RFID & the Label Converter

By Leah Genuario | July 20, 2005

A special series of articles updating the RFID issues facing the industry: RFID and the Label Converter , RFID and Mandates, and Item Level Tagging, by Leah Genuario; RFID and Static Electricity by Jay Perry of Simco Industrial Static Control.

Applications for RFID are popping up everywhere. They range from the predictable — logistics, for instance — to the peculiar — RFID arm implants that grant patrons entry to a bar and an interesting way to pay the tab (It's happening at Bar Soba in Glasgow, Scotland).

While RFID uses are seemingly endless, the market is still small. And not all applications require the assistance of a narrow web press. Still, many argue that RFID is an exciting opportunity for narrow web converters.

"The timing is right, the market is in its infancy, and the future demand is huge," says Max Golter, VP of sales for Bielomatik-Jagenberg in Windsor, CT.

The Wal-Mart mandate has certainly generated a lot of RFID business for narrow web converters. Converters usually supply blank thermal transfer labels that enable Wal-Mart suppliers to comply. These labels can be sold directly to the end use manufacturer, but are also sold to RFID printer suppliers and RFID systems integrators.

When Wal-Mart's rollout expands to include all suppliers and all products, the number of labels needed will be huge. "I think the visibility from Wal-Mart is that they are talking such large numbers. They are talking billions," says Joe Jiner, RFID development director for The Kennedy Group in Willoughby, OH.

"The whole RFID industry is hundreds of millions of tags today, and if you look at Wal-Mart alone, when they are fully rolled out it's going to be upwards of five billion tags just at the case level," says Stan Drobac, VP for Avery Dennison's RFID unit in Redwood City, CA.

While the logistics segment of the RFID industry might eventually dwarf other markets in terms of size, narrow web converters say its not the only opportunity.

"We have quite a bit of activity going on long-term outside the supply chain. There are niche applications for RFID. Some of our first involvement has nothing to do with the supply chain," says Mike Sanzone, RFID product specialist for MPI Label Systems, which is headquartered in Sebring, OH.

Item level pharmaceuticals is currently the biggest application for CCL Label, says Rob Ryckman, vice president of sales and marketing of its Healthcare Solutions Group, which is located in Hightstown, NJ.

Argent Tape & Label in Troy, MI is also excited about RFID within pharmaceuticals, confirming that item level tagging is already a reality. "They are already starting. Pfizer has started a pilot program with individual tagging for Viagra because it's such a high counterfeit, high theft item," says Jim Agney, president.

RFID baggage tags for airlines is also a hot market right now, as is the tagging of library books. At a Smart Labels conference last year, sponsored by IDTechEx, representatives from Delta Airlines, McCarran International Airport and the Singapore International Library shared their enthusiasm about RFID and their current use of RFID.

Label converter's role: Inserting or manufacturing inlays?
"Label converters are playing a role somewhere in the middle of the RFID supply chain. Five separate modules could be considered in the chain of providing RFID labels to market," says Peter Van Vegten, global business development director for Acheson Colloids Company. Acheson is working as a joint partner with ANI Printing Inks to bring RFID technology to the narrow web market. He lists the five supply chain steps as follows:

- Manufacture of the antenna;
- Manufacture of the inlay (also called transponder);
- Manufacture of the label or the smart card;
- Sale of the system to integrators;
- Sale of the package to the end users.

While label converters today are primarily concerned with taking the inlay and creating a finished product, there is excitement over the evolving narrow web role. Many foresee narrow web converters' increasing involvement in the manufacture of inlays.

The printing of antennae is an up-and-coming technology. In fact, it has already been used by some suppliers in Wal-Mart's initial RFID implementation. It is a hopeful area for the narrow web market.

Much of the excitement revolves around economics. For one, "We've seen that margin pressures are making label companies re-evaluate their position in the market. The more processes you control, the greater added value you can offer, so you can protect your margins more," says John Costenoble, sales manager, graphic prints systems, Stork Prints America in Charlotte, NC.

Besides better margins for label converters, printed antennae could also aid in bringing the RFID label down in cost. By distilling the supply chain to fewer steps, converters can pave the way for a more affordable label.

"There are just too many people involved in this supply chain," says Steven Van Fleet, president of new label converting company R and V Group in Chattanooga, TN. He says label converters are going to have "to figure out how to modify or buy converting equipment to start attaching printable antennas to straps and making a lower cost RFID label."

