the impact of rfid on supply chain performance482

8/11/2019 The Impact of Rfid on Supply Chain Performance482

1/33

Page 1 of 33

The Impact of RFID on Supply Chain Performance

Tony Gale, Divakar Rajamani, Chelliah SriskandarajahThe School of Management,

University of Texas at Dallas, Richardson, Texas, USA 75080

Abstract

RFID presents a great opportunity for leaders to take their supply chain performance to a superior level.

However, it does not come without risks which could delay the adoption of this technology. In this paper,

we propose a framework for companies to identify their role, typical pain points and performance metrics

to focus on to maximize impact. In addition, we identify the top ten challenges/risks that companies

should consider and an assessment matrix approach to prioritize the risks followed by an implementation

roadmap for faster adoption. Finally, the paper summarizes the current implementations in progress and

their expected benefits.


2/33


3/33


4/33

Page 4 of 33

information sharing (Quagliariello, 2004). To gain the biggest benefits of RFID, companies will have to

reexamine how supply chain decisions are made, and reengineer processes, which will require a deeper

understanding of how RFID impacts supply chain dynamics and decision making(Veeramani, 2005).

The objective of this paper is to provide a framework to understand the role of various entities in the

supply network, identify the potential impact and benefits of RFID on their supply chain performance,

identify the top ten challenges, and provide a challenge assessment matrix approach to minimize the risk

and a suggested implementation roadmap for successful adoption. In addition we also provide a summary

of benefits of RFID from an industry perspective and current implementations in progress and their

expected results.

The paper is organized as follows: Section 1 provides the motivation for this paper. Section 2 provides an

overview of supply chain entities, typical pain points, key metrics, actions and desired outcomes. In

Section 3, we briefly review the history of RFID and provide a primer on how RFID systems work. In

Section 4, the application of RFID to supply chain performance is discussed from both a supply chain

entity and industry perspective. Specific implementation examples are then given in Section 5. In Section

6, we present the top ten challenges facing RFID implementations and offer a matrix based approach to

assessing the magnitude of these challenges. In Section 7, we provide a roadmap for approaching RFID

implementations. The paper then concludes in Section 8 with a summary and discussion of role of RFID

in maximizing supply chain performance.


5/33

Page 5 of 33

2. Supply Chain Performance

The end-to-end supply chain can be defined as the network of entities (retailers, distributors, transporters,

storage facilities and suppliers) that participate directly or indirectly in fulfilling a customer request

(through the production, delivery and sale) of a particular product or service. Supply Chain performance

depends on effective and efficient management of information about inventory (raw materials,

components, finished goods, and replenishment), assets (resource capacity, labor, and tools), and location

of goods in transit and forecasted, actual end user-demand (Figure 1) and movement of finances.

Figure 1: End-to-End Supply Chain Performance

The pain points for various entities across the supply chain are typified by factors such as: Out of stocks

and consequent loss of sales; inventory shrinkage including theft, counterfeit, misplacement and search

costs; overstock holding costs such as inadvertent stock, redundant safeties, obsolescence, expiration;

Insufficient visibility and resultant bull-whip effects; lack of visibility of parts in shelf (e.g. number, type,

history, location incurring additional search costs); lack of responsiveness to product demand shifts,

recalls, customer expectations; insufficient speed of order to delivery and supply chain integration;


6/33


7/33

Page 7 of 33

removing bottlenecks; improving resource utilization by automating, reducing redundancy, increasing

efficiency; increasing service levels and adding repeat customer business and new revenue; and

improving quality by attaining more accurate inventory enabling more rapid product fault tracing and

correction.


8/33

Page 8 of 33

These key operational metrics and the actions related to overcoming typical supply chain pain points to

accomplish them are summarized are summarized in Table 1.

