tag on every box from the corrugated supplier, there will be a lot of wasted tags that never get used. Every company out there has obsolete boxes that they don’t want anymore because they come out with a slightly different box size, carton configuration, design, etc. It is not odd for the corrugated packaging to change every six to eight months. The best place to put the tag on the corrugated packaging is at the case packer where the speeds match the application speed capabilities and you know when you fill that case it is going to actually be used and sold.

Pallet Enterprise: What key variable do you think might really lead RFID to deliver supply chain efficiencies where other technologies or approaches have failed?

Ralph Rupert: The biggest thing that I think will help RFID be implemented is the plan is to interconnect the supplier computer systems and the retailer computer systems. For example, when a unit load comes into Wal-Mart’s dock and all these cases are read. The reader sees the tag as a license plate to get the information of what is in the box. It then has to call back to the supplier’s computer system and ask what does this number reference. The system responds, linking the inventory system of the participants throughout the supply chain.

                      If that data is not shared or becomes inaccurate, that is going to be the downfall of RFID. Right now, those databases aren’t linked. If those databases can become linked, that will bring visibility throughout the supply chain. People are still a little concerned about sharing data and providing access to proprietary databases. Open database communication is still worrisome to a lot of people.

Mark Roberti – editor and founder of RFID Journal

                      RFID Journal is a major independent news service covering RFID technology.

Pallet Enterprise: I have heard that most of the tagging is going to be of the load itself and not the pallet. Is that your understanding as well? Other than CHEP, who might want to tag a pallet?

Mark Roberti: I think it depends on who is doing it and what their goal is. Coca Cola, Pepsi might tag a pallet because it is hard to tag cans. If you put it on the pallet, you have a better chance of getting 100% read accuracy. What if you put it on the front of the pallet and when the load goes through the dock door, the tag is facing away from reader, you’re not going to read through a pallet full of canned Coke.

Pallet Enterprise: So then anyone shipping a load of liquid or containing a lot of metal, anything that might impact read accuracy would want to put the tag on the pallet?

Mark Roberti: I should think so, which is a fairly large number of companies. Wouldn’t you?

Pallet Enterprise: Given what you just said about good reasons to put tags on the pallets, why are so many companies talking about using a slap and ship approach? From what I understand, this method would have companies putting tags on loads and not pallets.

Mark Roberti: When people are talking about slap and ship, they are talking about tagging the load before it leaves the warehouse as opposed to tagging it when it is made. When you do slap and ship, you must do two things for Wal-Mart. You must have a tag for the entire pallet and a tag for each case. When you are doing slap and ship, you still have to put the pallet tag on. Now, I am not saying that Wal-Mart has said you have to put it on the pallet. You have to have a tag associated with the pallet. It has nothing to do with slap and ship or whether you integrate it into your manufacturing line, you still have to put the pallet tag on.

Pallet Enterprise: What do you make of all the news reports saying that Wal-Mart is backing off its deadline or is having troubles making RFID work?

Mark Roberti: A lot of people are misinformed and spreading information that is completely and totally erroneous. When Wal-Mart announced their mandate, June 11, 2003, it was Linda Dillman, the CIO, speaking at Retail Systems. I was in the room and knew it was impossible to tag every pallet and case from day one. So I asked her, ‘Are you saying that from January 1, every pallet and case in your system must be tagged?’ Her response was no, of course not. Wal-Mart was planning to start with a few SKUs and build up over time. When you read some of the analysts, who know nothing about RFID, they pontificate and say that Wal-Mart is backing off its deadline, slipping and changing its requirements. Wal-Mart’s requirement for its top 100 suppliers was that you had to start tagging pallets and cases on January 1. Wal-Mart has stuck to that. It has never changed its strategy or what the company has said…What you had was Wal-Mart being very practical realizing that this was a very big undertaking. Wal-Mart has been working with its suppliers. This is what the retailer has said it will do. And Wal-Mart is doing it.

                      Wal-Mart is making good progress at it too. You hear that they are only shipping three SKUs or working well with a limited number of companies. Wal-Mart is working with 137 companies as opposed to 100 and somehow the analysts think that this effort is failing. I am not sure how we get that.

Pallet Enterprise: Do you see the recent report by the Grocery Manufactures of America as an effort to influence the deployment strategy mandated by retailers? What would make the ROI more favorable to grocery manufacturers?

Mark Roberti: The GMA is basically saying that at the current prices it is hard for the manufacturers to make a return on RFID if they have to tag everything. The manufacturers would like to roll this out by SKU. Retailers want to roll it out regionally. The reason is that it is easier for the retailer to implement the technology region by region instead of across the board at one time. But the manufacturers do not work that way. The manufacturer makes thousands of razors, batteries, boxes of toilet paper. And then they ship that to their regional DCs. Then the items get sent on to retailers. It is a big problem for them to sort out items to be tagged by region. For example, razors are a high value item that is often out of stock and gets stolen sometimes…There is this tension between manufacturers and retailers over how they want to do this. A lot of this is going to take time to play out. From what I see, there is a lot of cooperation going on already.

