As the more than 500 delegates attending RFID Smart Labels USA 2007 in February learned, the main emphasis of RFID use and supply is not in pallet- and case-tagging. Contrary to the buzz around mandates from retail giants and the US Department of Defense for UHF-tagged items, the real opportunity lies elsewhere.

“The business is booming in just about every sector other than the supply of pallet and case tagging to retailer and military mandates,” says Dr. Peter Harrop, IDTechEx chairman. According to Harrop, the uneconomical price level and lack of tag reliability have hampered the adoption of this technology. So should label converters entering this $5 billion industry abandon all hope?

Not entirely, say Harrop and the rest of the presenters at the IDTechEx-organized event held in Boston. As demonstrated by converter George Schmitt & Co. (Guilford, CT), converters can prosper. A vertically integrated operation with prepress, platemaking, printing and other finishing operations such as diecutting, GSC has been making security labels for 20 years. However, RFID was a novel technology for the company when it began converting RFID labels four years ago.

“We had no RFID knowledge prior to 2003,” says Peter Moore, director of GSC's RFID unit. “We made our team learn as we were given only 13 weeks for production-quality labels.”

With the help of GSC's customer and partner Purdue Pharma LP (www.pharma.com), who placed the order for item-level RFID tags on its bottles of oxycotin due to Wal-Mart's mandates, the two companies were able to solve their RFID dilemma. Although they didn't have to worry about liquids, metals or label placements, they did have an issue with culling bad tags from Matrix Systems, Inc. (www.matrixsys.com). To send Purdue Pharma 100-percent-readable labels, GSC defined the criteria for a good tag and from there isolated individual tags at production speeds to ensure readability from 24 in. away. Inlays were read a minimum of six times, and read rates were checked at various power levels.

“We remove variability of tags, thus end users don't have to worry about readability,” Moore says.

Purdue Pharma has shipped 300,000 RFID-enabled bottles to date, with labels made by GSC. The two companies continue to collaborate as they prepare to move to Gen 2 and incorporate case-level tagging.

“(RFID) is still a work in progress,” warns Harry Ramsey, senior package development engineer, Purdue Pharma. “Don't try to do too much at once.”

According to Ramsey, Purdue started out using Google to familiarize company staff with RFID. As they learned, it became easier. Learning as much about RFID before jumping in can also open doors to niches that haven't been considered. Take frequency, for example. According to IDTechEx, of the $5 billion spent on RFID, approximately $2.24 billion is spent on tags. Which type of tag—HF, LF, UHF—is the most commonly used (see Fig. 1)? Is that a market sector you as a converter can enter?

ISO specification 14443 using HF tags started out in the card sector, but is now being used for tickets and labels. HF is also the most widely used type of tag. ISO specification 15693/18000-3, employing HF tags that can be read within 1 meter, is being used for hands-free secure access and supply chains involving cards, badges and labels. On the other hand, ISO 18000-6, more commonly known as the UHF Gen 2 tag spec, is mandated for pallets and cases by retailers and the military.

Another factor converters need to consider, if and when they get involved with RFID, is where they are selling. Right now, it is uncertain which type of tag, HF or UHF, will dominate the market. The outcome, says Harrop, may depend on which version China chooses to adopt. Consider that in 2007, China is projected to become the world's largest RFID market (see Fig. 2), spending $2 billion mainly on card, ticket and animal applications. The rest of the world shares the remaining 60 percent of the market. Converters must study not only the types of tags to create but where to sell them as well.

It also is imperative to know who can use that technology and for what applications they need it. “Technology is only as good as its successful and beneficial use,” explains Denton Clark, presenter and AIT (automated identification technology) manager at Lockheed Martin (www.lockheedmartin.com). “Using technology is not only about technology; operational and business process reengineering will make the difference.”

As numerous conference presenters stressed, because of all the different types of standards, frequencies, components and hardware out there, companies need to remain flexible to adapt to market changes and the varying demands of the consumer.

“Consumers are moving beyond passive products; they are looking for interactivity,” says Dr. Michael Okoroafor, technology director for Coca Cola Co. US. Okoroafor believes that RFID can provide that interactivity by allowing a two-way communication with the consumer, increasing brand-messaging knowledge and determining the preferences of the consumer by tracking their buying habits.

However, the challenges—insufficient label-reading performance, tags that don't work with liquids or metals (a major concern at Coca Cola) and lack of a global standard—must be resolved before anyone can reap the benefits, Okoroafor says. While working on solutions to technical problems, converters, RFID-technology suppliers and packagers must also focus on the consumers' needs and determine how to use the technology. Both issues must be addressed to move forward, he says.

“Customer adoption (of RFID) is essential to realize the benefits (of RFID),” Okoroafor concludes.