Key Metric Action and Desired Outcome

Reduce Inventory (I) Increase inventory accuracy

Reduce inventory holding costs; inadvertent stock, redundant safetystock, overstock, miscoded SKUs (stock keeping units)

Reduce inventory shrinkage (theft, gray market counterfeit,misplacement)

Reduce out-of-stocks and subsequent loss of sales

Reduce reorder quantities and target inventory levels

Reduce bull whip effects by real-time information sharing

Reduce expired time-sensitive or product lifecycle obsolescent goods

Reduce Cycle Time (C) Accelerate product velocity (increase speed of order to delivery cycletime and supply chain integration)

Eliminate distribution bottlenecks Improve inefficient business processes (automate, streamline)

Improve product life cycle analysis

Improve cash conversion cycles

Improve Resource (R)

Utilization Reduce labor costs; Automate manual inventory management tasks

More rapid, automated, accurate cycle counts

Reduce search and reconciliation activities for misplaced SKUs

Reduce labor and space requirement due to inadvertent excess stocks(time-on-floor and quantity)

Improve inventory efficiency (inventory throughput per labor hour)

Improve Quality (Q) Reduce inbound mis-shipments, in-coming manual coding errors

Reduce outbound mis-shipments, out-going manual coding errors

Inter-company error reductions

Decrease claims record / charge backs for inaccurate delivery withbetter visibility, better fault source identification

Anti-counterfeiting protection

Reduce reverse supply chain costs; claims / charge backs forinaccurate deliveries and product recalls

Improve Service (S) Improve defect product, in-store / building tracking and recallmanagement

Improved In-Store Replenishment / Forecasting / Improved shelfavailability

Accelerated payment transactions

Improved work in progress tracking Improve responsiveness to product recalls.

Enable mass product customization by integrating customer usage andproduct information in adaptive CRM, SCM and PLM applications

Table 1: Key Suppl y Chain Operational Performance Metrics and Related Objectives


9/33

Page 9 of 33

From an operational perspective supply chain performance stands to benefit most from the ability of

RFID to greatly improve inventory visibility as well as to provide more accurate and timely information

on both the supply and demand side. For the end to end supply chain improvement, it is important for

various entities to be aligned in terms of their metrics. An example of the metrics focus by each entity

and by industry are shown in Figures 2 and 3. While this may not apply universally to all entities or

players in various industries, such an analysis is strongly suggested. The net result of such analysis is the

ability to improve operational and financial performance and to respond more effectively to external

factors including competitors, suppliers, customers, regulatory requirements and compliance mandates.

Figure 2: Differing operational metrics emphasis by supply chain entity


10/33

Page 10 of 33

Figure 3: Differing operational metrics emphasis by industry

3. About RFID

In this section we provide a brief review of the history of RFID technology, and a primer on RFID

systems, their advantages over bar codes, and how they work to provide context for the reader.

3.1 RFID History

Radio Frequency Identification (RFID) was originally used by the military to identify friend or foe

aircraft (IFF) during the Second World War (Glidden et al, 2004; Robertson and Jalaly, 2003; Manhattan

Associates, 2003). Commercially, the technology was applied from the 1980s onwards with increased

acceptance by the mid-1990s for use with keyless entry and smart tickets, document information and

smart stamps, badge readers, automatic highway and bridge toll collection, and offender tags, tracing

livestock movements, tracking and control of nuclear inventories, tracking air freight and automobile

manufacturing through assembly lines (Jones et al, 2004), railroad and military asset tracking (Glidden et

al., 2004), law enforcement, libraries and health care.


11/33

Page 11 of 33

Most recently, compliance mandates by the U.S. Department of Defense and Wal-Martrequiring

suppliers to use EPC RFID tagging on pallets and cases by January 2005 have provided a strong push to

mainstream the adoption of RFID in the supply chain, especially by manufacturers and distributors.

3.2 RFID Primer

RFID provides a means to automatically identify and track items using tags that provide information in

real-time about their identity, location, activity or history which is then processed and utilized by

application software. RFID systems for the supply chain emphasize tagging of pallets, cases and (in

certain situations) individual items. In contrast to bar codes which are used by over a million firms in over

140 countries and 23 industries (Riga, 2004), RFID employs radio frequencies to transmit data to readers

within a certain distance. RFID also offers several key technological advantages over bar codes (Glidden

et al., 2004; Chen, Y., 2003; Riva, 2004):

Barcodes require optical line of site, and are blocked by many materials transparent to RF;

Barcodes are fixed at the time of printing compared to read-write RFID tags;

RFID tags are more abrasion and heat resistant and readable through dirt, paint and some plastics;

Barcodes can be spoofed by malicious individuals having access to a laser printer;

RFID more completely automate data handling and reduce paper with greater overall efficiency;

RFID has the ability to read multiple tags simultaneously with greater speed and efficiency;

Identifiers offer no ambiguity with absolute uniqueness many orders of magnitude greater than

the UPC system which enables traceability of goods not otherwise possible; and

Re-writeable RFID tags can be reused for multiple applications lowering cost of ownership.

