Gillette Eyes Wireless Supply Chain

Inks deal for 500 million RFID tags in first large-scale test of electronic product code technology

Morgan Hill, CA  January 8, 2003  The Gillette Co. is buying half-a-billion radio-frequency identification (RFID) tags for use in its supply chain and in retail stores over the next several years in the first large-scale test of a new product ID technology.

The 500 million low-cost RFID tags, to be supplied by Alien Technology under a multi-million dollar contract, incorporate the electronic product code (EPC) developed by researchers and member companies at the Auto-ID Center at the Massachusetts Institute of Technology.

A radio frequency "EPC label" affixed to a product or packaging can be used to track it through its lifecycle, from raw material to manufacturing to retail. As the cost of these labels falls over the next several years, EPC advocates believe they will revolutionize supply chain management by providing unprecedented visibility into inventory levels and product movement at the pallet, case and shelf levels.

EPC labels are more than a radio "barcode," because they contain individual item serial numbers and other information such as manufacturing location, date codes and other vital supply chain data. EPC proponents say that integrated solutions based on this technology will help businesses save billions of dollars in lost, stolen or wasted products, and achieve significant efficiencies across their own operations and those of their trading partners. Manufacturers are also hoping for reductions in counterfeit branded products due to the use of EPC.

Alien said it has developed the first EPC labels that operate according to the open specifications drafted at the Auto-ID Center, a research group set up in 1999 by industry and academia to investigate technologies for establishing automated supply chains. The center's worldwide standard for EPC labels is intended to ensure interoperability of tags and readers wherever they are operating. Alien and several other suppliers have developed and are marketing readers for this system.

According to Alien, its manufacturing approach, dubbed Fluidic Self-Assembly, allows tiny integrated circuits to be cost-effectively handled and packaged into EPC tags in huge volumes, a process that makes tagging affordable and that will allow the company and others to meet market demand that some expect to grow rapidly to tens of billions of units per year.

Alien CEO Stav Prodromou hailed the Gillette order as a landmark agreement. "Alien's partnership with The Gillette Co. not only signals that EPC tags will be in commercial production at an affordable price but also heralds the widespread adoption of next-generation Auto-ID technology across the consumer packaged goods industry," Prodromou said.

Dick Cantwell, the Gillette vice president who is leading that company's EPC initiative, said, "We are proud to be at the forefront of the introduction of Auto-ID technology and we hope our leadership will help enable the wider consumer packaged goods industry to open a new era in its relationship with retail customers."

Shipments of the first Alien EPC products to Gillette are expected to begin within the next few months. Other terms of the purchase agreements were not disclosed.

For more information on wireless tracking solutions for the supply chain, see "Needle in a Supply Chain Haystack," the Net Best Thing column in the January 2002 issue of iSource Business.