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Converters & RFID



Major converters share their thoughts about RFID in their businesses and in the industry as a whole.



Published February 27, 2007
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Converters & RFID



Major converters share their thoughts about RFID in their businesses and in the industry as a whole.



By Michelle Sartor



The number of converters involved with RFID is small — so far in the early days of the technology. Although it has been growing, the number of newcomers has slowed recently. Those converters that are producing RFID labels are involved in a variety of areas, including airline baggage tags, tickets, durable goods, electronics, tools, chemicals, textiles, pharmaceuticals, the food industry, the automotive industry, the medical industry, and apparel.

In this section, Label & Narrow Web takes a closer look at four North American converters: Mid South Graphics, MPI Label Systems, Paxar Corporation, and Topflight Corporation. They share information about their experiences with RFID including the extent of their involvement, testing methods, challenges, and expectations for the future.

Mid South Graphics


In late 2002, Mid South Graphics began its involvement with RFID on a limited basis. Today, RFID sales make up about 30 percent of the company’s revenue, and about 10 employees work in the RFID department. Mid South Graphics produces RFID labels for items including airline bag tags, tickets, durable goods, electronics, tools, chemicals, textiles, pharmaceuticals, and food. The company is involved with Avery Dennison, UPM Raflatac, Impinj, RSI, and Symbol Technologies (which is now Motorola).

Mid South Graphics produces mainly UHF labels, though it does have some involvement with HF. Mark Davenport, president of the company, believes aspects of production have changed. “The process of creating these labels has greatly evolved through the time and effort that everyone who is involved in this industry has put forth. This includes suppliers as well as our partners and fellow converters,” he says.

The company works with dry inlays and wet pre-diecut inlays. According to Davenport, “Most of the converters in the field will convert a dry inlay into a PS wet inlay to use in their label products. Others will simply buy an already converted diecut inlay that they will insert into a label on press or via offline RFID insertion.”

At Mid South Graphics, the tags are tested after they have been converted, and a final test is conducted after they have been inserted into a label. Davenport says the company is successful. “Most of the tags that we are working with have very high yield rates. These rates can be as high as 99 percent. However, the average that we have seen over the last year is around 97 percent,” he says.

Of course the company must deal with RFID carefully. Davenport says, “The challenges of producing RFID labels have not changed a whole lot with the exception of the yield rates improving drastically over the past two years. You still have to monitor your static levels and be very careful about making sure your dies are cutting the material properly. Speeds have increased throughout the years of experience that we have had in this field. As I am sure every converter will agree, the more you practice at something the better you will get.”

The return on investment for Mid South Graphics has been positive. Davenport explains, “When we first entered the RFID arena back in early 2002 we had to improvise and overcome the difficulties of handling webs with micro electronic chips on them, which was very costly. Because we were only one of a very few select converters who could provide such a product early on, our ROI was accelerated.”
The current investment environment might not be as favorable. Davenport says, “Today there are many converters in this arena, and the ROI in my opinion will take much longer due to very competitive pricing and capital equipment cost.”

Davenport believes the future for the technology is bright. “As suppliers find more economical ways of producing RFID components I would expect that the whole industry will grow rapidly throughout the next decade.”


Mid South Graphics Inc.
3720 Keystone Avenue
Nashville TN 37211 USA
800-280-1305, 615-331-4210
www.midsouthgraphics.com




MPI Label Systems


MPI Label Systems started manufacturing RFID labels four and a half years ago, but was involved in what Gerard Kelly, vice president, calls “an academic sense” two years before that. RFID makes up 2 percent of MPI’s sales and the company employs a dozen people in sales, customer service and manufacturing of RFID.

Currently, MPI produces both UHF and HF labels for a variety of purposes. Kelly cites the food industry, plastics manufacturers and the automotive industry as customers. He also says MPI is involved in the medical industry in closed loop applications for medical devices and blood bag tracking. The company also manufactured RFID labels for a Korean firm for parking passes in Seoul, South Korea.

