COMPUTER CHIP COULD NIX TRANSSHIPMENTS
BUT AMTEX PROJECT MAY FALTER IF THE CHIP'S PRICE DOESN'T COME DOWN SIGNIFICANTLY

Byline: JIM OSTROFF

WASHINGTON (FNS)--It's about the size of a grain of wheat and promises to stop apparel transshipping and counterfeiting cold.
The device, a radio-frequency, read-and-write silicon chip, has already passed muster in federal laboratories. Once embedded in a garment, the chip would carry a wealth of information--information manufacturers, shippers and retailers could use to track merchandise and curtail transshipments. But unless developers of the chip can bring down its $1.25 price tag, their work may go for naught.
The verdict could be in by next April, when researchers with AMTEX, a consortium of textile and apparel firms, will unveil the chip. Today, industry officials are elated by its promise.
"Conceivably, an entire case- load of imported apparel could be scanned at the dock or airport andwithin seconds it could be determined whether any of it was transshipped or is counterfeit," saidRichard Yardley, The American Apparel Manufacturers Associa-tion's technical services director.
The chip could produce "enormous benefits for retailers, too," said Jud Early, research and development director with the Cary, N.C.-based TC2 who is working with the AMTEX researchers.
"Right now, inventory records are corrupted at a high rate--some say 30 to 50 percent--by improper clerk scanning, such as when a customers buys a black and a brown suit that have the same price and the black one is scanned twice," Early said. He also noted that the chip could be programmed to set off a store alarm if this feature is not deactivated at the checkout.
Better inventory control and precise, real-time data on customer purchases could aid manufacturers, too, said Jim Caldwell, AMTEX's automation industry project manager, who also works at TC2.
"Production and shipments could be changed to exactly meet retailer demand and, with the device, the store's receiving dock need not open the case to verify that only four dozen green and three dozen red shirts were shipped," Caldwell said. "The case could be scanned instantly to do the verification, saving time and money."
After three years of work, AMTEX researchers say their chip can do it all.
"Basically, what we have is a silicon chip that is a passive radio-frequency device," Early said. "It does not require any electrical connection or power source, but resonates information when excited by a signal from an antenna."
In practice, he said an apparel manufacturer would be assigned a confidential ID number by some central agency for each garment to be produced. This "electronic fingerprint" also would contain data about each step of the manufacturing process, the intended purchaser, fiber content and, if desired, the suggested retail price and SKU.
"A counterfeiter could make the same garments, but without access to the validation number the fraud could be quickly detected," Early said. He added that the device would not permit any changes to be made in the ID number once it is electronically imprinted.
Early and Caldwell expressed confidence in the technology, saying it is already used in a rudimentary form in hospital operating rooms to record the number of times garments are worn and washed before they must be discarded.
At $1.25 each, however, the devices may not prove practical in the thin-margin apparel and retail trades. Caldwell said researchers at the Oak Ridge and Lawrence Livermore national laboratories are trying to develop a "read only" chip that would sell for about three cents. This device would contain only the verification ID and perhaps some retail data. A 25-cent version, also under development, would enable apparel manufacturers and retailers to add additional data.
Early said about 50 to 100 million of these devices would need to be sold annually in order to reach the three-cent goal. Prototypes of these other devices are expected to be unveiled by next April also.
Still unknown, though, are the costs manufacturers and retailers would incur to buy the equipment needed to interface with the computer chip. And apparel industry officials concede that for the device's anti-transshipping and counterfeiting features to be truly effective, the U.S. Customs Service would need to adopt it as an enforcement tool.
Samuel Banks, a deputy Customs director, recently told DNR the device "sounds interesting," but refused to say whether the agency is even investigating its use.
Even if Customs does not buy into the concept, the device could prove valuable to large U.S. apparel firms that now spend millions of dollars annually to combat counterfeiting, said an industry official, who requested confidentiality.
"Some of the big jeans firms could use the device and assign IDnumbers to each garment they make or have made for them abroad," the official said. "These companies could then go into stores and detect any bogus jeans and confiscate them right there."

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