TECHKNOW: The people and products shaping your future - Pushing the envelope. Smart labels

TECHKNOW: The people and products shaping your future - Pushing the envelope. Smart labels - Along with the latest from Prada, Gucci and Donna Karan, a new kind of smart label hits the high street this year. Unlike the fashionistas' offerings though, they'll be affordable, discreet and might change your life - or the way you shop, at least. Microchips no larger than a grain of sand called radio frequency identification (RFID) tags will identify and track every item we buy, from the parts of a car as it is assembled to the goods in our local shops - and they'll start to appear soon. Gillette is ordering 500 million smart labels over the next three years, and Benetton and Tesco are also conducting trials.

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Last Updated: 31 Aug 2010

Along with the latest from Prada, Gucci and Donna Karan, a new kind of smart label hits the high street this year. Unlike the fashionistas' offerings though, they'll be affordable, discreet and might change your life - or the way you shop, at least. Microchips no larger than a grain of sand called radio frequency identification (RFID) tags will identify and track every item we buy, from the parts of a car as it is assembled to the goods in our local shops - and they'll start to appear soon. Gillette is ordering 500 million smart labels over the next three years, and Benetton and Tesco are also conducting trials.

THE CHALLENGE: It's tough co-ordinating the huge number of items that come together from all over the globe to make sure that when someone wants to buy their favourite shampoo or tin of soup it's on the shelf. Add in the challenges of minimising overstock, returns and 'shrinkage' (the official euphemism for theft) and life in the FMCG fast lane looks tough.

The harrassed manager's salvation lies in labelling - wintness the speed with which barcodes took off 20 years ago. These enable rapid scanning at checkout and boost the bottom line with real-time monitoring of sales and stock levels. But you have to be able to see barcodes to scan them, and you can only scan one at a time. And to be certain that the 25 cases on that pallet really are packets of cornflakes, you must check each one with a handheld scanner.

THE SOLUTION: But if every cereal packet had a smart label, whole truckloads could be read instantaneously. Label readers fitted to shelves in store could sense automatically when stock was running low and order a refill.

And shoppers could work their own checkouts - just pass trolley, bag or basket through an RFID scanner attached to a credit card swipe unit, and bingo - no more queues.

The principle isn't new, but the size and cost of the latest chips and readers is. 'We've gone for the simplest, smallest bits of silicon that we can. People call them smart labels but they are actually pretty dumb,' says Helen Duce, European director of the Auto-ID Centre at Cambridge University, whose electronic product code standard will be used by Gillette's chips. The tags don't need batteries and cost as little as 5 cents each.

They have only a 96-bit memory, but that's 33 trillion different numbers - sufficient, claims Duce, to label all the atoms in the universe. So tagging small-ticket, high-volume goods now makes sense, particularly if - as with Gillette's batteries and razor blades - theft is a serious problem.

The chips can be switched off at the point of sale, but if left active they could be used to track the purchaser's movements, a prospect that delights marketers but appals privacy campaigners.

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