The key benefit presented by RFID over bar codes is being made possible by the internet and its

underlying information infrastructure. The richness and timely availability of information about the

location and status of goods worldwide to manufacturers, distributors and retailer (rather than the tag or


12/33

Page 12 of 33

reader) is motivating retailers such as Wal-Mart and the US Department of Defense, to mandate the use of

RFID by top suppliers (Glidden et al., 2004).

HighJump SoftwareTM(2004) described systems as consisting of 5 main components: tags, readers,

encoders, middleware and application software; each of which is briefly summarized below:

(i) Tags (also known as Transponders) - An RFID tag consists of an integrated microchip and an

antenna that transmits data wirelessly to a reader. The chip contains a unique serialized identifier that

contains information such as the manufacturer, batch or lot number, weight, ownership, destination and

history. Tags come in a variety of types, with a variety of capabilities, examples including:

"Read-only" versus "read-write": Read-only (class 0) tags contain data such as a serial

number, which is pre-written by the tag manufacturer or distributor and are generally the least

expensive. Updates to that information are maintained in the application software that tracks SKU

(stock keeping unit) movement and activity. "Writeonce" (class 1) tags enable a user to write data

to the tag one time in production or distribution processes. Full "read-write" (class 2, 3, and 4)

tags are the most costly and allow new data to be written to the tag as needed and even written

over the original data. However, they are not currently practical for tracking inexpensive items.

Data capacity can range from 16 bits to as much as several thousand bits. Greater capacity is

associated with higher price.

Form factor (size, shape, sensitivity etc.) of the tag and antenna structure vary and can either be

self-contained or embedded as part of a traditional label structure and depend on the physical

products and operational environment.

Passive versus active Passive (class 0, 1 and 2) tags have no battery and "broadcast" their data

only when energized by a reader. "Active" (class 3 and 4) tags are capable of broadcasting their

data using their own battery power. Read ranges are generally much greater for active tags than

passive tags (approximately 100 feet versus less than 15 feet for most passive tags). Active tags


13/33


14/33

Page 14 of 33

Figure 4: EPC tag struc ture

(ii) Readers - Reader/writers send an RF signal to tags to request the information contained on the chip.

Upon receipt, the information is translated to digital form and sent to application software. RFID Reader

technologies include hand-held devices, mobile data collection devices with embedded readers, and fixed

readers which read tags as product passes by or near them. Reader requirements vary depending on the

type of tag and application.

(iii). Encoders - Other than for read-only tags, encoders (often the readers themselves) provide the

capability to write data to the tag.

(iv) Middleware - Middleware is the software between the reader network and application software. It

provides the ability to retrieve data from the readers, filter to reduce and aggregate significant data

volume from multiple transmits and reads, and separate and identify directional movement from different

reader signals. It also monitors tag/reader network performance to generate a real-time view of tags being

read and may capture history of tag-read events for application tuning and optimization. Savant is

EPCglobal's proposed standard for defining how middleware will structure data gathered by an RFID

reader (Caton, 2004).

(v) Application software - The application software processes RFID data, controls workflows and

business transactions, and passes RFID data on to other systems such as Electronic Data Interchange

(EDI) translators or ERP software.


15/33

Page 15 of 33

4. RFID Application to Supply Chain Performance

This section is intended to give a high level perspective of the potential impact of RFID implications on

business performance from both a supply chain entity and industry perspective. It highlights the

differences between RFID and bar codes, assesses specific potential benefits of RFID and emphasizes the

need for alignment between the key business process metrics.

During 2000 alone, US companies spent almost US$1 trillion on supply-related activities including the

movement, storage and control of products across supply networks (12thAnnual State of Logistics Report,

2000). In addition, 43% of US companies have the same or higher level of inventory as they had 5 years

ago yet companies that improve their supply chain can generate savings equal to 7% of their annual

revenues (Alnoch, 1997). Furthermore, an average of 30% of information in retailer systems is incorrect

and studies have shown that as much as 63% of product descriptions can diverge in supplier and

wholesaler systems which diverge even more at the single item level (Karkkanen et al., 2003). With

expenditures and savings of these magnitudes there is a compelling need to identify new ways to reduce

costs and to extract a greater return on investment.