Printable technology can also offer more flexibility in design and order size. "Printing allows you to do some things that aren't really available to designers of antennae in etched copper or aluminum," says Dan Lawrence, director of technology and commercialization for Precisia in Ann Arbor, MI. In other words, "You can change the antenna design when you change printing plates."

As with any new technology, challenges must be worked out before some of the benefits of printed antennae are fully realized. As far as condensing the supply chain, converters might currently be able to print the antenna (step one) and insert the inlay (step three), but chip attachment technologies have proven prohibitive for label converters to enter into today.

"There is a possibility that down the road converters may print antennas and mount straps to those antennas and insert that finished inlet into a label structure, but I wouldn't anticipate converters mounting chips from wafers to antennas," says Bob Zaccone, vice president of Graphic Solutions International in Burr Ridge, IL.

Today, "Only a few chip manufacturers have made their chips available in straps. It's not widely adopted," he adds. "The process of mounting that strap to the real antenna is not nearly as precise a science as the chip mounting itself."

There is also a potential obstacle for label converters, associated with the printing process converters most use. Antennae are mainly printed using screen and gravure. Flexo, the process of choice for most narrow web printers, poses some difficulty.

"There are some challenges. One, our inks need a thermal cure and most flexo lines don't have a thermal capability. And two, flexography puts down very little ink, so they have to use multiple stations, which require a registration challenge at the place where the chip is attached," says Steve Ludmerer, president of Parelec, a manufacturer of conductive inks based in Rocky Hill, NJ.

One converter questions the future demand for printed antennae. "There are some areas where the printed technology is going take off. But as soon as you get into hostile environments, then there are issues. I'm not saying it's good or bad — but there are certain applications where the printed antenna is going to work really well, and other areas where it will not," says Jiner.

Considering the benefits of printed antennae and the challenges that they pose for label converters, will this emerge as a new role for narrow web converters? "Label converters' roles will change eventually. I think it will become more of an integrated part of construction, but I don't think you'll see a lot of it in the next few years," says Ryckman. "The average narrow web company doesn't have a demand or a need to do that at this point. And these products are very specialized, they are not what I'd call commercialized yet."

Printed technology remains something to watch. And perhaps of more excitement is the possibility of printing the entire transponder (See Item Level article on page 64) in the future, not just the antenna.

Business challenges
Orders are starting to come in, but the big question for the narrow web industry is whether or not label converters are making money on RFID.

Not yet, says one converter. "The marketplace is excited about the application, about the technology, and about applying the technology to their own operations. They have started to allocate research and development money to investigate the use and benefit and do a value analysis of RFID. What it has done to companies like ourselves, and many companies that are already into RFID, is to drain us for information: trials, prototypes, samples. There's a high cost to the dynamics of our industry," says Jim Agney.

The converting process is also not as efficient as it could be. "Right now, many inlays are furnished in one-across reels. It's pretty hard to convert economically in one-across reels when you are talking large volumes. How you adapt to that, or how you change that, is one of the issues," says Alan Davis, president of Tapecon, headquartered in Buffalo, NY.

Apart from issues related to profit, there are some technical obstacles as well. Inlays coming into label converters still offer questionable yields. "Trying to solve the problems furnishing 100 percent good product has been a large challenge, and the early converters who have learned to understand and get around those issues are the ones who have stayed in it," says Davis.

Fortunately, this is changing. "Another thing synonymous with UHF transponders [inlays at 915 MHz frequency in the US] until recently was poor quality. It has been a big problem because the failure rate on transponders has been 20 and 30 percent," says Golter of Bielomatik. "Now, UHF transponder manufacturers are boasting quality levels in the 99 percent yield range. That's huge as well, because the poor quality has frustrated the converters, frustrated the end users."

Inlay shortage has also proven to be a challenge, at least in the short term. Golter says that transponder manufacturers currently have up to a 22 week delivery time.

Capacity constraints, some say, are in every part of the supply chain as demand increases. "There are capacity constraints at each and every segment of the marketplace," says Bob Zaccone.

"With the adoption of the Class One, Generation Two standards, we'll start to see people putting capacity in place, realizing that the market has developed. Still, there's going to be a lag of capacity to demand, probably for the rest of '05 and into '06. My personal expectations are that the marketplace will really begin to explode in '07 and '08 and capacity will barely be able to keep up. So I think we'll be looking at capacity constraints for the next few years," he adds.

