Over the last two years, suppliers to Wal-Mart have been scrambling to place radio frequency identification labels on their cases and pallets per the retail giant's mandate. To comply, these retail suppliers have turned to labelmakers to provide them with solutions. Now, label converters must figure out how to meet the demand for the chip-embedded tags.

"RFID is much different (from non-electronic labels) as it is far more sophisticated in the type of equipment and process control required," says Robert Ryckman, vice president of sales, healthcare group for CCL Label (www.ccllabel.com).

Converting spoke with a couple of converters about their experience in adding RFID labelmaking to their service offerings and how other converters can jump into the RFID world.

CCL Label began producing RFID labels as part of its pharmaceutical security products six years ago. MPI Label Systems (www.mpilabels.com) began converting RFID labels three years ago to stay ahead in the markets it serves.

There are two types of RFID tags converters have to deal with. The High Frequency (HF) tags have a frequency of 13.56 MHz and the Ultra-High Frequency (UHF) tags are 915 MHz.

Although the HF tags have proven to be more reliable, Wal-Mart mandated that its suppliers use UHF. "It boiled down to read range," says Gerard Kelly, MPI's RFID vice president. The HF tags can be read only within 1 to 2 ft, whereas the UHF tags can be read from a distance of 15 to 20 ft. "Everybody decided 915 was the way to go," Kelly adds.

While UHF is the preferred type of tag, it is also the most challenging to manufacture. The UHF inlay—the chip, strap and antenna—is prone to communication errors, mechanical damage and the potentially catastrophic electrostatic charge in the air. "(RFID tags) are fragile and must be handled differently than traditional label materials," Ryckman says. "Also, not all tags work either before or after the converting process. And there is additional equipment and resources required to test and qualify all finished labels. This is one of the most challenging items for most converters."

According to MPI, the manufacturers mark the inlays that are defective so that the converter can pull them out of production. Even so, MPI tests the inlays before they are converted into labels and then tests the finished labels again after production. "It's a very labor-intensive process," Kelly says. In comparison to regular flexo converting where 4 × 6-in. labels can be made at 500 fpm, a production rate of 4,000 RFID labels an hour is considered good. "It seems to us that everyone rushed this technology into market, so we are still dealing with a very imperfect product. Examples of this are how unreliable the inlays are. They will leave here perfectly fine, but when you use them in the real world, they don't work."

Currently, converters are shipping a yield of good labels in the mi- to high 90-percent range. "It's hard for our end-users to change their mind-sets of receiving something less than 100-percent good," Kelly says.

Due to the amount of defective UHF inlays coming in, converters must process them slowly to be able to inspect the inlays and the finished labels thoroughly. "Once the product becomes reliable so that all these inspections and replacements (of bad tags with good tags) are not necessary, then things can speed up and the cost to manufacture will lessen," Kelly explains.

Another way converters are cutting manufacturing cost is by using printed an-tennae rather than etched antennae. By printing the antenna with conductive inks, the possibility of converting labels at flexo-press speeds rather than the 4,000-labels-an-hour rate seems attainable—but not until the reliability of inlays increases. "There's a lot to be proven here (with printed antennae). The people who are printing antennae today are struggling with it, but that doesn't mean it's impossible. That just means we're early on," Kelly says.

At this point, the RFID market is a costly business to get into. But people are working on ways to speed up manufacturing, and slowly the prices for inlays are dropping. "Right now the ROI is the big question, so the cost has to come down. As the demand grows and the technology improves, the costs will come down, but this will happen in years, not months," Kelly says. "I think in the long term, it's very much worth it.

"RFID is going to be a very strong part of our future, but there's a lot of blood, sweat and tears to get there."