Like the impact of bar codes and electronic point of sale on retail buying and supply chain management in

the 1980s (Jones, 2004), RFID also has many features and benefits likely to stimulate and facilitate

substantial change within numerous industry supply chains. Further, the evolution of complementary

technologies of Global Positioning Systems and Geographic Information Systems (GIS) present the

potential for new innovation opportunities and supply chain optimization (Williams, 2004; Saxena, 2005).

However, although RFID based systems have similarities to bar codes they also offer the potential to gain

several additional key business advantages (Glidden et al., 2004) including:

Labor savings from eliminating manual bar code scanning or keypad entry;


16/33

Page 16 of 33

Theft and loss prevention capabilities;

Streamlined inventories and cost reduction;

Reduced turnaround time and responsiveness;

Increased efficiency by minimizing unnecessary handling;

Potential for production adjustment to real-time downstream inventory level reports; and

On-demand replenishment at the distribution center or retail store level.

Operating costs have the potential to be lowered by RFID through elimination of inaccuracies relating to

human intervention for data collection (via bar codes) and the possibility of using real-time data to refine

retail processes such as cross-docking and trans-shipment. As such it has the potential to significantly

reduce the cost of cycle counting, receiving, picking, packing and delivery. The technology also plays a

critical role in addressing shrinkage (Linster et al., 2004; Datta, 2001)

From a retail perspective there are two significant and expensive operational execution problems

inaccurate inventory records and misplaced SKUs in stores which pose a serious barrier to the effective

use of IT in retail operations. Based on studies by Raman (Raman et al., 2001) these problems reduce

profits by more than 10%.

Although each player in the supply chain network; retailers, distributors, transporters, storage facilities

and suppliers, manufacturers has different focus areas, each has the ability to benefit from increased

inventory visibility and management as depicted in Table 2:


17/33

Page 17 of 33

Table 2: Potential RFID benefits from a supply chain ent ity perspective(adapted from e-force presentation:

RFID Solution Lifecycle Management, www.eforce.com)

Also, although each industry has different focus areas, each has the ability to benefit from increased

inventory visibility and management as depicted in Table 3:


18/33


19/33

Page 19 of 33

higher inventory turns, higher asset turns, shorter cash-conversion cycles, higher sales revenue, lower

operating expenses and higher profits.

5. RFID Implementation Examples

In this section we review real world examples to give a perspective on recent RFID implementation

activities, results and anticipated outcomes for companies spanning various industries.

Examples of recent initiatives that examine mass applications and their deployment include

pharmaceutical (Caton, 2004), mass retail such as Walmart and it suppliers such as Gillette (Walko, 2004)

and Henkel (Chen, 2004), grocery retail including Sainsburies, Tesco and Marks and Spencer in the UK

(Karkkainen, 2003; Walko, 2004; Jones et al., 2004) and the US Department of Defense (Walko, 2004). A

sample implementation summary, adapted from eForces RFID solution lifecycle management

(www.eforce.com) is given in Table 4 relating the anticipated key metric impact:


20/33

Page 20 of 33

Industry:

Organization

Item tagged Type of

tag/chip

Read /

Write

Year/stage Result

Semi-Conductor:

Phillips

Boxes of

microprocessors at

manufacturing and

packaging from

Taiwan to Hong

Kong.

Passive

13.56 MHz

Read/Write 2003-2004

trial, 2005

rollout

Trial: Automatic inventory updates,

trial showed use of labor needed

reduced by 25%, reduced inventory

receipt time to take shipments into

inventory and process outbound

shipments by 50 percent each.

Defense:

Raytheon

Warehouse parts

with value greater

than $1,000

Passive Read only 2004-2005 /

Phase 1 pilot

Automatically perform cycle counts,

increase inventory visibility, improve

inventory control

Pharmaceutical:

Purdue Pharma

Track and

authenticate bottles

of OxyContin from

factory to

pharmacy.

