Defeating diversion - LFHF Group

September 12, 2014

New Sunshine Black Noir

It's a fight worth winning. New Sunshine has been battling product diversion for 10 years. Its professional indoor tanning products, which are sold only through salons, often show up in unauthorized distribution channels such as Internet sites within two weeks of a new product launch.

"In the past, our customer service department has reported situations in which our bottles have been filled with generic brands of lotion, then sold online as authentic products," says Scott Matthews, general counsel, New Sunshine. "End users have expressed their concerns about us having changed or cheapened our formula."

The loss of income from those products is bad enough, but the loss of customer trust jeopardizes future profits, too—and exposes consumers to potentially unsafe or inferior products.

Angie Provo, New Sunshine senior brand manager, says, "Diversion is an industry-wide problem because it damages our brands and ultimately hurts consumer loyalty. Therefore, it's really important that we've taken this leadership position to help instill confidence back into the consumer."

New Sunshine Black Dahlia

Now, when the company sees one of its RFID-tagged products online or at any other unofficial outlet (such as drug stores and flea markets), Matthews says, they buy it, scan the RFID label to determine which distributor it was shipped to and work from there to find out how that product got into the wrong hands.

Matthews is quick to explain that the distributors are victims, too.

"Our distributors are allowed to sell only to tanning salons. What happens is the distributor gets a call from somebody who says, ‘I have a five-bed tanning salon in Wichita, Kansas. Ship me some tanning lotion,'" Matthews says. Because this sounds like a legitimate business, the distributor ships them product. "They think nothing of it. When, in fact, [those people] don't have a business. All they have is an online store. So we've been able to go to the distributor and say, ‘Work with us. Let's find out how this website is getting the product.'"

The RFID campaign has allowed New Sunshine to track down—and shut down—those dishonest sellers. Matthews says, "We've been able to identify how the products got into the distribution system improperly and we've been able to take measures to make sure those sources stop."

Scott Matthews

RFID experts at WS Packaging Group Inc. helped New Sunshine assess its business needs and develop a solution that had the least impact on packaging design and operations, could scale up quickly and would be the most efficient approach for downstream trading partners. Because these were new products, New Sunshine was able to test proposed packages and designs for RFID compatibility before committing to them. Matthews says this industry is big on expensive decorations, like holograms and foils. During testing, one foil interfered, so they ended up not using it. "This was all done in the testing phase so we knew which materials to choose," Matthews says.

They were a bit concerned at first with the proposed design for Black Noir. The bottle is sprayed with adhesive, then coated with glitter before being covered with a full-body clear shrink label. "Glitter did not affect the readability at all," Matthews says. "Honestly, we almost think it helped. The glitter worked like an antenna."

WS Packaging received Designer Skin sample packages and set up RFID portals to test a number of different tags to see which tags worked best with the products and the packages. Designer Skin is just one of several product lines. In this line alone, New Sunshine uses 14 different bottle shapes in a variety of sizes, ranging from 3.6 oz to 20 oz, with the majority of its bottles being 13.5 oz. For this initial implementation though, there were five formulations and three different bottles.

Michael Manley, senior business development manager, RFID, at WS Packaging, explains, "Suntan lotions have physical properties that can make reading RFID tags difficult, so it was crucial we find a tag that was sensitive enough to work well with their products and containers. In addition, it was vital that the tag be able to withstand the heat tunnel in which the shrink wrap is applied to many of the Designer Skin high-density polyethylene bottles."

No intrusion on designOne other criteria: New Sunshine didn't want the tag to intrude on the design of the package or label. Matthews says, "We are able to hide the RFID tag underneath the label without having to give up valuable packaging real estate or impacting our brand image. This was a very important factor to us."

That provided a secondary benefit. Since the RFID tags are hidden beneath the labels, there's no easy way to circumvent the system's security. A person would have to cut off the shrink sleeve label to remove the tag, making the product un-sellable.

It's all relativeWS Packaging standardized one UHF Gen2 RFID inlay-composed of an Impinj Monza chip, antenna and a clear film substrate that is applied to a pressure-sensitive paper label. The RFID tags are produced, pre-encoded and tested at the WS Packaging facility in Algoma, WI. WS Packaging ensures that there are no duplicate inlays and that each is unique. Each finished tag is serialized with an EPC Global identifier from GS1 and a log file is created.

