Tributes and Trials
RFID in the converting industry is full of advantages and pitfalls, but experts say it's time for converters to get involved in the technology.
RADIO FREQUENCY IDENTIFICATION (RFID)—those three words present both challenges and opportunities to converters today and will for years to come. On one hand, there's the ugly beast made up of high short-term and long-term expenditures, a steep learning curve, and the fact that the technology is continuously developing.
On the other hand, there's a huge customer base yet to be tapped, which is only going to grow over the next several years. This is due to mandates from Wal-Mart and other large retailers, as well as the U.S. Department of Defense, who want the technology for supply chain logistics. There's also pressure to adopt RFID by way of recommendations by organizations like the Food and Drug Administration, which is pushing for pharmaceutical companies to use RFID to help counteract security and counterfeiting issues.
The benefits that both retailers and consumer products will reap from incorporating RFID in packaging are obvious. With retail, said Dave Grove, technical sales specialist, Schober USA, "Wal-Mart has proven the advantage of being able to track RFID-tagged product. Wal-Mart representative and Vice President Linda Dillman told us at the recent RFID World Conference that they can now track inventory more efficiently, allowing them to restock shelves hours or days faster than previously possible. Empty shelves translate to lost sales. This happens with just pallet-level tagging."
With pharmaceuticals, RFID has the capability to help prevent such tragedies as the counterfeit Procrit® scare. In 2002, more than 100,000 vials of counterfeit Procrit—a drug used in the treatment of anemia associated with chemotherapy, chronic kidney failure, and in the treatment of HIV/AIDS—made its way onto pharmacy shelves. The ability to write to and read an RFID tag used in a label on prescriptions could be the answer to saving lives through better controlled supply chains.
But what benefits does RFID have for packaging converters today? That's still a little tricky to say, considering the benefits won't be immediate. Right now, said Steve Van Fleet, principal, The R and V Group LLC, RFID is a mess of benefits and disadvantages for converters. "[It's] many things at once [to packaging converters]: a headache, an opportunity, a sobering wake up call—all at the same time," he said.
Headache
Van Fleet sees the still-evolving technology associated with RFID—quality issues, lack of solid standards, and high costs—as just a few of RFID's many headache-inducing matters for converters.
First of all, when RFID technology manufacturers talk about emerging products down the road, they are talking in terms of three to six-months—not a year or so. Some of today's equipment could become obsolete in less than a year. Also, not all of the equipment available today is interoperable. "RFID technology and its implementation is not thoroughly understood in the market," Grove said. "Since we are dealing with an emerging technology, there are still pitfalls. For instance, the actual placement of tags on products can be important. Also, the product itself can affect RFID performance. Even the type of tag must be considered based on its intended use."
According to Van Fleet, quality is the biggest short-term problem for converters. With today's technology and processes, converters are inserting inlays into labels that can fail readability verification 20 to 30 percent of the time, he said.
From quality problems to cost—there's talk about the $.05 tag. However, many RFID experts' optimistic predictions of tag costs fall sub-$.15 in the next year or two, and, possibly, sub-$.10 in five years. At the moment, the $.05 tag is a nice idea and that's all—cost remains a problem that will affect widespread adoption of the technology.
Van Fleet said, "Inlay costs are too high today to sustain the market growth projections. The current silicon base for the tag and the traditional flip-chip processes to attach the chip to a metallized antenna are too expensive. There is much work ongoing to move away from the high cost of silicon and to faster, less expensive ways of attaching the chip to a printed antenna on lower cost paper substrates, but this is still a ways away. To the converter who is faced with investing in inlay insertion equipment based on today's RFID inlay manufacturing processes vs. the next generation, it is really a gut check as to where [they] spend [their] money."
Other cost issues will come via extra, more specialized personnel needed with RFID capabilities, as well the machinery. "A successful converter will need the necessary electrical engineer/RFID knowledge on staff, will have to invest significant capital on machine modifications or new equipment," Van Fleet said.
Opportunity
The outlook for RFID in the converting industry isn't very rosy for converters from an entry-level point of view. But amidst all the issues, there is opportunity.
Where that opportunity lies is in the reality of the future proliferation of RFID, said Van Fleet. "It's an opportunity for the converters because this RFID market is real and it will be huge volume in short order," he said. "Converters who prepare for this market and risk their capital will be rewarded. With a quality-centric deliverable, as opposed to shipping labels with 20 percent bad inlays, a converter can differentiate itself," Van Fleet said.
In addition, the technology is far enough along that the wait-and-see period is over. Converters waiting in the wings will still be there five years from now if they don't start to act now," Grove said. "RFID is here to stay and its implementation will grow at an accelerated rate in the foreseeable future," he said. "If you are a packaging converter and wish to remain a player, you will have to invest in RFID. Because of the many advantages RFID promises retailers, RFID will eventually be required in all packaging because it only works well when implementation is close to 100 percent. Therefore, it is no longer prudent for packaging converters to stand on the sidelines waiting for the technology mature."
Time to take action
Education is the golden key to RFID, Grove said. He suggests that converters attend seminars and conferences on RFID, at the very least, to learn about the technology, where it's going, and its pitfalls.
Another important piece of advice is to get the truth that lies beyond all the glitter and gold that is currently being thrown at the converting industry. "Try to avoid the ocean of hype that this industry is afloat in," Van Fleet said. "Get the facts from potential partners. Make them show you real world results, not PowerPoint presentations."
In addition, when it comes time to buy RFID converting equipment, buy the best, Van Fleet advised. "Inlay insertion needs to be exact and repetitive at extremely high speeds in the future to drive the cost of the final product down to where mass adoption will occur. Avoid machine and insertion solutions that do not scale cost effectively," he said.
This won't be easy since converters constantly receive mixed messages from the RFID industry. According to Max Golter, vice president, sales, bielomatik, converters are being hit with conflicting information from all sides. For example, there's a push to start printing antennas using conductive inks instead of buying inlays with the chip and antenna already attached. Printing antennas would help reduce the overall cost of RFID products.
Ink makers are introducing their lines of silver-based conductive inks, claiming the ink-applied antennas carry the same conductive performance as the traditional copper and aluminum antennas, Golter said. However, traditional transponder manufacturers point to the higher cost of silver compared to copper or aluminum, as well as the availability of silver to meet the demand, as issues to overcome.
A similar situation exists with chips. Golter said, "Today, silicon is traditionally used as the means of storing information. Silicon is expensive, but the interposer—or strap design—has enabled less silicon to be used within a transponder. Despite this, concerns about whether enough silicon will exist to meet demand are justified."
Where these mixed signals particularly affect converters is in what equipment should be purchased. Do converters need the ability to print antennas or not? Do converters need to invest in machinery that can handle the strap-attach design or the traditional inlay design? "The answer: The converters need to have machinery that will make them insensitive to whichever direction future smart product designs take," Golter said. "This can only be accomplished through converting equipment that has the flexibility to evolve along with the future smart product designs."
Even with all this confusion, there is one thing that's certain, said Grove: "Those with the foresight to invest in equipment now will have the jump on those being cautious, and will win important early contracts to provide RFID packaging."
by Kate Sharon
Associate Editor
- Companies:
- Bielomatik-jagenberg
- Schober USA
- People:
- Dave Grove
- Steve Van Fleet