Passive

915 MHz

Read only 2004-2005

pilot and

rollout

RFID-tagged and shipped more than

200,000 bottles of OxyContin Nov

2004-March 2005

Recreational

Vehicles:

Harley Davidson

Bins carrying parts

of custom

motorcycles during

assembly

Passive

13.56 MHz

Read/Write 1998/

rollout

Automatically displayed

manufacturing instructions for

employees at each stage of the

assembly process

Auto

Manufacturer:

Toyota Phase 1

Carriers containing

car frames as they

move through

paint stations

during production

Passive

13.56 MHz

Read/Write 2001/

rollout

Streamlined manufacturing and vehicle

tracking; saves on interest charges

Beverage

TrenStar

Beer kegs as they

move through the

supply chain

Passive

125-128

MHz

Read/Write 2001/

rollout

Improved demand forecasts and

increase efficiency; identification of

black-market sales and elimination of


21/33

Page 21 of 33

misdirected shipments

Paper and Paper

Products:

International

Paper

Cores of larger

paper rolls moving

through the

warehouse

Passive

915 MHz

Read Only 2003/

running

Reduction of lost and misdirected

paper rolls

Apparel Stores:

Gap

Denim apparel

through the supply

chain and onto

store shelves

Passive

13.56 MHz

Read/Write 2001/

pilot

Improved customer service through

better inventory management on shop

floor; increase supply chain efficiency

and data accuracy

Packaging and

Containers:

Raxel

Reusable plastic

containers for

carrying

biohazardous

waste

Passive

905-928

MHz

Read/Write 2002/

implemented

Avoid contamination by ensuring

proper cleaning, asset visibility

Rubber and

Plastics:

Michelin

Tires Passive

905-928

MHz

Read/Write 2003/

running

Compliance with the TREAD act and

recall management

N/A:

Las Vegas

Airport

Airline baggage

tags

Passive

905-928

MHz

Read/Write 2003/

deployment

Automated rerouting of baggage and

increased accuracy (99.5% up from 70-

85% accuracy with bar codes) to

ensure that they send each bag back to

the right airline

N/A:

US Department

of Defense

Shipping

containers

Active433

MHz

Read/Write 1994/

rollout

90% reduction in the number of

containers required

Table 4: Examples of implementations, results and anticipated key metric outcomes


22/33

Page 22 of 33

6. RFID Implementation Challenges

The following section prioritizes the major challenges facing RFID implementations and provides a

Likert-like Challenge Assessment Matrix as approach to assessing their magnitude. This is designed to

complement the RFID implementation road map described in Section 7 as an approach for gauging and

maximizing the likelihood of implementation success.

Utilization of RFID for widespread mass commercial applications has been limited primarily due to

challenges arising from several key factors. In the authors view the most important implementation

challenges are listed (in order from more significant to less significant) below:

Management Commitment - The most significant challenge to implementation is the

commitment of management to adopting new technology and having appropriate expectations of

RFID capabilities. Without executive sponsorship implementation will not be likely to succeed.

Early Adopter and Fast Follower corporate cultures are much more likely to adopt this new

technology into their business environment than watch-and-wait.

Customer Schedules - Compliance mandates put in place by Wal-Mart and the US Department of

Defense have provided a strong incentive to implement RFID. Even those companies not

currently required by their customers to actively implement the technology will likely lose

customers if they do not start to actively assess the technology. Customer schedules have also led

to recent significant increasing familiarity and experience with the technology and the business

case for RFID integration.

International Standards - A key challenge is the continually evolving standards in technology,

application, data, conformance, firmware changes, and tracking methods. In addition, different

companies often use different standards making cooperation between suppliers and manufacturers

difficult. Chinas direction regarding standards also has potential for significant global impact.

The need for a supporting internet infrastructure and industry based electronic product code


23/33

Page 23 of 33

(EPC) network standards is critical. These standards although helping to simplify the electronic

transactions that occur between organizations' ERP (enterprise resource planning) systems and

improve inter-company supply chain visibility are undergoing change.

Technology - Continuously and rapidly evolving technology presents unique implementation

challenges to integrating hardware, software and infrastructure due to upgrade management

requirements. Further, read ranges of current tags are still short, and read-logic ability to

distinguish between different pallets is still an issue, and there are operational environment

limitations on read accuracy such as such as liquids, metals and electro-static devices which can

distort, absorb, scatter or reflect signals. Middleware is immature and rapidly changing (Shor,

2005).