Oftentimes, MPI is unaware of its labels’ final use. Kelly explains, “About half of what we sell goes through resellers. A lot of times we don’t know the end user.”
MPI’s customers often dictate the types of inlays the company uses. Kelly says, “We are agnostic as far as whose inlays we use. The majority that we sell is Alien because that’s the most popular and what people ask for.” MPI also provides inlays from Avery Dennison, UPM Raflatac and Texas Instruments.

Although Kelly believes that the RFID label construction has not really evolved, he says the integrity of the inlay and chip has, and that the reliability has increased. “When we first got them, it was not unusual to have 50 percent of the inlays to be known bad inlays. Now it’s a handful, 3 or 4 percent bad.”

MPI uses Melzer machinery to make flip chips and strap attach constructions. Although MPI advises new customers about RFID decisions, Kelly says the end users often tell MPI what they want.

Kelly explains the testing procedures in place at MPI: “We test them before we merge the inlay, visually inspecting to see if the manufacturer has marked them as known bad. We form and diecut the label. Just as it’s rolled back up, we test it electronically. If it fails there, we mark it so that when it goes into the QC department it gets replaced.”

MPI believes there is no acceptable failure rate. Kelly says, “When the labels leave here, they are tested to be 100 percent good. Due to the nature of the inlay, they do experience a little bit of fallout at the end user site.” Although failures do occur, Kelly says it’s not always the label causing the problem. “Failure can be because of communication errors or environmental issues, so that even though the label gets blamed, it’s not always the label.”

Kelly sees the quality of the inlay as an issue. He says, “Some manufacturers are still better than others. Alien makes it very reliable with Gen 2.” One challenge for MPI is creating different RFID constructions. As an example, Kelly says some companies want sheeted RFID labels to put through a laser printer. “Doing that is different for us.”

From MPI’s point of view, mandates are no longer driving factors in RFID. “More business is evolving from fields other than from Wal-Mart mandates. We do a lot of work with HF, which tends to be closed loop,” says Kelly. Wal-Mart’s mandate, he points out, is not universal, because not all of its supplier companies are compliant, and the mandate requires RFID only on a few SKUs.

MPI currently hasn’t seen a return on its investment. Kelly says, “We’re seeing steady growth, but it’s still not at the point we’re assuming it would be. It will still probably be a couple years before ROI is made.” The company plans to continue its RFID work, however.

As a strategy for the future, MPI is looking toward less traditional RFID uses. Kelly says, “We keep pushing sales people to look for non-Wal-Mart applications, non-mandate applications. We’re very competitive when it comes to something unusual.”

Kelly believes RFID will see growth, but it will be slow. He thinks the technology is beneficial and will therefore continue to improve internal processes for companies.

Kelly has an analogy for RFID: “Back in the early 70s, people were resistant to bar codes. Then everybody realized how good bar codes were. That’s a parallel with RFID.”


MPI Label Systems
450 Courtney Road
Sebring OH 44672 USA
800-837-2134, 330-938-2134
www.mpilabels.com







Paxar Corporation


Paxar Corporation converts tags and labels in the US, Europe and Asia. The company began studying RFID technology in 1999. Rick Bauer, director of RFID global program development for Paxar Americas, says, “When companies in our retail market focus area began commercial use of RFID, we began building printer/ encoders in 2003 and conversion of RFID tags and labels in 2004.”

Paxar produces passive RFID labels using both UHF and HF frequencies. Bauer says, “Almost any configuration of label or tag we make in the bar code and apparel business we can manufacture with RFID. This includes thermal transfer, thermal direct label and tags. Also durable label and cold chain label products for challenging applications.”

Bauer has seen an improvement in the quality of RFID inlays. He explains, “In 2004, incoming quality yields before our processing was 60 to 70 percent. Now incoming yield levels on some products are over 98 to 99 percent. This has allowed improvement in process speeds and throughput thereby improving cost and pricing to the customer.”

When Paxar tests its RFID labels, employees either remove or replace any defective labels. “Paxar tests 100 percent of our RFID labels for marginal or defective performance to parameters associated with the end use by the customer,” Bauer says. “When utilizing the Paxar printer/encoder and Paxar supplies we guarantee 110 percent of the product price for any defective labels that fail to encode and operate out of the printer.”

