Xerafy.com RFID AND THE GREEN SUPPLY CHAIN

5

Real-time tracking improves use of returnable transit containers When companies try to reduce waste in their supply chains, they typically focus on improving efficiencies — streamlining operations, improving visibility, speeding communication, and eliminating redundant or manual data collection processes. However, there is another type of waste in the supply chain – the physical waste created by transport packaging, and the wasted effort and cost of managing large fleets of transport containers (carts, pallets, boxes) and replacing those assets when they are inevitably lost. One way to reduce this waste is to employ returnable transit items (RTIs), which include reusable plastic boxes, returnable pallets, metal rolling carts, and other types of reusable packaging. RTIs can help support an efficient and sustainable supply chain by reducing the time and money needed to transport goods. However, managing these often-expensive assets can be challenging without a way to track their location and status in real-time or near real-time. That is where RFID comes in. RFID can provide increased visibility for manufacturers, distributors, RTI pooling companies and retailers. With this real-time visibility, companies can access exact information regarding where a particular RTI has traveled, who used it last, and when the RTI should be returned. This not only reduces the cost of purchasing disposable packaging or replacing lost assets, it can also improve the company's environmental standing by reducing operational waste in the supply chain. In this whitepaper, we will explore how RFID is used to manage a fleet of returnable transit assets and reduce waste in the supply chain. We will also examine ways in which RFID can enable recycling programs and other environmentally friendly activities.

RFID and the Green Supply Chain

Xerafy.com RFID AND THE GREEN SUPPLY CHAIN

5

RFID and Three R's RFID technology helps companies practice the "three R's" of sustainability: reducing the number of logistics assets needed to operate the supply chain; reusing those assets as frequently as possible; and enabling new types of recycling programs. RFID can greatly improve the use and management of RTIs throughout the supply chain. By using RFID to track returnable transit items, companies can increase asset utilization and reduce theft, loss, and reliance on redundant supplies. It also puts less strain on the environment by reducing the need for manufacturing, maintaining and storing additional assets. Improving Inventory Visibility Tracking returnable transit containers with RFID can ensure containers are returned and managed properly. Such real-time tracking is important to maximize asset utilization and ensure the success of any RTI deployment. Dallas-based Mission Foods, a leading provider of chips, salsa and taco shells, uses RFID to track returnable plastic containers in its distribution chain. Before using RFID, the company was replacing nearly 100 percent of its RPCs annually (at a cost of nearly $3.5 million) because they would be lost in transit from its warehouses to customer facilities and back. Since implementing RFID labels to track the containers as they enter and leave the

warehouse, Mission has achieved a replacement rate of 4 percent. In addition, rolling out new

types of RPCs has saved additional costs by reducing packaging expenses. Mexican department store chain Liverpool and 2,500 of its suppliers have utilized an RFID-based RTI since 2007 in a similar open-loop system. More than 600,000 RTIs have been tagged to help track shipments from supplier locations to the company's main distribution center and back. Liverpool uses RFID to improve supply chain visibility and manage its RTI assets. The company can track 100 percent of incoming products automatically using Motorola fixed RFID readers installed at 25 doors in the warehouse.

Third-party container providers have also leveraged RFID to manage their shared inventory of RTIs. Container Centralen, a global provider of returnable transit items and metal trolleys, uses active RFID to track hundreds of thousands of metal trolleys as they travel across hundreds of depots and customer sites, helping reduce the number of trolleys that have to be replaced each year. A number of large pallet pooling companies offer RFID-enabled pallets and containers to help manage returnable, third party assets. CHEP, one of the world's largest pallet pooling companies, offers RFID traceability services using passive tags to help manage customer fleets and reduce theft and loss. In addition to improving efficiency and reducing losses, combining RFID with returnable containers also encourages their use over alternate containers made of wood or