Class One, Generation Two
Last year the issue of standards was a hurdle for the RFID industry. This year that concern has subsided with a new standard. The EPCglobal UHF Generation Two standard was ratified by EPCglobal last December. It marks a significant milestone for the RFID industry.

According to the EPCglobal, an organization whose aim is to drive RFID standardization, it is the first royalty free, global standard related to RFID. Developed with input from over 60 member companies, the new standards offer interoperability around the world, and security improvements, such as advanced encryption technology.

The standard is important for the further development of the RFID industry. "Now chip companies can build to a standard and it will be interoperable with other people's equipment that has been built to talk to that standard," says Lawrence. "It takes a lot of the uncertainty out of manufacturing. A company that wants to implement RFID doesn't have to worry about using proprietary technologies that may or may not be compatible now or in the future."

It may also ease capacity issues. "This should now make it easier for more companies to start manufacturing larger quantities," says Van Vegten.

For label converters specifically, "Standards are good, and help the converter better understand exactly what equipment he needs to produce labels that will work with a variety of equipment," says Ken Daming, product development manager for Mark Andy in St. Louis, MO.

Generation Two standards are not available commercially yet, but Lawrence predicts that in the next six to nine months, they will start to appear in the marketplace.

Schober RFID Tag Insertion Machine

Getting in or staying out
According to a survey conducted by Labelexpo officials in 2004, 37 percent of converters were interested in getting into RFID. That interest was apparent from the crowds around RFID equipment vendors.

"Last year at Labelexpo, we introduced our machine and since then we've been inundated with requests, not only about our machine, but about RFID in general. The interest is increasing dramatically," says Dave Grove, sales engineer for Schober USA in Cincinnati, OH.

Label converters are watching this technology closely. For those who are involved with the industry, they offer both words of encouragement and words of caution.

Melzer's M4-S inlay machine

"Let's begin first of all painting a picture of why it's in a converter's best interest not to wait. Over the past 12 months, orders from transponder manufacturers have quadrupled resulting in delivery times as far out as 22 weeks," says Golter. "Quadruple production and long deliveries are proof that usage of smart labels and smart tags are increasing dramatically."

He continues, "Those electing to wait have partially done so because of the lack of that standard [Generation Two]. That standard is here now. Instead of waiting and seeing what's going to happen, converters should be saying 'I need to look at getting the capability in-house sometime soon, I need to broadcast this is up and coming on my web site, and I have to start training my sales force in RFID technology'."

Others advise caution because of the expense. "It's an expensive technology to learn, for a couple of reasons. One is that you need a set of skills that you don't have typically if you are a converter. You need electronics personnel, for one thing, and they are hard to find and fairly expensive. And the other thing is that as you learn your manufacturing processes you will have to go through quite a bit of expensive material," says Drobac.

"It's a gamble whether you want to be an early adopter, take the risk and be there when it really takes off, because it will take off and it will take off very fast," says Mike Cove, senior marketing manager, thermal and advanced technical product business for Appleton, located in Appleton, WI. "But it's going to cost you a lot of money to learn."

R and V Group, founded in October, has decided to take the plunge. They have invested significantly in RFID — purchasing high speed quality control equipment, as well as equipment that will ultimately allow them to attach printed antennae to straps.

The president, Steven Van Fleet, had this to say to those converters who are examining the market: "Two pieces of advice would be: Before you invest in equipment, don't base your return on investment on today's market sell price because it's just not going to be sustained. If you are in it for the long term, you have to look beyond the current cost structure to make the labels, and the current technology. Number two, you need to understand that things are going to change with UHF Generation Two. The players are going to change, the dynamics are going to change. You have to look beyond the traditional short investment period, because this technology is very dynamic."

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RFID and Mandates
By Leah Genuario

When Wal-Mart announced it was requiring its top suppliers to tag cases and pallets with RFID by January 2005, it sent the RFID world spinning. RFID was relatively untested, the cost of implementation was high, and the RFID industry was still very small.

But some argue that it was the kick the industry was looking for.

"Although it's causing the industry a lot of stress, I honestly don't think there would have been a better time. Before Wal-Mart came along, the industry was just kind of hanging in suspension with a good technology idea, but nowhere to go, apart for a few limited applications," says Mike Cove, senior marketing manager, Thermal and Advanced Technical Product Business for Appleton, located in Appleton, WI.

