RFID in a Nutshell

RFID tags are going in and on everything from pharmaceuticals, toys, key chains, season tickets, clothes, and even on kids. This growth represents a tenfold increase of where we are in 2004. One of the primary drivers of RFID this year is the push from Wal-Mart that requires its top suppliers to include RFID tagging on shipments by January 2005. The real question is how distributors and manufacturers can embrace this technology and turn it into profits. Everyone is talking about RFID, an industry poised to grow from infancy to a $1.3 billion market by 2008.

RFID stands for radio frequency identification, a technology that has been used for many years in inventory tracking and secure access applications. More recently, RFID technology has been a major thrust in the tag and label industry, as small labels and tags include RFID transponder inlays that, unlike bar codes, allow users to read without line of sight. This membrane-thin inlay can also identify multiple articles simultaneously. In addition, it offers read/write capabilities so users can update information.

In a typical RFID label construction, the inlay is one additional layer in a typical pressure sensitive label construction. In the label or tag manufacturing process, the inlay is laminated between layers to become part of the label or tag. Inlays can be incorporated into existing stickers, labels, tickets or badges. Anywhere a pressure sensitive label can be placed, an inlay can be placed. Whether it is part of the packaging or part of the product, an RFID label can be embedded and hidden from sight.

Are you Using RFID?
RFID applications are all around us. MobilExxon Speedpass users carry an RFID transponder inside a key tag. Some high-end vehicles like Cadillac and Infiniti use an RFID transponder embedded in the ignition key that knows when the key is near the car, unlocking or locking the doors based on the proximity of the actual ignition key. Many big city marathon races use RFID tags to track the progress of each runner. In this application, the runner wears an RFID tag on their shoelaces that can be read at specific points in a race.

How RFID Works
At its most basic level, RFID is a wireless link used to uniquely identify objects. RFID systems use electronic devices called transponders or tags, and readers to communicate. These systems communicate via radio signals that carry data either unidirectionally or bidirectionally. When a transponder enters a read zone, data is captured by the reader and then transferred through standard interfaces to a host computer for storage or action. Once a link is established with a unique ID on an item, the automation process begins.

For example, consider the application of sorting boxes on a conveyor. At specific read points in the system, boxes are identified by location. A central monitor can immediately display this information. It is real-time information that can be shared with the manufacturer, with forwarders, and with the customer waiting for the shipment. The shipment can be automatically directed to the appropriate dock door, truck, carrier, etc. The shipment can be redirected while in transit if plans change—all without human intervention. This puts real time decision-making power into the hands of many functional areas up and down the supply chain. Having this vital information readily available enables management to respond rapidly to changing patterns of demand, and allows a company to provide superior service to customers.

What's on the Inside?
At the core of an RFID tag or label is a transponder inlay that is inserted between layers, usually in a pressure sensitive construction. The inlays, which are batteryless, are specifically designed to be converted into tag and label applications by a label manufacturer. The inlay consists of two primary parts, the RFID silicon chip, and an antenna that circles the perimeter of the inlay. Inlays can be placed on a polymer tape substrate and delivered in reels to the manufacturer, who in turn converts the inlays into usable RFID labels. Another technology is being used that prints the circuit and antennae, and does not use a pre-made inlay. With this technology, the label converter prints the antennae portion with special ink, and then attaches the RFID silicon wafer to the printed antenna. By printing the integrated circuit and antennae, the cost of the actual label drops significantly.

The premade inlays are more costly and require the added step of inserting them into the label. Obviously, printing the inlay in one production pass is quicker and more efficient, but the printed antennae do not have the high read rates enjoyed by the premade inlays. High read rates are critical for applications that require a 100% read rate.

Writing Data
Many applications of RFID labels include thermal direct or thermal transfer human-readable printing and bar codes on the face of the label. Therefore, the logical place for data to be written to RFID labels is at the bar code printer. Printer vendors such as Zebra technologies, Datamax, and Intermec have developed RFID writers that are built into their printers.

The Wal-Mart Mandate
The RFID environment changed dramatically in June 2003 when Wal-Mart announced that it would require its top 100 suppliers to place RFID tags on shipping cartons and pallets by January 1, 2005. More recently, Wal-Mart announced that it is expanding its RFID efforts to 200 of its next-largest suppliers. This second group of suppliers must have their RFID tagging in place by January 1, 2006. In Wal-Mart's case, each RFID tag will store the electronic product code (EPC) for the items in the carton, automatically updating inventory in Wal-Mart's database. The RFID tag will be used to track products as they enter Wal-Mart's primary distribution centers and then as they are shipped to individual stores.

Keep in mind that the Wal-Mart mandate applies to shipping cartons of items, not the individual items going into the stores. The push is a big one for the automatic data capture industry, and only time will tell if the suppliers are up to the challenge of keeping Wal-Mart's inventory system happy in 2005.

Primary Issues Facing the Industry
The primary issue barring widespread adoption of RFID is the actual cost of the disposable tags. In 2003, the range of prices for tags was still as high as 50 to 90 cents. The RFID industry has long claimed that the critical price for widespread adoption is the five-cent tag. But a recent study from RFID research firm Arc Advisory Group predicts the price of RFID tags will only drop to a low of 16 cents by 2008, despite other industry estimates that the cost will reach the five cent mark in the next four years.

The manufacturing process and cost of materials continue to be the culprits driving prices so high. The ARC report specifically points to tag creation as the barrier to massive implementation and the illusive five-cent tag. There is no doubt that this technology will advance significantly over the next few years, however, its implementation depends on who can manufacture tags most efficiently and effectively. The challenge for label and tag converters is to make huge strides in production. The effectiveness must improve significantly over the next five years for companies to remain in this market.

Some experts believe that in order to get to the five-cent label, the printed antenna is a must. Today, premade inlays typically can cost 50 cents per piece, so an order for a million tags can quickly add up to major dollars. Costs are on a downward trend, but production and quality issues must be resolved to force prices down even further. Whatever the case, look for ongoing developments and advances with RFID inlay printing in the near future.