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Carmel firm grows up in emerging market: BlueBean acquisition makes it one-stop RFID shop

July 3, 2006

A small Indiana firm is looking to become a big player in the emerging radio-frequency-identification market.

Carmel-based BlueBean LLC is one of a small but growing number of firms nationally that provide consulting services to companies trying to set up systems using radio frequency identification-commonly called RFID-tags and readers.

BlueBean in April acquired Mishawakabased www.rfidsupplychain.com, which sells RFID hardware and software online. The acquisition also provided BlueBean rights to a bevy of other domain names, including www.rfidhealthcare.com, www.rfidpharma.comand www.rfidfood.com. The company has eight employees and is looking to add several more this year.

"This acquisition is a great step for us and will provide customers with even more options, better pricing and a single source for their RFID projects," said Gregg Maggioli, BlueBean's founder and president.

RFID technology is eventually expected to replace the familiar bar code. It consists of a tag imbedded with silicon chips that carry up to 96 bits of data-allowing for better tracking of goods during shipment.

Maggioli said his 2-year-old company has helped some of its clients reduce their trucking fleets 30 percent by allowing them to better track goods with RFID technology.

"RFID helps you track goods from the time it's made to the time it's sold; every step of the way, you know where something is, and how long it's been there," Maggioli said.

RFID technology can save even midsize manufacturers and shippers millions of dollars annually, according to a report by A.T. Kearney, a Chicago-based consulting firm that's a subsidiary of Plano, Texas-based Electronic Data Systems. But infrastructure costs can be daunting. Though prices are coming down, RFID tags still can cost 10 to 20 times more than bar-code labels. RFID tags generally cost 14 cents to 40 cents apiece.

The Kearney report estimates that installing the RFID infrastructure at a warehouse would cost more than $400,000, while outfitting a retail store would cost at least $100,000.

A typical manufacturer with $2 billion in sales could use 88 million RFID tags annually, Kearney said. Integrating the information into reporting systems would cost millions more.

Unlike bar codes, RFID-which uses radio waves to communicate-doesn't need a line of sight to be read. Items can be identified while still on a pallet or truck. RFID tags can hold substantially more information than bar codes, and data can be added and deleted, making tags reusable. RFID readers can read several tags simultaneously, making them ideal for high-speed conveyor and sorting systems.

In 2003, Arkansas-based Wal-Mart Stores Inc. panicked manufacturers and suppliers by telling them they must be RFID-ready by the end of 2006 if they want to continue doing business with the nation's largest retailer. The U.S. Department of Defense and Minnesota-based Target Corp. also are trying to get their suppliers on board with RFID technology.

The emerging technology has given rise to dozens of consulting firms nationwide that claim expertise in RFID, said Barbara Fossum, managing director of the Cyber Center at Purdue University.

"When you seek the advice of an industry expert in something so new, I always tell people to check credentials," Fossum said.

Maggioli, 43, earned an undergraduate degree in industrial engineering from Purdue University before obtaining a master's in computer integrated manufacturing from Arizona State University.

Before starting BlueBean, Maggioli worked for Carmel-based MagTech Systems Inc., a consulting firm that shows companies how to use technology to increase efficiency. While there, he began to work with and learn the value of RFID.

"I started to see this technology was going to have profound effects on everything that touches a supply chain," Maggioli said. "I could see applications in agriculture, health care, pharmaceuticals, transportation and a lot of other industries."

Maggioli won't divulge his company's revenue, and said most of its clients don't want to be identified. But he did say clients include the U.S. Navy, IUPUI and Paramount Farms, a large California-based supplier of pistachio nuts and almonds.

"This technology is so new, it's hard to find people with Gregg's expertise," said Richard Pfile, professor of electrical and computer engineering technology at IUPUI. "I'm not aware of another company in Indiana with the kind of supplychain expertise BlueBean has."

Maggioli said he has grown the company through word of mouth, through partnerships with RFID equipment makers and by marketing in trade publications. He projects BlueBean's revenue will grow 70 percent to 100 percent annually for the next two years, and 50 percent annually for three years after that.
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