Reis knew he had hit on something parents could use and dropped out of the electrical engineering graduate program at Stanford to start Savi Technology and market his product. Reis convinced fellow Stanford colleague Vikram Verma to join him. Today Verma is the CEO of Savi, whose headquarters are in Sunnyvale, and Reis has retired.

Little did Reis and Verma realize their kid-tracking device would lead to a multimillion-dollar contract with the U.S. Department of Defense.

According to Mark Nelson, director of corporate communications for Savi, the U.S. government turned to Savi after the Persian Gulf War because of the difficulties the military had keeping track of what was shipped where. Out of 40,000 containers shipped to the gulf during that war, soldiers had to open 28,000 manually just to identify where supplies were located. "They shipped a lot of duplicate containers," Nelson said.

The U.S. government awarded Savi a grant in 1992 to develop tracking systems for Army supplies. "At that time the military was looking for wireless tracking systems. We thought maybe our technology could track cargo instead of kids," Nelson said.

Savi uses radio frequency identification technology and software that allows the company to track containers shipped around the world. The technology includes "smart tags" that are placed on containers. The tags act as mini computers and can store information about the contents of the shipment, including its route and the containers' various stops along the way.

Soldiers use handheld reader devices that capture information from the tags every time a shipment passes by their station.

The information is transferred to the Internet for the military in the U.S. to access.

What's especially helpful, Nelson said, is that once the containers reach their destination, soldiers can use the readers to access each container's contents without opening them. This eliminates wasteful shipments, Nelson said.

This year Savi won another contract with the U.S. Department of Defense, the third multiyear contract since 1994. This one is for $90 million.

"Our technology has been extended out to the Middle East in recent months," said Nelson.

The project can track up to 300,000 containers from 400 different locations. So far the company has tracked close to 1,000 containers moving around the world.

"People are concerned about security gaps in transportation, particularly how easy it would be to put a weapon of mass destruction in a container," Nelson said.

Since the Sept. 11 attacks, Savi has incorporated new technology to include an electronic seal that can detect whether the locked container was tampered with. The smart tag would send a message that shows where the container is and gives information about the breach as it occurs.