According to Wal-Mart, its plan is on track so far. The mandate included 100 top suppliers, as well as more than 30 other suppliers who volunteered to comply. By January 14, tagged shipments had been received from 57 suppliers. These suppliers are not tagging all of their products, only a few SKUs. The rollout will continue throughout the year and into 2006 and beyond.

"We plan to expand geographically to be in up to 600 stores and 12 distribution centers by October 2005. Additionally, some suppliers will be tagging additional SKUs as we progress through the year. By the end of the year, our next 200 top suppliers will need to be tagging cases and pallets destined for our distribution centers by January 2006," says Christi Gallagher, spokesperson for Wal-Mart, based in Bentonville, AR. "We will have all domestic suppliers involved in the initiative by the end of that year, beginning with the initial planning stages."

Business case
Wal-Mart's business case for RFID in its supply chain is strong. Gallagher says that the company will see improved productivity, less checking time and less freight handling, which will give associates more time for customer service and re-stocking shelves. "Down the road, we can see benefits related to returns, recalls, warranties and battling counterfeit products, including pharmaceuticals," she adds.

Some industry observers say that the benefits to Wal-Mart's suppliers are not necessarily clear cut. For companies involved in Wal-Mart's mandate, the investment was substantial, even at the lowest levels. Wal-Mart's suppliers spent on average between $1 million and $3 million each to implement RFID, according to Kara Romanow, research director for AMR Research in Boston, MA.

"The $1 to $3 million is pretty much for whatever they needed to comply, but at the bare minimum. It did include all the hardware and software, as well as the tags and readers, but they did it only for a few products and only in one limited geography in most cases," she says. What most suppliers did not do, she adds, is integrate the entire supply chain, or set up methods for capturing and analyzing the tremendous amount of data that RFID would provide.

Romanow published her findings in RFID Fast Followers Take Heed: Suppliers Spent $250 Million in Round One. She writes: "Suppliers haven't embraced the technology and made these more substantial investments. Why? Because in many cases there were too many hurdles to overcome in too short a period to consider revolutionary ways to use the technology and the data that will eventually become available."

"Slap and ship," as it's commonly called by industry pundits, was the easiest way for suppliers to comply. It includes hand application of labels and only the most essential of equipment. Some say the lack of bells and whistles makes it an extra cost instead of a valuable tool.

"Slap and ship is basically this: I print the label with an RFID enabled printer, then I take it and slap it on the carton or pallet," says Dan Williams, marketing manager for Avery Dennison Printer Systems America in Philadelphia, PA. "It's only a cost because there is no feedback into the system telling you I shipped this, I have X number of units going to X number of places. It's the equivalent of an extra label."

An RFID application from MPI Label Systems

Not all suppliers to Wal-Mart have chosen to go this route, however. The Procter & Gamble Company is among the top 100 suppliers of Wal-Mart and has begun shipping RFID-tagged cases and pallets to the retailer.

"We are not just doing 'slap and ship'. We see tremendous potential value in the EPC [electronic product code] system, so we are evaluating how best to create systems to get the most out of the information we're able to collect via the system. We are still in a test-and-learn mode right now. This means that we are focused on doing small pilots with interested retail partners," says Jeannie Tharrington, Procter & Gamble Media Relations, headquartered in Cincinnati, OH.

Like Procter & Gamble, many suppliers are starting implementation on a small scale, but they recognize the long-term benefits of RFID and the need for further investments.

R4 Global Solutions is a systems integrator working with 15 percent of Wal-Mart's top suppliers. "Manual application tags is what the vast majority of the folks we work with are using," says Charles Rice, VP of technology for the San Francisco, CA based company.

While that is the current reality, Rice says that these same suppliers are serious about integrating RFID into their operations. "They are investing in infrastructure, in terms of the tags, readers, the middleware, integration, and to their ERP systems, and spending more time on the business process of how this will become a part of their standard operations."

Rice says his company is hearing feedback from suppliers on both sides of the fence, but that the benefits to suppliers are numerous. "For those who have expensive products — products with high margin, products with high shrink, products where there's a lot of counterfeit and diversion — there are some obvious, immediate benefits. With some of our other suppliers, the insight into inventory, the insight into the supply chain and the movement of the products through that chain, especially when it's a perishable item, have resulted in increased sales," he says.

Wal-Mart and the label converter
The good news for label converters is that Wal-Mart cases and pallets are tagged with RFID labels. These labels vary in size — generally 4" x 2" or 4" x 6" — and are most often passive thermal transfer labels.