Availability of Resources - Resource availability is also limited due to the lack of sufficiently

trained, skilled personnel which is complicated by the aforementioned rapidly evolving standards

and technologies. There is also a lack of public domain reference case studies that

comprehensively document failures and lessons learned. The shortage of existing skilled

resources and lack of comprehensive, accessible information has cost implications for training

and presents potential implementation problems.

Security - For certain implementations, illicit tracking of RFID tags presents problems. This is

particularly relevant for military installations but security challenges are relevant also for

corporations and individuals. For example, scanning and cloning of RFID tags can potentially

provide undesired access to important facilities or use for payment in commercial transactions.

Change Management - RFID implementation poses challenges of managing change associated

with integrating RFID and of reengineering work process. This requires strong management

commitment and support. For example Slap and ship often doesnt provide a return on

investment as the real benefit typically comes from back-end integration. Because most back-end


24/33

Page 24 of 33

systems are not designed for the level of detail that RFID provides, enterprise applications

currently often cannot specifically retain meaningful information (Hotchkisss, 2005).

Government Regulations - Implementations are complicated by varying specifications and

regulatory requirements, for example operational frequencies and power specifications vary from

country to country.

Privacy This presents more of a challenge than technology in Europe where it has a much higher

priority over the technology or benefits of RFID than in the USA (MacSweeney, 2005). The

impact of public interest groups is certainly significant, especially on the mass retail industry.

Recent notable backlashes and boycotting campaigns from privacy protection groups such as the

UKs Liberty and U.S. Consumers Against Supermarket Privacy Invasion and Numbering

(CASPIAN) to Benettons, Tescos and Gillettes RFID initiatives (Jones et al., 2004) have

caused companies to more carefully examine their approach and be more sensitive to privacy.

The concern is that information recorded for one purpose is being used for another, and the need

for clear legal guidelines as to what information organizations are allowed to gather and what

they can do with the information. To this end CASPIAN has proposed legislation, The RFID

Right to Know Act of 2003, which would require mandatory labeling to inform consumers when

an item contains an RFID tag. It would also prohibit companies from linking the chips with

personally identifying information.

Cost Currently, higher priced assets and items are more suited to RFID implementations based

on existing price points. However, since 2000, price reductions have opened the door to

application by various industries with the cost of a [non-UHF]tag dropping from about $1/unit to

around $0.25 over a period of 3 years. In addition, costs of data communications, tag readers and

related equipment have also fallen dramatically to reflect the increased interest in the use of this

technology (Jones at al.,2004; Niemeyer et al., 2003; Manhattan Associates, 2003). Although the

cost of tags and readers is going down, overall implementation costs of RFID solutions go beyond


25/33

Page 25 of 33

hardware, software and personnel as they also have to account for the cost of changing business

process.

To assess the overall challenge presented to the organization the authors propose the use of a simple,

Challenge Assessment Matrix (CAM) based on a Likert-like approach (Likert, 1932). Through

answering a questionnaire each challenge is assigned a score whereby if the answer the question is true

to a very great extent a score of 5 is assigned, conversely if the answer is that the issue has an impact

likely only to be true to a very slight extent a score of 1 is assigned. Once the matrix has been

completed the total score is determined by summing the total for each column; in the example the sum

total is 24. If the result of the shows that the total score is tending toward the maximum of 50 (i.e. high)

this indicates that the implementation will be fraught by numerous challenges and be unlikely to succeed.

Conversely if the CAM total score tends towards the minimum of 10 (i.e. low) the implementation is

much more likely to succeed. A more sophisticated version can be used whereby each challenge is

weighted according to the perceived level of importance of each challenge.


26/33

Page 26 of 33

SUM TOTAL CAM SCORE = 24 (i.e. 15 + 3+ 6)

Table 5: Challenge Assessment Matrix (CAM) for RFID implementations


27/33

Page 27 of 33

7. RFID Implementation Roadmap

This section provides a road map to approaching RFID implementation. In conjunction with recognizing

the challenges involved in executing RFID solutions mentioned in the previous section, it is important to

keep implementations simple and phased, keep the scope tight but be prepared to be flexible, and to be

aware of change management requirements to traditional business processes.