Although Paxar doesn’t publish how much of its operations are devoted to RFID, Bauer says, “It is safe to say Paxar’s investment in capital and personnel has been aligned with the pace of market adoption. We have not scaled excessive investment that requires us to adjust as the market has not developed at the pace forecasted.”

Return on investment can be tricky. Bauer explains, “ROI with any new technology is an investment in the future. Paxar has invested prudently in the technology and our customer acceptance and production levels have matched demand. We are well positioned with current plans to support customer needs for suitable business returns.”

Challenges with RFID are a result of the technology’s configuration. Bauer says, “RFID products are electronic devices with integrated circuits (ICs) on the tags.” He cites electrostatic discharge and dirt as two issues that can cause problems and are ones that Paxar has addressed. “The next challenge will be the qualification of a whole new set of ICs and inlay designs that will be entering the market in 2007.”

Bauer believes RFID implementation will increase, especially at the item level. He says, “Adoption of RFID will not be unlike the adoption of technologies such as the bar code or the internet. Once customers see and understand the value and convenience it brings to processes and end customer value, it will explode in usage.”

While converters are waiting for that increase, Bauer says, “Converters need to focus on delivering high quality innovative products to the marketplace to spur adoption.”

Paxar Corporation
105 Corporate Park Drive
White Plains NY 10604 USA
800-33-PAXAR (72927)
www.paxar.com


Topflight Corporation


Topflight Corporation has been involved with printed conductives and circuits since the 1970s and has been producing RFID labels since 2001. Dave Becker, marketing and communications manager for Topflight, says, “Our original trials and tags were produced utilizing our own, specially designed Flexible Converting System, which we have supplemented over the years with larger, more advanced machines to increase capacity and productivity.”

Topflight spends more than $500,000 in research and development every year. Becker says, “We staff an in-house Product Development team with certified RFID experts and engineering specialists constantly exploring emerging technologies in all areas of electronic signal delivery.”

The company uses different frequencies for a variety of uses. Becker explains some applications: “LF chips for use in metal surgical instruments, HF tags for biodefense cryogenic vials containing viruses or other potentially unique biologicals, UHF labels in every class to meet mega-retailers’ and government initiatives, and even SHF labels for Japanese metal components in an integrated circuit less than 0.5mm in size.”

Research at Topflight is ongoing to find better options. “Topflight has also tested special stocks and adhesives for greater performance, added perforations and security solutions, printed combination (copper and silver) antennas for greater cost effective performance, converted aluminum antennas (versus silver or copper) which are easier to recycle and much friendlier to the environment, and we’ve even begun investigating active components which will lead to a completely printed transponder, offering the lowest cost and the most versatility of any RFID tag in a solution integrated directly into the label or packaging,” says Becker.

The main challenges with RFID production, he says, are mechanical and electrostatic discharge damage. He says that Topflight has processes and procedures in place for all personnel and equipment to help eliminate the damage.

Becker continues, “Beyond chip failure, we also face challenges with inlay and label testing, 100 percent verification and the high cost of waste when compared to other pressure sensitive products we produce. Topflight performs a variety of tests depending on customer specifications; everything from audit testing for process control to 100 percent verification for lot release. For most of our RFID orders, the failure rate is zero.”

Although return on investment with RFID technology can be difficult, Becker believes Topflight has navigated the situation well. “Because of our extensive background in electronics and engineering, our learning curve for RFID was much smaller and smoother than many converters, placing us in an early position to become efficient and profitable. This has allowed us to be very successful with the standard pallet labels typically seen and discussed in the news, as well as several unique solutions which would pose too great a challenge for most manufacturers,” Becker says.

He believes the future is bright with RFID. “Topflight will continue to work with all frequencies and applications, focusing on those challenges which uniquely fit our ability to create viable solutions where others cannot. As for the rest of the industry, it seems the current Gen 2 RFID labels at the pallet level will remain the focus of most businesses, with a slow shift to item level labeling with the exact same technology,” says Becker. “We should have no difficulty keeping up with the demand for such labels, and look forward to the new challenges awaiting in those applications which need to push the boundaries of RFID technology.”

Topflight Corporation
277 Commerce Drive
Glen Rock PA 17327 USA
800-233-9386
                                                                      www.topflight.com


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