Label converters are generally supplying blank labels for the initiative. The end use manufacturer then prints variable information themselves, such as destination information or bar codes, using an RFID-equipped printer.

According to Williams, new generation RFID printers prevent damage by "jumping the bump". "These printers accommodate RFID labels with chips in any label location; users simply alert the printer to chip location during setup. During operation, the print head senses the chip location and jumps over it," he says.

If the Wal-Mart mandate continues to go as planned, the need for blank RFID labels will soar. But is this an excellent opportunity for label converters? That's debatable.

"In the first few years as RFID usage kicks in, label converters such as ourselves who already have equipment in place to do the conversion will be able to provide that conversion," says Jim Agney, president of Argent Tape & Label in Troy, MI.

Testing in progress at R4 Global Solutions' lab. The readers and antenna are reading information from RFID tags affixed to cases moving by at 600 fpm.

In the long term, however, Agney sees smaller label converters involved elsewhere, adding that there are plenty of larger companies that are geared to deal with high volume orders for logistics. "The large high volume producers will take care of the Wal-Marts of the world," Agney says.

There is also a question of return on investment. "I think most label converters are going after the Wal-Mart pallet and case label. We are hearing more and more about applications in the airline industry, but today, most are obsessed with the 4" x 6" label," says Max Golter, VP of sales for bielomatik-jagenberg in Windsor, CT.

"The converter who is solely going after fulfilling the Wal-Mart mandate will find it difficult to recapture the investment, because this is a company that has stated from the start that it is not willing to pay anything extra for the advantages that it brings. There are plenty of applications out there that are not so cost sensitive," Golter observes.

Challenges uncovered
"As RFID moves forward, more and more super stores will move to it. It makes sense. The technology makes a lot of sense, but boy, is it hard to get going," says Appleton's Mike Cove.

A number of challenges were encountered during piloting and initial implementation by Wal-Mart's suppliers. Here are a few:

- Orientation: Where the label is placed on the box or pallet can make a big difference in whether or not it works. "The reality is that the antennae have to be in a certain orientation relative to the scanner, and they have to be placed away from certain materials, like metals and liquids," says Cove.

- One size does not fit all: "One of the biggest awakenings for our suppliers has been that a single type of tag (antenna design) does not necessarily fit all of their products," says Gallagher.

- Data: RFID systems produce an extraordinary amount of data. "Right now, I'm not sure the manufacturers know what to do with that data, the volume, or how to make sense of it. A lot of the suppliers didn't build big data warehouses to capture that data, to put analysts on top of it to figure out what to do with it, and then integrate it back into your supply chain," says Romanow.

This is not a complete list. The cost remains a challenge for many suppliers, the yield can still be an issue, and there are questions about label application in the future when suppliers will go from tagging a few SKUs manually to automating the process with the entire product line. But despite the challenges, experts are quick to say that RFID is not going away.

"RFID is going to happen. It's going to happen alongside bar code and human readable labeling for a period of time, but it is a fact of life. And developing a strategy to address it would be a vital part of their future business," says Steve Ludmerer, president of Parelec in Rocky Hill, NJ.

Wal-Mart isn't the only retailer�
RFID in retail will not begin and end with Wal-Mart, nor will it end with logistics. According to Technology Briefing #021, written by Charles Rice of R4 Global Solutions and published in January, "Every one of the top 15 US retailers has begun some type of effort around RFID technology."

Several companies are mentioned specifically. In logistics, the briefing reports that Target is in the early pilot stages of its RFID effort. "The program is live at 10 Texas area stores with 19 suppliers," it says. Albertsons is anticipating an August 2005 live date for its top 100 suppliers. A current pilot includes seven top companies, among them Gillette, The Procter & Gamble Company and SC Johnson.

Best Buy's RFID mandate was announced in August of last year. "The initial mandate covers a supplier encompassing approximately 80 percent of the company's store inventory. Pallet and case use of RFID is scheduled for an August 2005 pilot with a potential further expansion to item level in 2006 and beyond," states the report.

In Europe, Metro Group is working on a pallet-level RFID pilot, and has installed RFID readers and tags at its largest distribution center in Unna, Germany. Tesco has announced a major expansion of its "Secure Supply Chain" RFID program, and has also announced expansion of its item-level DVD pilot from two UK stores to 10.