Xerafy.com RFID AND THE GREEN SUPPLY CHAIN

5

corrugated cardboard – packaging that, although it can be recycled, is often treated as disposable. Further, companies like Wal-Mart and Tesco, as well as the U.S. Department of Defense, have begun mandating the use of RTIs for their suppliers. RFID can therefore help maintain compliance with such customer mandates. Recycling On the recycling front, RFID tracking of parts from the point of manufacture to their end of life allows customers to return items (like consumer electronics or specialty equipment) to manufactures for recycling or to ensure proper disposal is completed. RFID is also useful in recycling or disposing of other types of electronics. By embedding RFID tags on printed circuit boards (PCBs) in consumer electronics, recycling companies are able to better identify the manufacturer of a product, what materials in the item can be recycled, and what hazardous materials may be present in the device. RFID is valued in a number of other recycling applications that utilize the same technology needed to manage RTIs, including identifying recycling bins. RFID has a long history in tagging garbage cans throughout Europe for systems that charge customers by weight, thus encouraging them to recycle more items. The city of Cleveland RFID-enabled its recycling bins to monitor how often residents take their bins to the curb for collection. If the officials see that a household has not been placing the bin on the curb for several weeks, a trash supervisor will audit their garbage to see if they are throwing away recyclables. If the trash carts contain more than 10 percent recyclable material, the homeowner could face a $100 fine. Officials in Alexandria, Va., have deployed a similar system with Motorola products.

Xerafy’s Trak Family

Xerafy developed a family of RFID tags, the Trak Family, versitile enough for metal and non-metal applications in tracking logistics assets, including RTIs. The Versa Trak tag for tracking metal and non-metal assets can be used to track returnable transport items, pallets, and other logistics containers. Thanks to its small footprint, the Versa Trak tag is easily integrated unobtrusively into most types of assets. The UHF tag has a read range on metal of 26 feet (8m) and 13 feet (4m) off metal. The Versa Trak is compliant with the ISO 18000-6c/EPC C1G2 open standard.

The Trak family of tags also includes the Cargo Trak tag for tracking large cargo containers, and the Data Trak tag is for small IT assets.

Xerafy.com RFID AND THE GREEN SUPPLY CHAIN

5

Tag Standards While tracking RFID-enabled logistics assets in a closed-loop scenario can provide significant benefits, opening up these solutions so that multiple companies across the supply chain can utilize them will provide even an even greater return, while enabling new applications. For such systems to work, however, different companies have to be able to easily read the tags. That's why standards for tracking RTIs and other assets are so important. Guidelines for tracking RTIs such as containers, pallets and other reusable assets used to transport parts and assemblies will address the lack of an international standard to ensure container visibility between supply chain members. This lack of standardization often leads to lost containers and delayed production. Current standards and guidelines and those under development help clarify the procedures for storing data on RFID tags so it can be shared among multiple parties in the worldwide supply chain. The automotive industry has been particularly aggressive in developing such guidelines for returnable containers. The Automotive Industry

Action Group (AIAG) developed a guideline for the basic features of data carriers applied to returnable containers in the supply chain as part of the Joint Automotive Industry Forum (JAIF) RFID Working Group initiative, which includes major industry organizations in the U.S., Asia, and Europe. According to the JAIF, 76 percent of companies in an industry survey indicated they had a problem with returnable containers. The percentage of container budget spent by companies to replace non-disposable containers/racks was greater than 7 percent, and the industry spends an estimated $750 million annual to cover the main problems encountered when using such racks and totes in North America alone. Standardization can help reduce this financial burden.

International standards body GS1 has developed the Global Returnable Asset Identifier (GRAI) for reusable packaging or transport equipment and has issued guidelines on using EPC-based RFID tags on pallets.

Xerafy.com RFID AND THE GREEN SUPPLY CHAIN

5

Conclusion RFID can help companies improve their impact on the environment by enabling the management of returnable transport items, improving logistics asset utilization and reducing reliance on "disposable" transport packaging. The technology can also improve traditional recycling operations by better tracking household recycling bins and monitoring recycling activity. The Xerafy Versa Trak tag is uniquely positioned to deliver these benefits by providing a ruggedized, reliable identifier that is utilized on a variety of RTIs to enable real-time, standards-based asset tracking across the supply chain. By leveraging technology to reduce waste, enterprises can take a novel and innovative approach to making their supply chain "greener."

About Xerafy Xerafy is committed to bringing our customers the world's smallest and most reliable passive UHF RFID-On-Metal (ROM) and iN metal tags that are qualified and tested to meet extreme conditions over the lifetime of the asset. Xerafy’s innovative technology offers the industrial, manufacturing, defense, IT, and supply chain markets, an affordable, durable, high temperature smart tag that can be easily attached to or embedded to metal assets. Xerafy enables packaging solutions for automatic check-in / check-out tools, work in progress, IT auditing, product authentication and asset management with a competitive advantage in size, cost, design, quality, and performance of tags. Xerafy is headquartered in Hong Kong, and maintains sales & support offices in Dallas, Texas, Maryland and in Shanghai, China. Contact Us For more information on RFID tag applications, product overviews or any other questions, please visit

Xerafy, www.xerafy.com.