Company sticking with new technology

Radio-frequency tags simplify inventory process

Small business

January 06, 2003|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

Executives at Matrics Inc. may want to tag the world with their technology, but for now, they'll settle for sticking their tags on crates and pallets.

The Columbia-based technology company has spent the past several years raising $16 million in venture capital funding and developing radio-frequency identification tags, software and readers that can keep track of thousands of items at a time.

Now the company is trying to woo Fortune 500 corporations to use the tags to help manage their supply chains and keep track of items on sales floors. Matrics also has "smart" shelves that can tell a store manager precisely what is placed on them or when a shelf needs restocking, and the company is working on "smart" parking and toll systems that would allow a tagged car to pass through a reader without slowing. The company also is working to make their products smaller and cheaper.

Some large customers

So far, much of Matrics' business has come from placing its tags on pallets and crates used in warehouses throughout the United States. The company has not made enough money to cover the cost of research, but executives say that Matrics has five customers - some are among the largest corporations in the United States - who have decided to use the technology in warehouses and plants.

"For a company our size, that can only be because they think this RFID is really something," said Matrics President and Chief Executive Officer Piyush Sodha.

Matrics could be on to something, according to a research report by Accenture, a California-based management consultant and technology services firm that has been tracking the development of radio-frequency identification tags technology. Businesses lose millions of dollars through theft and glitches in the supply-chain system. Bar-code readers, the most effective technology used widely today for supply-chain management, allow everyone from a warehouse worker to a cashier to scan and identify items as they move from warehouse to shelf and out the door. But the devices require someone to do the scanning, and the scanners must have a clear line of sight to keep track of inventory.

RFID is the same type of technology used at highway tollgate systems and gas stations equipped with "speed passes" that enable automatic billing to credit cards or from bank accounts. The challenges of adopting the technology for supply-chain management lie in the size and cost of the equipment and its range, according to Accenture. Smaller antennae - like those used in service stations' speed passes - have to be placed very close to the reader in order to register. Antennae that can be read from long distances - as is necessary for highway toll systems - are too large and too expensive for use on small items such as a box of cereal. In many cases, the technology costs significantly more to implement than bar-code technology, the report said.

Another problem with current RFID technology is that the number of items a reader can keep track of typically is limited, the report said.

Matrics' solutions

But Matrics executives think they've conquered these obstacles with their tags - each contains a minuscule microchip and antennae in a format as thin and pliable as a sticker. The tags sell for less than a dollar each, have a longer range than other small antennae, and thousands can be acknowledged by a reader simultaneously. This enables a manufacturer to know the exact number of items that are in a facility, where they are located, precisely when a new shipment enters, and when a product leaves.

"The difference between a tag and a bar code is, no people are required," said Tom Coyle, vice president of supply-chain solutions. "You don't have to read tags one at a time. We can read hundreds at a time, and you don't need to be able to see [a tag] to read it."

So a pallet with 60 cartons of cereal can appear or disappear at once in the inventory as it moves through a warehouse portal without anyone checking the materials in or out. And if a carton falls off the pallet or walks away, it can be tracked, or the system can send notification that the carton is missing.

The company's new shelving system works similarly, with readers placed within the shelves keeping track of the tagged items on them. Matrics' software allows the data collected from the antennae and readers to be sent to the clients' software, where the information can be shared with business partners or suppliers.

Although Matrics - a small company, with 30 employees - is competing with the likes of Texas Instruments and Motorola, its executives say their successes have given the company the traction to continue to grow quickly. This year, Matrics plans to hire another 10 people, and is expanding its office by half, to 7,500 square feet.

By the end of next year, with about 20 customers, the executives say the company will be turning a profit.

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