While Gallagher from Wal-Mart says that her company doesn't "anticipate tagging at item level for 10 to 15 years," it is worth noting that not all retailers are focused so specifically on supply chain management. RFID can do more than trace packages.

"Retailers are not all going to do the same thing that Wal-Mart is doing. Wal-Mart is focusing on supply chain excellence, inventory visibility, out-of-stock reduction, all that good stuff," says Romanow of AMR Research. "A lot of other retailers can't compete with Wal-Mart on price, so what they do is compete with Wal-Mart on things like store experience. RFID is one of those technologies where you can do some innovative things in the store."

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Item Level Tagging
By Leah Genuario

Item level bar codes were officially launched on June 26, 1974, when a 10-pack of Wrigley's Juicy Fruit was scanned at Marsh Supermarket in Troy, OH. The bar coded, 67-cent item marked the beginning of the UPC code era. Although bar code and RFID technologies are comparable, they do not share the same beginnings.

Even though the price of gum has risen since 1974, a 20- to 50-cent RFID label on a low priced item doesn't make sense. But item level RFID tagging is not a moribund concept. Although it is not following the initial path of bar code implementation, it is still being considered on the item level and might one day be inexpensive enough to warrant the tagging of Juicy Fruit.

Item level tagging is already happening, says Ken Daming, product development manager for Mark Andy in St. Louis, MO, "but for now only on high value items — baggage, library books, and others."

In addition to the items mentioned above, there has been a buzz around pharmaceutical labeling for quite some time, as well as tagging high value retail items. UK retailer Tesco, for instance, has announced an expansion of its item-level RFID pilot on DVDs.

The benefits of item level tagging are obvious for products that are highly counterfeited. There are other benefits.

"The potential at the item level is significant. If you look at some of the pilots that have been run that are public, as well as some of the work we have done in our lab, you are talking about 50 percent reduction in shrinkage, which for average retailers are 2 percent of sales. We are talking about reducing your out-of-stocks significantly by 50 to 75 percent, which for most retailers is around 8 percent," says Jeff Richards, CEO of R4 Global Solutions in San Francisco, CA.

While the benefits are great, there are some privacy concerns. Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), along with the American Civil Liberties Union and several other organizations, have issued a Position Statement on the Use of RFID on Consumer Products.

The paper does not call for an all-out ban on RFID, but it does call for limits, asking "manufacturers and retailers to agree to a voluntary moratorium on the item-level RFID tagging of consumer items until a formal technology assessment involving all stakeholders, including consumers, takes place." The group has also recently launched a boycott against Tesco for its use of RFID.

Despite the attention around privacy issues, industry experts do not consider this to be a long term challenge. "I think that a lot of privacy concerns are based on misconceptions. I know that people believe that when things are RFID tagged, there's a big satellite in the sky that will figure out what you have. That's just not the case. I think that will iron itself out in the next two to three years," says Klaus Dimmler, president of Organic ID in Colorado Springs, CO.

Consumer product companies are also trying hard to be sensitive to the privacy issue. Procter & Gamble, for example, has posted a privacy policy online addressing principles for item-level RFID. One principle states: "Consumers should have a choice as to whether personally identifiable information about themselves is electronically linked to the EPC number on products they buy."

Procter & Gamble is not an exception. EPCglobal, the organization dedicated to driving RFID standards and adoption, has issued industry-wide guidelines for privacy, which include items like consumer notification and consumer education guidelines.

While privacy concerns might not be enough of an obstacle to defeat item-level RFID, the cost of an RFID tag could be the grim reaper of widespread item-level implementation. Already a hurdle at the case and pallet level, cost can kill at the item-level.

Sub-cent RFID?
The price of a typical RFID label used in the Wal-Mart mandate today generally ranges from 20 to 50 cents; the price is dependent on volume and other variables.

At this price "it will never make sense to tag everything, because there won't be a business case for some of those products. Tagging toothpaste or toilet paper just doesn't make sense," says Kara Romanow, research director for AMR Research in Boston, MA.

P&G's RFID privacy policy clearly says that item level tagging is being considered. The policy states that "down the road as we learn more about the technology, there may be opportunities to save costs and generate additional benefits for the supply chain and consumers via item-level EPC."

Cost is a hurdle. "Our primary focus remains on testing and learning about the costs and benefits of EPC at the case and pallet level. We have said previously that we think applied tag cost needs to be under a penny in order to enable a broader roll-out at the item level," says Jeannie Tharrington of Procter & Gamble Media Relations.

