Apparel RFID Tags

5798478 Word Count:2595 December 2011

CONTENTS

CONTENTS

Contents
Executive Summary Introduction Main Body Opportunity . . . . . . . . . . . . . . . . . . . The Market . . . . . . . . . . . . . . . . . . . RFID Market in Apparel Supply Chains Industry Challanges . . . . . . . Market Drivers . . . . . . . . . . Market Restraints . . . . . . . . Segmentation . . . . . . . . . . . Competition . . . . . . . . . . . Unmet/Niche Markets . . . . . . . . . . Other Markets . . . . . . . . . . . . . . exitec . . . . . . . . . . . . . . . . . . . . . . Technology and Protection . . . . . . . Costing . . . . . . . . . . . . . . . . . . Business Model . . . . . . . . . . . . . . . . . Value Proposition . . . . . . . . . . . . . Customers and Sales . . . . . . . . . . . Resources and Activities . . . . . . . . . Partners . . . . . . . . . . . . . . . . . . Costs . . . . . . . . . . . . . . . . . . . . Risks/Threats . . . . . . . . . . . . . . . Conclusion 2 3 4 4 4 4 5 5 6 6 6 7 7 8 8 10 10 10 10 11 11 11 12 13

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Appendices 17 Global RFID Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Apparel RFID Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

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EXECUTIVE SUMMARY

Executive Summary
This business plan focuses on the apparel radio frequency identication (RFID) tag market. It provides a brief overview of the market including, trends, challanges, drivers and restraints. It peers into the global market for RFID technology and looks into where these markets are heading in the future. The report goes on to explain the technology behind the brand exitec and how it is relevant to the apparel RFID market. It then goes on to explain the basic premises of the exitec business model, constraints and risks.

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INTRODUCTION

Introduction
exitec is a technology that produces organic transistors and integrated circuits (ICs) using novel materials, methods and techniques. Conventional organic electronics can take many costly processing steps, exitec merges two of these steps using specially designed molecules and solution processing techniques to signicantly reduce the cost and produce durable and exible electronics. By combining exitec integrated circuits with other establised techniques it is possible to create a maliable, washable and cheap radio frequency identication tag that is ideal for use in the apparel business process and supply chain. The apparel industy is expected to be one of the fastest growing passive RFID markets from 2011 (Frost&Sullivan, 2011c; IDTechEx, 2011; Frost&Sullivan, 2011a,b). RFID tags implemented within the apparel industry will increase operational eciency and supply chain visibility and allow retailers to evaluate customer behaviour leading to better customer service. All of these factors are being taken into consideration as they will reduce costs and increase sales for vendors. For example, knowing where stock is from the warehouse to the shop oor will reduce stock-outs and allow the location of specic stock anywhere in the store. The benets of RFID implementation in the apparel industry has been highlighted by Matthew.A.Waller (2011); IDTechEx (2011) andFrost&Sullivan (2011b) The next logical step is the emergence of tags that can withstand dry cleaning, washing and ironing that can be incorporated into a garments. exitec along with RFID inlay manufacturers and experts can provide this option at prices that will see fast returns on investment. Although obvious application for the exitec technology is within durable RFID tags, exible ICs can and will have many other uses such as active matrices for at panel displays and other smart electronics applications.

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Main Body
Opportunity
Reports (USAToday, 2011; just style, 2011) suggest that 2011 will see rising buying-in prices for apparel retailers due to cotton prices and cost of production in lower-cost regions, like asia, rising. Guangdong province for example has annonced its second minimum wage rise in less that a year (just style, 2011). In order to control garment costs, retailers and suppliers must manage their productivity, not by increasing numbers of workers but by providing better supply managment and process control. RFID tags provide the technology to tackle this problem. Clothing can be tracked from the factory to the shop oor. Matthew.A.Waller (2011) produced a list of 60 benets for suppliers using RFID tags that included quality control; accuracy of the wareabouts of products; proof of delivery and faster response to defects. In addition to cost savings by the supplier RFID tags within a store aord many benets. In a busy clothing store, knowing exactly where stock is and what colour and sizes they are in will inevitably increase sales and enable greater customer service by allowing stores to tailor to the needs of their local communities. In order for an Apparel RFID tag to last the full lifetime from manufacturer to end consumer it must be able to withstand the harsh conditions of dry cleaning, washing and ironing. It must also be light weight, cheap and compatible with the production of the clothing i.e. incorporated into the designer label. Conventional integrated circuits used in RFID tags are made of expensive silicon chips which are brittle and unless protected via encapsulation would not withstand the harsh conditions mentioned above. In order for the apparel industry to benet from the full potential of RFID technology a durable, cheap alternative to conventional ICs is needed. Trends being seen in the market include source tagging, item-level tagging, government regulation and mandates the needs however include complete systems and faster return on investment (ROI).

