Pentagon officials refining requirements for smart tags on military shipments.

• Author: Erwin, Sandra I.

The Defense Department is banking on the success of a new smart-tag technology to improve the management and tracking of shipments moving in and out of major depots.

Although the electronic-labeling technology--known as passive radio-frequency identification--continues to evolve and has yet to be perfected, the Pentagon and retail giants such as Wal-Mart are hoping that their extraordinary buying clout will bolster manufacturers' investments in passive RFID.

Beginning in January 2005, Defense Department suppliers shipping repair parts, clothing and other military gear to Defense Logistics Agency depots in Pennsylvania and California will be required to identify the contents of every pallet with a passive RFID tag.

RFID tags electronically store information about the contents of a shipment, making it easier to sort and track the equipment during transportation. A scanner or reader device is needed to retrieve the data.

Although the Pentagon is just now beginning to introduce the passive RFID technology, it has been a user of active RFID tags for decades. Active tags contain an internal power source, enabling the tag to hold more data and providing a longer "read" range. Passive tags are a much newer technology. They have no power source, hold a minimum of data and have a shorter "read" range.

The Defense Department has embraced the passive RFID technology, because the tags are, at 40 cents each, much cheaper than the active tags, which cost at least $120 each. Active lags are used on large shipping containers. The passive tags will identify the contents of warehouse pallets.

The most recent Defense Department policy, released in late July, will require suppliers to attach passive RFID tags on cases and pallets by January 2005. The mandate only applies to shipments made to Defense Logistics Agency depots in Susquehanna, Pa., and San Joaquin, Calif.

Certain shipments of raw materials will be exempted from the RFTD policy. These include bulk commodities--sand, gravel, liquids, concrete, coal and agricultural products--that are shipped in rail cars and tanker trucks. These materials interfere with the radio signals.

The RFID tags will be employed on an experimental basis for the time being, even though the plan is to expand the technology to all defense depots in the United States and eventually to overseas installations, said Alan Estevez, assistant deputy undersecretary of defense for supply chain integration.

It is unlikely that any shipments...