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RFID Technology Opens New Markets for Label Converters

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RFID Technology Opens New Markets for Label Converters Avery Dennison White Paper Intelligent Labels Converters New Market Opportunities for Label Converters Written and produced by the editors of RFID Journal Sponsored by averydennison.com/rfid Intelligent Labels Page 1 New Market Opportunities for Label Converters Radio frequency identification (RFID) has been used to identify, track and manage objects for several decades. For most of that period, the technology was used in niche applications, such as tracking nuclear materials, automated toll collection and access control. Over the past decade, intelligent labels embedded with an RFID inlay have proven to deliver big benefits to apparel retailers. This year, more than 16 billion inlays will be consumed and an estimated 10 billion of those will be used to track apparel in retail application. In the past three years, RFID has The adoption of intelligent labels in begun to gain a foothold in other new industries is creating additional RFID has begun to gain a foothold sectors, including cosmetics and opportunities for label converters. in other sectors, including: beauty, food production and This white paper provides insights distribution, aviation, automobile into where the biggest market Aviation manufacturing and logistics and opportunities are and how to seize fulfillment. IDTechEx Research, them. At the end of the paper, we Cosmetics a firm that has been tracking the will provide additional resources & Beauty RFID market for nearly 20 years, that label converters can use to estimates that the market for RFID aid expansion into the RFID market. products will grow to $13.4 billion Food Production in 2020, from $11 billion in 2018. & Distribution Other research firms are predicting even faster growth. Automobile & Manufacturing Logistics & Fulfillment Intelligent Labels Page 2 New Market Opportunities for Label Converters Market Opportunties Aviation In 2018, the International Air IATA reports that it plans to work with Airlines served more than 4 billion Transport Association (IATA) voted airlines and airports to bring RFID to passengers in 2018 and handled to require its airline members to 80 percent of checked for air travel 4.86 billion bags. With the current begin tracking passenger luggage baggage within the next three years. handling system, an estimated starting in 2019. At its 75th annual 27 million bags will be lost in 2020 General Meeting, held in Seoul, Delta Airlines has already transitioned and will cost the industry $2.7 billion, South Korea, in June of 2019, IATA to RFID hands-free technology at creating a powerful incentive for adopted a resolution supporting 84 of its largest domestic stations, airlines to adopt RFID technology. the global deployment of RFID which handle, more than 85 percent And with passenger traffic expected tracking for checked airline baggage. of the bags in the Delta system. to nearly double to 7.8 billion in The move to RFID has been a wide- Delta says that due to its use of RFID, 2036, the number of baggage tags scale collaboration between all 99.9 percent of bags are now being required will also likely double, stakeholders across the industry, accurately scanned and tracked, creating a huge opportunity for including airports, airlines, luggage compared to an industry average label converters in this sector. handlers and technology providers. of 85 to 90 percent with bar codes. Cosmetics & Beauty According to a 2018 report by typically been a tricky product to advances in inlay designs have Zion Market Research, the half track with RFID due to the problems largely overcome these issues. Avery a trillion dollar global cosmetic created by the small size of many Dennison, for example, has developed products market is expected to of the products (lipstick, eyeliner, the AD-163u8 (60mm by 4mm) and consistently grow by about 7 percent and so on) and the materials used in the AD-180u7 (26mm diameter) a year through 2024. Cosmetics has some of the packaging. But recent RFID inlays specifically for cosmetics. Food Production & Distribution Roughly $1 trillion worth of food RFID can reduce food waste by up Given that the Earth’s population produced annually is wasted, to 20 percent by accurately aligning is expected to grow from 7.7 billion according to the Food and inventory with variable demand, today to nearly 10 billion in 2050, Agricultural Organization of the improving processes, optimizing the demand for food and the need United Nations. That’s about $130 production, increasing visibility of to reduce waste is likely to drive worth of food for every man, woman expiry dates and facilitating food demand for improved tracking and and child on Earth each year. donations. In fact, food traceability management of food from farms In developing countries, about technologies, including RFID, can to tables. New RFID tags, such as 40 percent of losses occur at post- enable food loss reduction by Avery Dennison’s WafeSafeTM harvest and during processing. 