The Market
RFID Market in Apparel Supply Chains
Frost&Sullivan (2011b) describes the RFID market as emerging and is at present in a nascent phase. It shows the predominance of ultra high frequency passive

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tags and predicts huge potential growth with the only competitor being the humble bar code. In 2010 the global RFID market in apparel was $420.6 million and is predicted to grow to $1478.1 million by 2017. Frost&Sullivan (2011b) calculate a compound annual growth rate (CAGR) of 19.7%. Industry Challanges Disinclination of customers towards new technologies Factors include price, lack of knowledge of the technologies benets and understanding of the business case. Privacy issues Concerns of data and identity theft. Low technical skills System integrators play a mojor role in distributing RFID technology to the customers they must be very aware of their needs and be able to deliver. Extensive Customisation The cost of middleware is directly proportional to the supply chain complexity. The more complex a system the more data has to be processed. The apparel industry has very complex supply chains. Market Drivers Re-Initiation of projects After the nancial crisis, RFID adoption projects are re-emerging, driving demand and emphasising the benets of the technology. Reducing tag costs From the re-initiation, suppliers of RFID tags are looking to become more competitive in the market. Gaining prominence of item-level tagging Item-level tagging is being implemented over conventional pallet tagging, improving inventory management and allowing greater visibility of the supply chain. This is further being driven by madates from the likes of WalMart, Gerry Weber and METRO. Need for business process management RFID tags allow for better process transparancy, inventory managment, security and customer service. Technology advancements Reducing man hours and increasing customer service are all benets of the advances in the technology. 5798478 5

THE MARKET

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Market Restraints Uncertain ROI The high cost of implementation, maintanance and servicing for a low prot margin market such as apparel is a major restraint for the adoption of this technology. Fragmented apparel industry The industy is full of retailers from global multinationals to local shops. The market will be dominated by the lower tiers due to the shorter time to see ROI but the high initial costs are a restraint. Fragmented supply chain 80-90 percent of manufacturing is sourced from Asia. The total number of participants involved in the supply chain is very high leading to diculties in implementing the technology throughout the entire chain due to the large amounts of data to be handled. Segmentation Figure 1 shows how the RFID market revenue in apparel, segmented by region. In the Americas item-level tagging is being seen at Macys, Walmart and J.C Pennys. Likewise in Europe Marks & Spencers and Gerry Webers are implementing RFID on clothing (Frost&Sullivan, 2011b)

Figure 1: Apparel RFID market revenue segmented by region. Source Frost&Sullivan (2011b)

Figure 2 shows the revenue breakdown of products. It shows that tags are responsible for a high portion of revenues. With the reducing cost of tags we should see a signicant drop in the cost of adoption. Competition There are three tiers to the market share of RFID competitors. Tier 1 Make up 50% and consist of global companies that oer a wide range of products and services.

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Figure 2: Apparel RFID market revenue segmented by product. Source Frost&Sullivan (2011b)

Tier 2 Making up 30% of the market they excel in a particular country or region Tier 3 Are small local companies with niche markets and make up 20% of the share

Unmet/Niche Markets
The UK currently accounts for 4% of the world users of apparel RFID (IDTechEx, 2011). IDTechEx (2011) also predict that Japan, USA and Germany will all be the global leaders of the apparel RFID market in a few years trumping the curent leader Marks & Spencers. The demand for source- and item-level tagging leads to issues of RFID tag durability when experiancing the harsh conditions of cleaning and ironing. A so far unmet market is life-long, durable tags that can be woven into a garment label. This would allow for complete transparency throught the entire business process.

Other Markets
Apparel in 2010 accounted for 10% of the total RFID market. Frost&Sullivan (2011b) predicts this will rise to 15% by 2017. The total RFID market in 2009 was worth $3,679.4 million and is split into several high prole vertical markets (see Figure 3)(Frost&Sullivan, 2011c). All these markets are predicted to grow at greater than 10% cmpound annual growth rate (CAGR) [Note that apparel is grouped in the vertical market of retail]. Many of these sectors could benet from the adoption of durable RFID tags. The total RFID market as calculated by Frost&Sullivan (2011c) is predicted to be $9,732.6 million in 2016.

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FLEXITEC

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Figure 3: Global RFID vertical markets. Other includes, livestock, aviation and government. Source Frost&Sullivan (2011c)

exitec
Technology and Protection
Organic electronics have become more widely used in the last decade with the emegence of OLEDs (organic light emitting diodes) in phone displays. Organic transistors have been slower to realize their potential. With such benets as roll-to-roll processing onto exible and robust substrates their popularity will increase. Conventional organic eld eect transistors (OFETs) as demonstrated in Figure 4 are made up of several layers, namely; the substrate, gate, dielectric, semiconductor and source drain electrodes. Each layer requires a seperate process that could involve any number of intermidiate steps all of which cost time and money.