The likelihood of successful implementation can be accentuated by taking the following steps:

(i) Study The As-Is System Process

This requires collecting and mapping out data on the current system state of the business process relating

to supply chain performance within the company.

(ii) Identify Pain Points and Opportunities In The Supply Chain.

Because the pain points and opportunities differ by industry and supply chain entity involved, these need

to be examined carefully. Examples of pain points and opportunities are described and summarized in

Section 1 and Table 1.

(iii) Study As-Is Technology and Standards Roadmap

Because many of the implementation challenges identified in the previous section are undergoing change

these should be reviewed to understand current limitations and potential workarounds and to appreciate

the need for a flexible implementation.

(iv) Propose Future System State

Having understood the as-is process, pain points and opportunities and recognizing the as-is technology, a

hypotheses for the desired future system state should be developed.

(v) Evaluate Opportunities & Implications Of RFID to Future State

The role of RFID in achieving the future state can now be evaluated in the context of the existing pain

points and opportunities within the supply chain to determine what activities have the potential to be


28/33


29/33

Page 29 of 33

8. Summary

RFID presents a tremendous opportunity in improving the overall performance of supply chains. It can

not only elevate the pains of various entities and industries, it also presents an opportunity for the leaders

to drive their supply chain performance to a superior level. The ROI from RFID implementations is

likely to be primarily long-term and requires a more strategic perspective to align business processes and

key financial, internal and external metrics. Although shorter-term benefits can be achieved through

customer retention by meeting RFID compliance mandates and refining existing processes (e.g., faster

more accurate identification of items) the main benefit comes from business process redesign that focus

on reducing inventory, reducing cycle times, improving resource utilization, ; increasing service levels

and improving quality. In this paper, we provided a framework to understand the role of various entities

in the supply network, identified the potential impact and benefits of RFID on supply chain performance.

Considering that the technology and standards are evolving we identified the top ten challenges that a

enterprise should account for in their implementation plan, followed by an implementation roadmap for

successful adoption. In addition we also provided a summary of benefits of RFID from an industry

perspective and current implementations in progress and their expected results.


30/33

Page 30 of 33

References

1. Allnoch, A. 1997. Efficient supply chain practices mean big savings to leading manufacturers,IIE Solutions; July 01

2. Anupindi, R., S. Chopra, S. D. Deshmukh, J. A. Van Mieghem, E. Zemel. 2006. Managing BusinessProcess Flows Principles of Operations Management, Second Edition

3. Boone, C. 2004 Whats the Frequency? The Future of RFID for the Retail Supply Chain,Massachusetts Software Council Presentation, May 20.

4. Brandel, M. 2003 RFID: Smart Tags, High Costs, December 15, http://www.computerworld.com.

5. Bright, J. 2004 Finding the ROI in the FDA's counterfeit drug guidelines November,http://www.usingrfid.com.

6. Caton, M. 2004 RFID reshapes supply chain management, April 19, http://www.eweek.com.

7. Caton, M. 2004 Drug Companies Look to RFID, April 19, www.eweek.com.

8. Chen, A. 2004 Henkel on Track to Meeting RFID Mandate, April, http://www.eweek.com.

9. Chen, Y. 2004 Getting Ready for RFID, Operations Research Management Science Today, June,http://www.lionhrtpub.com/orms.

10.Council of Supply Chain Management Professionals. 2000 12th Annual State of Logistics Report.

11.Datta, S. 2001 RFID.an incomplete story, MIT Forum for Supply Chain Innovation.

12.Supply and Demand Chain Executive Editorial Staff. 2004 Near-term ROI Lacking for EPC RFID,Study Finds, Supply and Demand Chain Executive, November 2, http://www.sdcexec.com.

13.eForce. RFID Solution Lifecycle Management, presentation, www.eforce.com.

14.Faber, P. 2005 RFID Strategy -- The Three R's, July 5, www.industryweek.com.

15.Glidden, R., C. Bockorick, S. Cooper, C. Diorio, D. Dressler, V. Gutnik, C. Hagen, D. Hara, T. Hass,T. Humes, J. Hyde, R. Oliver, O. Onen, A. Pesavento, K. Sundstrom, M. Thomas,Impinj Inc. 2004 Design of Ultra-Low-Cost UHF RFID Tags for Supply Chain Applications, IEEECommunications Magazine, August, http://ieeexplore.ieee.org.