85 million tons by 2030, according (AD-25Xr6-P), which is suitable In industrialized countries, more to the World Economic Forum. for accidental microwave usage, than 40 percent of losses happen making tracking food easier, safer at retail and consumer levels. and more efficient. Intelligent Labels Page 3 New Market Opportunities for Label Converters Automobile Manufacturing Global automobile sales topped nearly 1 million containers to $4 trillion in 2018, and while growth date) to reduce the need to has slowed, global competition buy additional containers each amongst automobile companies year and to have better supply has increased. This growth is chain visibility. Key manufacturers pushing companies to look for greater and other parts suppliers are also efficiencies to improve margins starting to track critical parts to and gain a competitive advantage. ensure customer safety, and this Some companies, such as Johnson trend will accelerate in the coming Controls, have begun tagging parts years. RFID is an efficient and bins (Johnson Controls has tagged reliable option for this segment. Logistics & Fulfillment UPS says it ships 20 million packages is increasing. Some leading a day and while FedEx delivers companies such as Deutsche Post another 14 million. With e-commerce have turned to intelligent labels to continuing to grow in popularity – track packages. Growth in this global e-commerce sales grew sector is just beginning to accelerate, 18 percent in 2018, according to but the market potential is massive Internet Retailer – the pressure on as RFID increases in popularity and logistics and fulfillment companies ease of use. Other Opportunities These are not the only market manage shipments and deliveries. opportunities for label converters Events companies are using RFID looking to expand in the intelligent to manage attendees, and more labels market. Health care is a hotels are beginning to use RFID growing market, as more hospitals to manage linen and consumables, use RFID to track consumables, such as soap and shampoo. In such as bandages, gauze, surgical addition to these industries, sponges, intravenous fluids and companies in other industries even patients and other personnel. are continually finding new Some pharmaceutical distributors uses for RFID, creating business are using RFID internally to opportunities for label converters. Intelligent Labels Page 4 New Market Opportunities for Label Converters Seizing the Market Opportunity The first step toward growing your Manufacturing teams need to develop business by offering intelligent labels skills in converting regular labels is to become more knowledgeable into intelligent labels. They need to about the basics of RFID and the value understand the different substrates it can provide. Label converters do not available for inlays, how different need to be experts in the technology antenna shapes perform in different or its application, but sales staff applications, and other factors that need to be able to speak intelligently relate to how customers use intelligent to customers about the difference labels in their operations. between Near-field communication (NFC) and passive UHF RFID (RAIN Resources available to educate sales RFID), about inlays that will work on and manufacturing staff are listed at different products and environments the end of this white paper. and about the range of label options for each individual use case. Technology Required High-end RFID inlay insertion SmartfaceTM technology, which equipment can be expensive, but replaces the PET substrate with label converters can get into the a paper substrate to reduce the RFID market without investing environmental impact of inlays. hundreds of thousands of dollars. For small to mid-size volumes, Converters will also need to invest converters can use a “wet” RFID in an RFID verification reader to inlay (one with adhesive) in a ensure intelligent labels have not traditional label application process been damaged during the converting to produce intelligent labels. This processes. Antistatic material on the low-cost approach is ideal for jobs floor is recommended around working that don’t require a high level of stations to reduce the chance of customization labels. damaging intelligent labels with an electrostatic discharge (ESD). For mid-to high-volume orders, Employees handling finished labels converters can purchase dry inlays should also wear special clothing from a company such as Avery and shoes to reduce ESD damage. Dennison and use an on-pitch inlay form and a lamination/multi up As a converter’s business grows, converting process. This allows for it can consider investing in a high- a custom face stock, but requires end inlay insertion machine from a Servo press. The same process a company such as Bielomatik, can be used with Avery Dennison’s Melzer, Muhlbauer or Tamarack. Intelligent Labels Page 5 New Market Opportunities for Label Converters Choosing an Inlay Provider The key to developing a successful Capacity It’s important to choose an inlay intelligent labels business is choosing the provider that has the manufacturing capacity to deliver the inlays you right inlay provider.
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