The technology as it stands today will never get to these price points, some argue, even when volume ramps up. "If you are going to build a traditional label, and buy and insert inlays, there's no way you are going to be able to get to the cost basis that's going to make the ROI attractive for item level tagging," says Steven Van Fleet, president of R and V Group, a converter in Chattanooga, TN. "More and more of these circuits will go to ink."

The industry is turning toward printable RFID technology as a possible solution to the cost dilemma. Printable antennae with silicon chips are already being used commercially. But a transponder that is printed entirely — yes, even the chip — could reach the one-cent mark.

"There's a technology challenge between here and there. But assuming that those technology challenges are bridged, there's no doubt that you can get into the one cent or even less than one cent tag," says Dimmler.

To get to this price would require chips that were not made out of silicon, the chip ingredient of choice today. Dimmler's company, Organic ID, is pioneering the printable RFID label (transponder and all). His aim is to create tags targeted at the item level market.

If RFID technology is said to be in its infancy, this technology is just a twinkle in someone's eye. The company currently does not have a prototype for an RFID tag, but hopefully one is forthcoming. Dimmler says that the University of Texas has "a working semi-conducting process that can produce transistors, and inverters and circuit components. We are now in the process of designing a whole RFID tag."

A variety of printing processes are being examined for use in printing the chip. Dimmler anticipates that "it could very well be a mix of printed technologies depending on what layer we're printing. They all have their pros and cons, and what we have to do is optimize the pros and try to decrease the cons as much as possible."

How far off is this new chip? "We anticipate that in a year we could have a prototype that's not necessarily printed, but we'd have a prototype. And within two years we would have sample quantities of printed RFID tags. And within two and a half years we should be able to supply some significant volume," he says.

13.56 vs. 915
The printable technology that Organic ID is working on would produce a 13.56 MHz, High Frequency (HF) tag. This has commonly been considered a good frequency for item level tagging because the read range is much shorter than that of UHF tags (which is generally 915 MHz in the US).

But is this perception changing? When Tesco announced its expansion of the DVD pilot from two stores to eight, it also said that it will discontinue use of HF tags and use UHF tags instead.

Some say this will be a trend, mainly because UHF is being used first with cases and pallets. "Most of the piloting and implementations are using 915. When you start to see people adopting billions of tags in the 915 MHz frequency range, it's going to be hard to say we'd also like you to put a 13.56 tag in there," says Richards.

"There's certainly some resistance to implementing duplicate infrastructures, different printers, different tags, and managing an inventory of different tags as opposed to committing to a standard," says Charles Rice, VP of technology for R4 Global Solutions.

While the frequency that will be used for item level tags in retail is the subject of debate, 13.56 makes sense in other niches. For instance, the 915 MHz frequency can interfere with hospital equipment and would not be a good choice in circumstances where that could happen.

Despite current obstacles in privacy, cost, standards and technology, many are optimistic that widespread item level tagging will be achieved within a decade, and it will be achieved through printing.

"I think widespread adoption of item level tagging is five to 10 years away," says Bob Zaccone, vice president of Graphic Solutions International, a converter based in Burr Ridge, IL. "In order to get to the sub-nickel level, it's going to have to be completely printed — printed antenna, printed chip, with a printed label — all done on one piece of equipment in one pass. That will come some day in the future, probably 10 years down the road. At that point, we'll see Wrigley's chewing gum using RFID."

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Static Electricity & RFID
By Jay Perry

RFID is changing the world of automated identification. Limitless applications include tags for everything from airline luggage to inventory control for retail and grocery stores. With opportunity, however, comes the challenge of change.

RFID is a method of remotely storing and retrieving data using devices called RFID tags. An RFID tag is a small object, such as an adhesive sticker, that can be attached to or incorporated into a product. RFID tags contain antennae to enable them to receive and respond to radio-frequency queries from an RFID transceiver.

Sounds a little like a semi-conductor circuit doesn't it? Well I'm not sure how familiar tag and label manufacturers are with semi-conductors, but I can assure you that your factory environments are no place for an unprotected chip. There are different types of RFID devices, and some of them are more robust than others. There have been instances, however, where customers returned thousands of RFID tags because the tags had been damaged by static electricity. Static can damage these devices in an instant, causing production problems and some very unhappy customers once they find out that their RFID tags aren't working.