16.Gromley and Hook. 2005 Tapping RFIDs Value into the Supply Chain, May 16,http://www.deloitte.com.

17.Haley, C. 2004 An eye on RFID ROI June 7, http://internetnews.com.

18.Harris, G. 2004 "Tiny Antennas To Keep Tabs On U.S. Drugs" New York Times, November 15,http://www.nytimes.com.


31/33

Page 31 of 33

19.HighJump Software (a 3M company). 2004 The True Cost of RadioFrequency Identification(RFID), Whitepaper.

20.Hotchkiss, D. 2005 Navigating the Bumps In the RFID Road, RFID News & Solutions, January 1,http://www.rfidnas.com.

21. Jha, A. 2003 Tesco ends trial of CCTV spy chip on razor blades, The Guardian, August 22,http://www.guardian.co.uk.

22. Jones, Clarke-Hill, Shears, Comfort and Hiller. 2004 Radio Frequency Identification in the UK:Opportunities and Challenges, International Journal of Retail and Distribution Management, Volume32, Number 3, pp 164-171, http://www.ingentaconnect.com.

23.Karkkainen and Holmstrom. 2002 Research Paper: Wireless Product Identification: enabler forhandling efficiency, customisation and information sharing, Supply Chain Management: AnInternational Journal, Volume 7, Number 4, pp 242-252.

24.Karkkainen, M, T., K. Ala-Risku, Framling. 2003 The product centric approach: a solution to supply

network information management problems? Computers in Industry 52, 147-159.

25.Karkkainen, M. 2003 Increasing efficiency in the supply chain for short shelf life goods,International Journal of Retail and Distribution Management, Volume 31, Number 10, pp 529-536.

26.Likert, R. 1932 A Technique for the Measurement of Attitudes, Archives of Psychology, Vol. 140,June.

27.Linster M., J. Lie., and V. Sundhar. 2004 Avicon: RFID in the supply chain: Improving performancethrough greater visibility, Avicon Whitepaper, January 7, version 1.13.

28.Manhattan Associates. 2003 RFID: The UPC of the 21stCentury.

29.Maurno, D. A. 2005 The Real Story on RFID: 5 Questions for 6 Experts January,http://www.inboundlogistics.com.

30.MacSweeney, G. 2005 Standards, Privacy Concerns, Not Technology, Are Largest Obstacles toRFID Success Managing Automation,June 15, http://www.managingautomation.com.

31.Quagliariello, L. 2004 Is RFID the Supply Chain Holy Grail? http://logistics.about.com/od/rfid.

32.Raman, A, N. DeHoratius, Z. Ton. 2001 Execution: The missing link in retail operations CaliforniaManagement Review, Volume 43, No. 3, Spring.

33.Riva, F. 2004 EPCglobal: Commercializing EPC: EPCglobal US, October 22.

34.Roberti, M. 2004 The Vision Thing, April 26, http://www.rfidjournal.com.

35.Robertson, I.D., I. Jalaly. 2003 RFID Tagging Explained, Communications Engineer, February.

36.Saxena, M. 2005 Does GIS and RFID Amalgamation Work? GeoWorld - Tech Time, May,http://www.geoplace.com.


32/33

Page 32 of 33

37.Shor, S. B. 2005 "Obstacles to RFID Tags in Manufacturing Abound", CRM Buyer, July 19,http://www.crmbuyer.com.

38.Veeramani, R.2005The Key to Finding RFID's ROI, June 6, http://www.rfidjournal.com.

39.Walko, J. 2004 Super-Locator: The noise surrounding RFID technology is getting louder by the

minute, IEE Communications Engineer, February/March.

40.Williams, D. 2004 The Strategic Implications of Wal-Mart's RFID Mandate, Directions Magazine,July 29, http://www.directionsmag.com.

41.Witt, C. E. 2004 How to Make ROI Real December, http://www.mhmonline.com.

42.Zaragoza, S. 2005 Tandy using RFID on Wal-Mart shipments, Dallas Business Journal February11, http://www.bizjournals.com.


33/33

the impact of rfid on supply chain performance482

Documents