Figure 4: Conventional OFET in bottom-gate, top-contact conguration. Each layer compromises of a seperate manufacturing step. Each of these steps usually include additional processing or treatment to maximise performance.

exitec technology produces FETs with a reduced number of steps with a solution processd method compatible with printed electronics techniques. Using specially designed molecules that are synthesized so that when they come into 5798478 8

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contact with a specic surface they will chemically attach themselves to it (see Figure 5). The head of this molecule acts as the semiconductor in a conventional OFET and the long carbon tale serves as a nano dielectric allowing the transistors to work at low powers, which is ideal for passive RFID tags. As the dielectric and semiconductor are assembled in one step without further processing this drastically reduces both the cost of materials and the cost of manufacture. Altering the chemical structure of the anchoring group (bottom of the molecule) allows for the attachment to numerous dierent metal and metal oxide surfaces. Altering the design of the top (semiconducting part) allows for the production of p- and n-type transistors which are needed for integrated circuits.

Figure 5: exitec FET and exitec molecule. The molecules attach themselves to the surface and hence create a semiconducting channel between the two electrodes.

Several international patents will protect this technology. The patent will protect the chemical structures of the compounds, along with various semiconducting head groups and anchoring tail groups. The process of fabricating nand p-type transistors and integrated circuits will also be protected within this patent. The patents will follow similar rules to those set out in Do.Hwan.Kim (2010); Ali.Afzali-Ardakani (2010) for transistor design protection and GyouGin.Cho (2011) for printed electronics. The exitec logo will become a registered trademark, all technical drawings will have copyright and a website domain name will be purchased for sales.

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Costing
Louis.Sirico (2011) breaks down the costing of RFID tags and allows for transparancy of the costing involved in manufacture of silicon tags. A simplied outlook is as follows: Conventional silicon RFID tag IC 3.45 antenna 3.1 inlay substrate, strap and adhesive 6.325 nishing 5 Total = 17.875 exitec allows for the cost of the IC to be approximately 0.35. exitec technology due to its chemical bonding and compatability with any substrate allows for a simplication of the inlay and nishing manufacturing steps further reducing the costs. A simplied outlook is as follows: exitec RFID tag IC 0.35 antenna 3.1 inlay substrate, strap and adhesive and nishing 5.625 Total = 9.075 with further optimisation and the cost of antennas reducing a exitec RFID could easily meet the 5goal for RFID tags.

Business Model
To look at the exitec business model the Ostawalder business canvas was used as a template.

Value Proposition
exitecs value proposition is to deliver durable integrated circuits for RFID tags and electronic solutions.

Customers and Sales

exitec supply a solution to durable integrated circuits that will be purchased by original engineering manufacturers (OEMs) for the use in various, novel electronic applications and inlay manufacturers for RFID tags, predominantly for the growing apparel RFID market. The business will work in a personal relationship with the inlay manufacturers and OEMs but will be isolated form the nal end user (e.g. Walmart). exitec will supply products that meet each projects needs and designs. As

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well as this co-creation style relationship the business will work by creating and sharing products, ideas and designs to allow for solutions to be easily identied. Products will be distributed via direct sales, ordered via catalog or website and delivered via courier services. Sales to end users in the apparel industry will be via sytem integrators (SIs) who combine tags, hardware and middleware into convenient packages for the customers. Revenue generated through sales of assets to end users via SIs and OEMs will be the main source of income. Others include technical support, maintanance and licensing.

Resources and Activities

exitec will hold the itellectual property and process expertise to produce washable RFID tags via roll-to-roll printing techniques. In order to fulll the value proposition the business must manufacure, on demand, bespoke ICs for the customers to the standards they expect. It must also supply technical support to integrators and most importantly expand its IP to fulll unmet market needs and advance the technology.

Partners
The value proposition can only be upheld with close relationships with several key partners. Inlay manufactures will form a major partner as we will work very closely in order to deliver custom designed tags as ordered through the SIs by the end users. Other partners include, univerisities to supply research facilities in order to increase IP and expand the tehnology and chemical/material suppliers.

Costs
The business is value-driven. The market expect quality and performance over price in the RFID market (see Figure 6).

Figure 6: Market criterion for RFID tags. Performance is key. Source Frost&Sullivan (2011b)

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Fixed costs include, rent, salary and licences of other technologies needed to complete an IC. Variable costs for materials and logistics both decline dependant on the scale of an order/project. The business must also account for the inital loan needed to purchase equipment and initialise the company.