                      Wal-Mart doesn’t have a gun to suppliers’ heads. It made a mandate and created a deadline to try to move the industry forward. Wal-Mart basically said, ‘There’s this chicken and the egg problem. Until we start using millions of RFID tags the price won’t go down, and the price won’t go down until we start using millions. How do we break this and make it happen?’ Wal-Mart’s answer was let’s require suppliers to do this. Wal-Mart believes its push will drive the price of the technology down and lead to a positive ROI. And I happen to think they are right.

Pallet Enterprise: What can people in the wood pallet and transport packaging industries be doing to take advantage of RFID technology? Except for maybe CHEP, the industry has not really been involved in the development or deployment of the technology. Is the industry missing out on a great business opportunity?

Mark Roberti: You’ve got to get involved. What I have seen from a lot of industries is that people are sitting back and saying, ‘Oh, this RFID thing is terrible. Wal-Mart is mandating that. Look at how bad Wal-Mart is. We are going to sit on our hands because basically we just want to do things the way that we are doing them now. And yeah, we’re not terribly efficient. But so what? We’re making profit, and we don’t like change.’ That is basically what I see going on. Smart companies, like CHEP and others are saying, you know what, there is an opportunity here. We are going to invest some money to figure out how we can add value to our customer so that we make more money. If you are a shipper and you can add value to your customer, you are going to be able to charge a little more and make more money.

Pallet Enterprise: Barcodes are everywhere right now. And from what experts have said, the data is not really being used as well as it could be. RFID will likely produce a lot more data. If companies are having problems using barcode data now, what makes you think they will be able to handle the data glut caused by RFID? The information systems side seems to be the big hang up for RFID. But I don’t hear a lot of people talking about it.

Mark Roberti: Less than 10% of companies are really going to transform their supply chain with RFID. Eighty percent are going to get some minor, incremental benefits. And ten percent are going to go bankrupt. They are going to bungle it so badly that they are going to go out of business. The key differentiating factor in that equation is knowledge and innovation…Companies haven’t begun to deal with the data issue yet. All the bad press that RFID has gotten this year has been around the tag and reader. Getting the tags to read, dysfunctional tags, so on and so forth. The leading adopters have been grappling with that all year. Next year they are going to grapple with the data problems. We are going to hear a lot of negative stories about the data. It’s true. They are going to have problems. But the smart companies are going to figure it out. And they are going to get benefit over time. It is not going to happen right away.

                      The Internet has been around for over eight years commercially. There are 10% of the companies that make good use of the Internet. Eighty percent make very little use of the Internet. And ten percent don’t even know what the Internet is. My sister’s company won’t let her have the Internet in the office because it is afraid that she is going to be wasting time in the office on e-mail all day. If the Internet has been around for years and we know how it works, but most companies don’t take advantage of it, why would we believe that most companies are really going to dive in and leverage RFID?

Pallet Enterprise: If you were running a packaging company, what would you be doing right now to make sure that you can benefit from RFID?

Mark Roberti: How about figuring out some way to recycle tags off corrugated? That is a huge business. The challenges are how to get the tag out effectively and efficiently without damaging it… Recycling tags and figuring out sensors and other things that you can do to add value to the RFID process is important. Right now, this is the learning stage…I’m not saying that everyone is going to be able to come up with brilliant schemes to make millions of dollars by adding value. But I do think if you are in business and facing tons of competition from people who are jumping into RFID, you have to innovate, keep working and doing better. Companies have to come up with more and better information, more services that customers want. I have to figure out ways to deliver value to them. That is what I would do if I was in the packaging industry or any other industry.

Pallet Enterprise: CHEP has spent a lot of money on its RFID program. Do you think that companies will switch to CHEP in order to be able to comply with retailer RFID mandates? Will CHEP’s financial gamble pay off?

Mark Roberti: I don’t really know the answer to that. It depends on how much value that CHEP can add through using RFID. If CHEP’s rental model doesn’t work for you, I doubt that you would go with CHEP just because it offers tagged pallets. RFID is an extension to what you are doing. It depends if CHEP can provide data and other services that make sense and make its model worth doing.

Pallet Enterprise: Is there anything else that the pallet and packaging industry should know about RFID?

Mark Roberti: Yeah, this is coming their way. Like it or not, RFID tags are going to be put on everything, especially assets within the supply chain. Visible containers and packaging are a great opportunity. I believe that part of the business case is that you recycle tags. The easiest way to recycle tags is to put them on reusable containers.