Implementing RFID technology in the supply chain

11-Oct-2023 - Last updated on 12-Oct-2023 at 13:48 GMT

Fragrance brand Bastille Parfums has implemented RFID technology for its new fragrance launch

With transparency under the microscope due to sustainability demands, issues with counterfeiting, and the upcoming Digital Product Passport initiative, RFID is in the spotlight again.

Beauty and personal care product manufacturers are experiencing a greater need for more efficient supply chains, increased inventory accuracy, and consistent product availability.

RFID technology is one solution that could potentially solve many issues faced by brands.

It uses radio waves to communicate with a microchip that can be mounted on a tag, card or transponder and benefits include real-time inventory control at every stage – from production to retail point of sale – which can allow sales and marketing teams to have a real-time view of the product evolution.

It can also offer protection against counterfeiting, as well as traceability throughout the supply chain, as it contains manufacturing dates, batch numbers, expiration dates, allergen lists and anything else that may potentially be useful to a brand or consumers, which could be especially beneficial for sustainability claims.

Counterfeit products are a growing concern for luxury brands – with the popularity of sales channels like TikTok Shop leaving more brands open to this issue.

The Intellectual Property Crime Threat Assessment 2022 from Europol and the European Union Intellectual Property Office (EUIPO) said that in 2020, approximately 66 million fake items were seized by authorities in the EU. Almost 69% of those items were seized in the EU internal market, while the remaining 31% were seized at the EU border.

As fake products won’t have been properly tested, there are consumer health and safety issues to consider, as well as a brand’s loss of reputation and the potential financial losses.

RFID has become simpler

According to Uwe Hennig, Senior Director Market Development, Beauty for Avery Dennison Smartrac, roadblocks that have historically prevented beauty and fragrance brands from implementing RFID are now a distant memory with recent technological advancements.

“Brands may have encountered issues in the past regarding the size of RFID tags, or their ability to work on metallic or liquid products, but advancements and innovation now mean that RFID tags come in all shapes and sizes, which means they work with liquid products as well as metal packaging and can be used on long, thin cosmetics like mascara or round products like eyeshadow pots,” he said.

He said that the process for beauty brands to become RFID-ready is now relatively simple and tags can be physically applied to any product or its outer packaging.

Every tagged product is given a unique digital identity – also known as an electronic product code (EPC) – within the tag. This is what gives the product its ‘digital twin’, which is a readable, completely traceable, unique digital identifier.

Once an order is ready for shipment, the RFID-enabled products are quickly scanned, and their individual EPCs assigned to that order before they leave the distribution centre. “Brands can then monitor where their products are in the supply chain, dramatically improving visibility,” said Hennig.

Hennig also said that brands will also need an ecosystem to really maximise the benefits of digital identification solutions. “We refer to this as the power of three: you need the digital triggers (RFID, QR code, NFC technologies); a connected cloud-based platform to link everything through your supply chain like atma.io and applications to unlock the visibility and consumer engagement,” he explained.

Avery Dennison offers the atma.io product cloud: a cloud platform that distils all of the data hidden in a product’s value chain into insights for consumers and businesses. This platform shows exactly what a product is made of, where it’s been, its various footprints and certifications, and proper end-of-life actions.

Hennig said that one of the biggest challenges with supply chain visibility is that brands will often have data sitting in silos on disparate systems, so a system like atma.io puts all that product data in one place from all the different stakeholders in the supply chain.

“At its most basic level, the combination of these digital solutions allows for incredibly fast and efficient stock management. It also sees labour time fall dramatically,” he said.

And he also said the technology allows for more advanced usage such as: "seamless omnichannel services, mitigating counterfeit products, creating personalised experiences with customers, and even communicating end-of-life actions such as how to recycle, reuse or refill products."

Consumers are craving transparency

Fragrance company Bastille Parfums has recently worked with Avery Dennison Smartrac to embed RFID tags into its outer packaging of new scent Paradis Nuit.

Bastille Parfums CEO Sophie Maisant said of the decision: “Beauty consumers are craving more transparency on the products they buy and use. For us, it’s an amazing opportunity to deliver information about fragrance composition, ingredients sourcing, and sustainability impact through an immersive experience directly on mobile.”

Maisant noted that the RFID technology also allowed the company to track and trace each product offering regarding bottling date and location. “I don't think any other beauty brands offer this level of transparency and visibility to their customers, which positions us as pioneers in the industry,” she said.

Cosmetics brands may be reluctant to implement this technology due the potential costs, but Maisant firmly believed that her brand will see long-term savings by introducing RFID. She was “confident that in the mid- and long-term, with the benefits of the technology like counterfeit prevention, stock accuracy management, and consumer loyalty we will soon see a return on investment."

There is also the need to educate consumers on what the technology does and why it is necessary.

Yet Maisant said her customers have been: “happily surprised” by the initiative and interested in knowing more about their products, the ingredients and their provenance. “They are impressed that we even disclose the exact date of manufacturing,” she shared.

Spanish fragrance manufacturer Mixer & Pack has also recently integrated RFID encoding tunnel into its production line, so that each product is encoded in real-time, isolated and in a chain.

Incoming Digital Product Passport (DPP) initiative

Looking forward, Hennig believed that younger generations will now spur a shift to more use of RFID, as they demand more transparency.

“This is what makes our partnership with Bastille so pioneering, By disclosing the full list of ingredients and date of bottling, they are really paving the way for a more transparent and resilient beauty and fragrance industry,” he said.

Waste due to overproduction and excess inventory also remains a key issue of the industry, which highlights the need for more efficient and visible supply chains now and in the years ahead.

Hennig also noted that the industry will need to prepare for the European Commission's incoming Digital Product Passport (DPP) initiative as the EU aims to transition to a circular economy.

"DPPs help to ensure businesses effectively measure and verify their progress towards more sustainable ways of operating,” he explained.

“DPPs for the first product groups of textiles and batteries is expected to come into effect in 2027. All other product categories will likely soon follow, meaning beauty and fragrance brands best start their preparations sooner rather than later.”