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    Report: 5 Billion RFID Tags by 2005

    CAMBRIDGE, Mass. - Radio frequency identification tags, otherwise known as smart tags, will be in place on some 5 billion packages, crates, and shipping containers within a few years, according to a report from Forrester Research.

    CAMBRIDGE, Mass. - Radio frequency identification tags, otherwise known as smart tags, will be in place on some 5 billion packages, crates, and shipping containers within a few years, according to a report from Forrester Research.

    Currently in place on only a million or so items in pilot tests, RFID tags can hold scads of information about a single item, from what's in it to when it was produced to where it is at a given time. Conventional wisdom among packaged goods manufacturers holds that widespread usage of the tags hinges on lowering their price to 5 cents or less, but the Forrester report says other factors will speed the deployment of RFID technology.

    Increased demand for the tags for logistical purposes and for high-ticket items such as tobacco products and HBC items will drive down prices, says Forrester. Government enforcement of strict, automated checks of freight containers will boost adoption of RFID, as will Wal-Mart's increased implementation of the technology.

    "The first RFID systems in the grocery industry primarily involve pallets and reusable containers. They allow firms to more quickly scan goods in the warehouse. Once we start seeing tags on cases, things will get really interesting, because case-level tagging will enable all sorts of innovative activities like automated replenishment and vendor-managed inventory," said Forrester analyst Christine Spivey Overby. "The media has focused on the five-cent tag, but tag prices are just the tip of the iceberg."

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