The serialization-encoding scheme consists of a grandparent (pallet), parent (case) and child (bottle) RFID tag relationship. Each tag consists of a data identifier—"P" (pallet), "C" (case) and "B" (bottle)—followed by a serial number, allowing the RFID reader to easily identify the product and associate it with a unique sales order and determine if the number was a bottle, case or pallet.

In collaboration with New Sunshine's IT department, WS Packaging developed a data capture and reporting tool that captures, manages and reports on the pedigree of the item.

"They were instrumental in diagramming how this process would work and make sure that the software and the procedures—the use of the RFID technology—would not affect our business operations in any way," Matthews says. "They made sure the software was customized to fit our specific business model." It even interfaces with New Sunshine's accounting system.

New Sunshine RFID in-plant operations

In operationAll product development, production and packaging—including RFID and prime labeling—take place at New Sunshine's manufacturing facility in Tempe, AZ. WS Packaging helped New Sunshine map out the process flow in the plant and identified the required RFID hardware.

New Sunshine added a computer and Impinj Revolution R420 fixed readers in the plant to read and associate bottles to cases and cases to pallets. As a last step, order pickers use Motorola MC3090 UHF RFID mobile readers to scan shipments as they leave the warehouse. Several tags can be read at once and the serial numbers are recorded and stored in a central database.

RFID tags are supplied to New Sunshine on a master roll, which is loaded into a label dispenser. Workers apply the tags by hand to the individual empty, unlabeled Designer Skin bottles; they are placed horizontally on short bottles and vertically on tall ones.

Once the tags are in place, workers fill the bottles on a semi-automatic system, manually add the closures and then slip the shrink labels on. Bottles then go through a shrink tunnel and are manually packed into cases and sealed.The cases pass between the Impinj readers, which scan the bottles and identify the case. A case RFID tag is then applied. Once cases are palletized, they are scanned again with the mobile reader and a pallet RFID tag is added and associated to the load.

See a video of New Sunshine's RFID labeling operation to fight diversion at www.packagingdigest.com/NewSunshineRFID.

New Sunshine beauty shot 1

Plan to expand useEventually, New Sunshine plans to put an RFID tag on every bottle that has a shrink-sleeve or pressure-sensitive label on it in the future. Matthews says it will be a gradual process, but the company is committed to the technology.

"Outside of the pharmaceutical industry, we're on the cutting edge of industries doing this," Matthews says. "From a company standpoint, that's been exciting for us. We didn't turn to RFID to be Big Brother to our distributors or the salons. What we're doing is trying to combat a serious issue and help our distributors and help our salons fight the same problem."

GS1 US, 609-620-0200. www.gs1.org/epcglobalImpinj Inc., 206-517-5300. www.impinj.comMotorola Solutions Inc., 847-576-5000. www.motorola.comWS Packaging Group Inc., 800-236-3424. www.wspackaging.com/rfid

Committed to safety and integrityNew Sunshine makes high-end tanning lotions, bronzers and tan extenders, such as Designer Skin, Australian Gold, Swedish Beauty and California Tan.

With a product philosophy and positioning built on "nutrition of the skin" for its Designer Skin line, New Sunshine promises to provide the ultimate in skin nutrition through the use of advanced skincare ingredients and formulas.

The company's official position on "product diversion" is posted on its website (along with a video explaining how they combat this serious issue):

"Designer Skin is committed to a salon-only policy of sales and distribution of our indoor tanning lotions. Our products produce optimum results when chosen and sold by trained tanning salon professionals who understand their clients' tanning needs and objectives. Diverted products are many times counterfeit, contaminated, old or expired products that may not be safe to use. We are committed to protecting the safety of our consumers. Our commitment to you is to make every effort to maintain the product integrity that you demand."

Lisa McTigue Pierce

Executive Editor, Packaging Digest

Lisa McTigue Pierce is Executive Editor of Packaging Digest. She’s been a packaging media journalist since 1982 and tracks emerging trends, new technologies, and best practices across a spectrum of markets for the publication’s global community. Reach her at [email protected] or 630-272-1774.