Static charges are commonly found in tag and label printing and production operations anywhere along the path from the feed roll to the rewind. The charges are generated by the contact and separations of the web material from the unwind roll, and as the material travels over the various rollers and process stations as it runs through the press or converting equipment. Static electricity is an electrical charge on the surface of the material. The charges usually occur on an insulative material, such as a film or coated paper web, and may be on a conductive surface if it is isolated from electrical ground. When two surfaces are in contact, an exchange of electrons (negative charges) takes place between the two surfaces (See Figure 1). When the surfaces separate, the surface that has gained electrons becomes negatively charged. The surface giving up the electrons is left positively charged.

The materials involved and the pressure and speed of contact and separation affects the magnitude of the charge. This contact and separation process, or friction, is known as "triboelectrification," or "tribocharging." It is the same phenomenon that occurs when you walk across the carpet, touch a light switch, and get a shock.

To understand the static charge characteristics of materials, their relative position within the Triboelectric Series must be considered. This relative positioning governs the magnitude and polarity of charge that will be produced when two surfaces make contact and separate. The farther apart the materials are located in the series, the greater the magnitude of the charge. Also, a material at the top of the scale acquires a positive charge with respect to any material below it (See Figure 2).

This is further complicated by the fact that static charges are cumulative; charge potentials can continue to increase each time the web contacts another surface (See Figure 3). This is evident in processes where the material may come in contact with several idler rollers. Does this sound familiar? Your presses have rollers everywhere. What is important to recognize is that the charges do increase with additional friction events, and that you need to keep the charges at safe levels as part of your plan to protect the RFID devices.

Typical areas within the web transport system that tend to generate significant charges on the web include unwinds; nip rollers; accumulators; idlers with insulative sleeves; bow rollers; coating rollers; corona treaters; lay-on rollers; and rewinds. It is common to see surface charges in the 5,000 to 10,000 volt range, depending on the materials.

Unfortunately the involvement of the RFID devices has changed everything, because these tiny circuits are not be robust enough to withstand exposure to stray voltages. Many devices have a susceptibility level as low as 500 volts.They can experience damage from different sources, the most important of which are:

- Damage from a direct electrostatic discharge (ESD). When a charged object or individual touches a device, some of the stored energy is transferred or discharged either to the device or through the device to ground. The charge is transferred to the static-sensitive device with sufficient energy to cause damage or destruction of the device.

- Perhaps the most dangerous potential damage to RFID tags is from electro magnetic interference (EMI). This is also referred to as electrical overstress (EOS) in the electronics industry. It occurs when a device is exposed to a transient energy, or voltage, temporarily overstressing the circuit. The result is either immediate damage, or catastrophic failure of the device, but most often results as a latent failure that ultimately causes the device to fail. Latent failures are similar to a crack in a pane of glass. As the glass is stressed, the crack grows larger until the glass breaks and the device fails.

So how do you protect RFID tags from static electricity?

First, you need to use an active (electrical) static eliminator that can provide relatively balanced ionization. The ionizing balance (equality of positive and negative ions) of the active eliminator is important to be aware of, because the offset voltage differential (usually negative) of some ionizers could cause damage. Balanced ionization will reduce the static charges quickly to levels that are no longer dangerous to the RFID tags, with negligible residual voltage.

Do not use passive eliminators (tinsel or string) to protect your RFID tags. Although they do reduce static charges in some industrial applications, this type of ionizer can be dangerous for RFID tags because a passive ionizer will only reduce static charges to the threshold voltage level that initiates their ionizing capability. The danger is that the threshold voltage levels will exceed the voltage range that is considered hazardous for any RFID tag to be exposed to.

Second, the use of an extended range active static eliminator will allow you to locate the unit 2" to 6" from the target. This keeps the sensitive RFID circuit a safe distance from the high intensity electric field that is present in close proximity to the ionizer emitter electrodes (pins). Also, the additional distance from the target will provide a better mix of ions, and consequently a better ion balance, so there are no residual voltages to be concerned with.

Third, keep in mind that your RFID device supplier is a critical part of your static control program. To avoid bringing in damaged tags, make sure that your supplier protects them with adequate static control.

Jay Perry (jperry@simcomail.com) is marketing manager at Simco Industrial Static Control. He has a BS from Temple University in Philadelphia and has been with Simco for 18 years in a variety of sales, marketing and management positions. Jay currently specializes in electrostatic applications in the printing, converting and plastics industry. More information about the company is available at www.simco-static.com.