Risks/Threats
Organic electronics is a growing technology that has a lot of large companies such as Samsung and Sony investing in it. This is creating a saturation in the protected technology and a crowded market place. exitecs novel design allows it to compete in this market but could easily be swallowed by a company looking to acquire its IP. In order to succeed it must increase its portfolio and advance its technology.

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CONCLUSION

Conclusion
The RFID apparel market has been looked at in some detail, the uptake of the technology has already been started and retailers are starting to see the benets of the technology. There is signicant growth in this sector with space for new technologies that allow for complete transparancy throughout the business process to emerge. The benets of being able to see a product through from source to the end consumer will rely on RFID tags that can withstand the harsh conditions of cleaning and ironing as well as needing to be exible, compatible with the clothing and cheap. The technology presented in this report allows for the production of organic transistors and integrated circuits at a fraction of the price of conventional silicon based solutions. It allows for the production of OFETs and ICs on almost any substrate (including exible ones) via roll-to-roll printing techniques. The nature of the technology means the electronics are durable to quite harsh conditions. This makes it ideal for the advancement of the apparel RFID market and will nd uses in other niche electronics markets. A drawback is exitec as a business will come in the lower tier for companies competing in this market. This makes it very susceptible to a take over by larger multinational institutions such as Samsung. The uptake of RFID tags in apparel and other markets is going to happen, exitec is just one player in a very large sector that is soon to be saturated with roll-to-roll printed electronics. Its advantages comes form very cheap production and durability and so has a ghting chance of competing in a market place full of some big name oponents.

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BIBLIOGRAPHY

BIBLIOGRAPHY

Bibliography
Ali.Afzali-Ardakani. 2010, Organic eld eect transistors and methods of making the same based on polymerizable self-assembled monolayers. US Patent 7776646B2. David.J.Mountain. 2008, Method for fabricating a exible organic integrated circuit. US Patent 7452746B1. Do.Hwan.Kim. 2010, Organic thin lm transistors and methods for fabricating the same. US Patent 2010065830A1. Frost&Sullivan. 2011a, RFID in the Apparel Industry [online]. (August 2011). URL Available from: http://www.frost.com/. [Accessed:17/12/2011]. Frost&Sullivan. 2011b, RFID Market in Apparel Supply Chains. Mountain View. (November 2011). Frost & Sullivan. Frost&Sullivan. 2011c, Global RFID Market. Kuala Lumpar. (February 2011). Frost & Sullivan. Gyou-Gin.Cho. 2011, Preparation of thin lm transistors (TFTs) or radion frequency identication (RFID) tags or other printable electronics using inkjet printer and carbon nanotubes inks. US Patent 2011079770A1. Haiko.Tidemann. 2011, RFID apparel tag for use in industrial processing and post care treatment. WO application 2011066358A1. IDTechEx. 2011, Apparel RFID 2011-2021. (August 2011). IDTechEx. just style. 2011, Is RFID in apparel nally coming of age? [online]. (August 2011). URL Available from: http://www.just-style.com/. [Accessed:17/12/2011]. Louis.Sirico. 2011, 2011 Passive UHF RFID Tags & Smart Labels Buyers Guide [online]. (October 2011). URL Available from: http://rfid.net/. [Accessed:17/12/2011]. Mark.E.Tuttle. 2009, Flexible RFID Label. US Patent 2009284377A1. Matthew.A.Waller. 2011, An Empirical Study of Potential Uses of RFID in the Apparel Retail Supply Chain. RFID Research Center. (November 2011). University of Arkansas. Michael.J.Isabell. 2011, Washable RFID device for apparel tracking. WO application 2011005550A2. 5798478 14

BIBLIOGRAPHY

BIBLIOGRAPHY

Sebastian.Gallschuetz. 2007, Radio frequency Identication transponder antenna. US Patent 2007052613A1. USAToday. 2011, Clothing prices to rise 10% starting in spring [online]. (February 2011). URL Available from: http://www.usatoday.com/. [Accessed:17/12/2011].

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Appendices

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GLOBAL RFID MARKET

Global RFID Market

Figure 7: Revenue forecast for the global RFID market. Source Frost&Sullivan (2011c)

Figure 8: Global RFID revenue segmented by product. Source Frost&Sullivan (2011c)

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APPAREL RFID MARKET

Figure 9: Global RFID revenue segmented by region. Source Frost&Sullivan (2011c)

Apparel RFID Market

Figure 10: Global Apparel RFID Market. Source Frost&Sullivan (2011b)

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APPAREL RFID MARKET

Figure 11: Annual growth of the apparel RFID market. Source Frost&Sullivan (2011b)

Figure 12: Annual growth and segmentation of apparel RFID market by product. Frost&Sullivan (2011b)

Source

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APPAREL RFID MARKET

Figure 13: Tiers of apparel RFID suppliers . Source Frost&Sullivan (2011b)

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