The "electronic tag" technology, which will be demonstrated in Chicago next week at Pack Expo International 2000, could bring automated identification to low-cost, disposable products ranging from lipstick boxes to breakfast cereal containers. The technology is expected to hit the market at the end of this year.

"There are going to be trillions of tags like these on all kinds of consumer products, and they'll tell us exactly where those products are in the supply chain at all times," said Larry Kellam, director of worldwide-supply-chain innovation for Procter & Gamble Co. (Cincinnati). "This is going to be huge."

The technology, which uses radio-frequency transmission techniques, could represent a critical step forward for the manufacturing supply chain because it dramatically cuts the cost of automated product identification. Up to now, the microchips used in RD identification have always cost more than 50 cents apiece and usually have cost more than a dollar.

But the electronic-tag chips will range between 10 cents and 30 cents each and might ultimately be squeezed down to just a few pennies apiece, engineers said. If so, the technology could be applied to virtually every product imaginable.

By some estimates, manufacturers now lose anywhere from $70 billion to $200 billion per year as a result of theft, counterfeiting and excess labor, much of which could be eliminated through the use of techniques that would provide each product with its own ID.

As a result, the new chips are expected to take the biggest step yet toward the elimination of the bar code, which has been the standard-bearer in product identification for the past two decades.

"Bar codes were a giant leap forward for their time because they made it quick and easy to capture data," said Sanjay Sarma, associate professor of mechanical engineering at the Massachusetts Institute of Technology (Cambridge, Mass.). "But these new chips have the potential to completely eliminate the human element, which even the bar code couldn't do."

The new system, which represents a collaborative effort between International Paper's Cincinnati Technology Center and Motorola's Worldwide Smart Card Solutions Division (San Jose, Calif.), is one of many existing RF identification techniques. More than a dozen electronics companies, including Texas Instruments Inc. and Philips Electronics, make RFID systems.

Capacitive technique

The new technology, however, departs dramatically from other systems in its basic principles of operation. Whereas conventional RFID systems typically use inductive methods to operate an electronic tag, the Motorola system employs a capacitive technique known as BiStatix. That approach, introduced by Motorola in mid-1999, uses an electric field to couple the chip, or tag, capacitively to a reading device. The electric field thereby becomes the tag's source of power and its master clock, allowing the tag to modulate its data regularly and transmit the data to the reader's receiver circuit.

Motorola engineers say the capacitive technique enables a low system cost because it eliminates the need for the wire coils or batteries typically used in inductive systems. Instead of a wire coil design, the BiStatix configuration mounts a tiny, 3-mm² silicon chip atop printed-carbon-ink electrodes. The electrodes, which use conductive ink, act as an antenna. Motorola attaches the BiStatix chip to the ink-based antenna by employing a conductive, self-adhesive label called an interposer.

Because the antenna consists of conductive ink on a paper substrate, it offers tremendous manufacturing simplicity for International Paper. "The main advantage of the Motorola process is that we can use a carbon black ink to actually print the transponder on a piece of paper, instead of using a metal etching process to make it," said Rich Rudolph, project manager for the small e-packaging program at International Paper's Cincinnati Technology Center. "That's something that International Paper can do in its own converting operations."

Indeed, the BiStatix concept is so simple that the Motorola engineer who co-invented it, Noel Eberhardt, often demonstrates it by using a pencil to create an antenna on a piece of paper. By applying graphite to paper, and then attaching the BiStatix chip to the graphite antenna, Eberhardt has been known to create a working model of the concept in less than a minute.

Motorola executives say that the technology can be used in cardboard boxes or such paper products as labels, forms and theater tickets. "It's applicable to anything that has a non-conductive substrate," said Rich Krueger, director of RFID business development for Motorola. "Paper is the most obvious place for it to be deployed."

Information vessel

International Paper engineers said they were quickly drawn to the Motorola concept not only because of the cost but because it fit the company's profile. International Paper, the world's largest paper-based packaging company, makes about 30 billion packages a year. By applying the antenna-and-chip combination, the company's engineers saw the potential for an inexpensive RFID solution for corrugated containers, folding cartons and beverage packages.

"We saw an opportunity to change the concept of a cardboard package," said Steven Van Fleet, manager of e-packaging for International Paper. "Instead of just protecting and transporting a product, we realized that a paper package could be an information vessel."

The key is that the RFID chip, unlike a bar code, is programmable. The BiStatix chip provides 96 bits of data with which a manufacturer can give each product its own serial number.

"It's so much more powerful than a bar code because you use a bar code on an entire lot of products, whereas the first 96 bits on this chip gives you trillions of unique combinations," Van Fleet said.

Plans are for manufacturers to register each product's serial number in a database that could be accessed during the product's journey through the supply chain. By keeping the data on a Web site, International Paper could enable stores or warehouses to use a PDA to check the history of the product. Retailers thus could check for authenticity or theft, as well as monitor out-of-stock and out-of-demand trends.

The company is so convinced of the potential of RFID concepts that it plans to spin off a separate company dedicated to automated product identification in paper-based and non-paper-based products. "We're leveraging all of our packaging design people with our electrical engineers in multi-functional teams across all of our business lines to bring this forth as a commercial solution," Rudolph said. The engineers are working on packaging designs as well as techniques by which readers can communicate with tags.

The company has teamed with MIT's Auto-ID Center to develop infrastructure, architecture and applications for RFID technology, as well as to recommend standards. International Paper is one of 12 Auto-ID Center member companies, which pay either $150,000 or $300,000 for membership. Others include Procter & Gamble, Unilever ND and Phillip Morris Co.

International Paper executives said they have invested more than $5 million in prototypes that they will demonstrate for retailers and manufacturers over the next several months. The designs are expected to target companies in such industries as cosmetics, tobacco products and agricultural equipment.

International Paper's xpedx division (Covington, Ky.) will also demonstrate applications of the technology at Pack Expo, a biannual packaging show that's expected to draw 80,000 attendees in Chicago next week.

Priced for disposal

Although Motorola has helped reduce the cost of the RFID technology, the industry is in agreement that the price of the chips must drop more before the technology can be applied to low-cost, disposable items on grocery store shelves.

"It will have to reach 1 or 2 cents before we can put it on every box of Tide or every package of Sure deodorant," said Kellam of Procter & Gamble. "And if this technology doesn't find its killer application and drive the volumes up, it will never reach that level."

International Paper engineers said they are considering other technologies in their effort to drive costs down. Over the next 18 to 24 months, they expect to look at such technologies as polymeric circuits and organic transistors.

For now, though, the company's engineers say that BiStatix technology is their best bet for reaching their cost goals.

"The chip prices aren't there yet," Van Fleet said. "But Motorola's technology has the best chance to get us where we want to go. Right now, nothing else is close."