Editor's Note: The following industry white paper excerpts, authored by Rock-Tenn Co. on RFID, makes recommendations for a "sane path through the RFID quagmire."

As major retailers such as Wal-Mart demand that their suppliers implement RFID tagging, companies struggle to understand this evolving technology and the role it will play in their future.

RFID mandates require consumer-goods suppliers to apply RFID tags to cases and pallets before shipping and require suppliers to transmit electronic product code (EPC) data via the Internet to a centralized service, to consumer-goods manufacturers, to retailers or to any combination of those companies.

Companies have several choices on how to address RFID mandates, from less costly slap-and-ship models to more costly, integrated models that incorporate RFID technology into many, and eventually all, production lines. Regardless of the strategy, companies will have to integrate their RFID tagging system with internal business systems to collect, associate, and disseminate EPC data.

Wal-Mart encourages its suppliers to leverage RFID technology internally and discourages them from pursuing slap-and-ship models. Nonetheless, we believe virtually all consumer-goods suppliers will deploy a slap-and-ship model until a significant percentage of their product requires RFID tagging (the tipping point). Until then, many suppliers cannot justify the multimillion-dollar investment required to deploy a more integrated RFID tagging model.

A slap-and-ship model requires an additional process for each pallet of finished product, which typically includes:

1. Identifying product information for RFID tagging.
2. Breaking down the pallet.
3. Programming and applying RFID case tags.
4. Verifying that each case tag can be read.
5. Remaking the pallet.
6. Programming and applying the RFID pallet tag.
7. Verifying that the tag can be read.

Along with these steps, business systems must use predefined, customer-specific business rules to create EPC numbers for each customer and then marry product, production and customer order data with each EPC number so they can subsequently transmit EPC data via the Internet. This entire effort adds costs for labor, RFID equipment, infrastructure, RFID middleware (to integrate with internal business systems), custom programming and/or configuration changes to internal business systems and more.

The slap-and-ship model presents several choices:

Slap-and-ship before shipping: Due to the speed of manufacturing for most consumer-goods companies, many companies selecting a slap-and-ship model will implement RFID tagging before shipping, a relatively lower investment in RFID technology, since it isolates tagging and reading equipment to a single area. But this model could create serious bottlenecks for product delivery as tagging requirements grow.

End of the assembly line: If speed is not an issue, companies can try applying tags before the palletizing step at the end of each line. This could eliminate having to break down and remake pallets as the tags could be programmed, applied and verified as part of the case-finishing process. But this option increases costs for RFID equipment and labor because it requires multiple tagging stations.

Hybrid slap-and-ship in finishing: Lines can share RFID tagging equipment that can be rolled from line to line (tagging before palletizing). This necessitates pallet breakdowns and remakes, but might be less expensive than outfitting several lines with RFID equipment and labor.

The only justifiable choice: At one RFID conference, several presenters suggested the slap-and-ship model may be the only justifiable choice most suppliers have, due to:

• Costs of the RFID infrastructure
• Ever-changing RFID technology
• Lack of agreed-upon standards
• Lagging RFID adoption
• RFID deployment complexity, and
• Widespread uncertainty about aspects of RFID.

A keynote speaker from Forrester Research (Cambridge, MA), an independent technology research firm, stated that most companies today cannot justify RFID, so they have no choice but to deploy a slap-and-ship model to comply with RFID mandates.

For the largest suppliers shipping millions of cases to Wal-Mart each year, their option for complying with RFID mandates might be a more-integrated model. But even if they're willing to spend millions for a more-integrated option today, the high speed of manufacturing machinery, coupled with the immaturity of RFID technology, might prevent this option. The result could be millions in additional costs and increased cycle times for RFID tagging and data synchronization if they cannot achieve full, in-line integration with their manufacturing equipment.

Companies should consider several issues when deploying a more-integrated RFID model, including:

Immaturity of tag printing/applicating: Perhaps the greatest RFID breakthroughs will be in printing and applying RFID tags. An automatic tag printer must be built into a customized tag applicator and the unit must attach RFID tags to various types and sizes of objects without damaging tag antennae.

Tagging solutions must be able to verify each tag to ensure a 100-percent read rate and be able to take appropriate action when errors occur. To cut the cost of RFID deployments, tag printing/applying systems must evolve so that tagging can occur inline with manufacturing. Today's RFID tag printers and applicators don't come close to meeting inline needs for most major manufacturers.

Combining bar codes with tags: Bar-coded labeling is here to stay for the foreseeable future, so manufacturers need to continue to print bar codes as they add RFID tags. Ideally, the bar-coded label and RFID tag would be applied in the same step. Likewise, having one printer that could produce whichever auto identification was needed for each order would be ideal. Technological advances are sure to come in this critical RFID area.

Slap-and-ship still needed in shipping: Even if companies pursue a more-integrated RFID model, they will still need a slap-and-ship station in shipping to replace tags that cannot be read.

Leveraging RFID internally with the slow pace of RFID adoption: Companies are desperately seeking ways to leverage the cost of RFID internally, rather than adding non-value cost to their products. They must implement tagging much faster than required by customers, but unless significant internal operating efficiencies can be found, this path is costly and risky. Yet suppliers potentially risk market-share erosion if they do not position themselves as market leaders, especially if competitors tout a more aggressive RFID strategy.

Suppliers deploying RFID for mandate compliance, regardless of which model they choose, must change their internal business systems. Systems must be able to generate unique EPC numbers according to each customer's business rules. Over time, it's expected that detailed EPC data-transmission requirements will grow as RFID adoption increases and manufacturers and retailers increase their leveraging of RFID technology.

The cost and complexity of RFID will lessen over time, so a minimal investment may be more prudent than investing significantly early on. Likewise, as RFID technology evolves rapidly, the risk of technology obsolescence remains high with early investments.

This article originally appeared in Packaging Digest, January 2005.