A REPORT ON SUPPLY CHAIN MANAGEMENT AND RADIO FREQUENCY IDENTIFICATION

NITHIN SASI

School Of Management Studies CUSAT, Kochi 22 Email: nithin.sdn@gmail.com

Abstract: A major intent in supply chain management (SCM) is the identification and tracking of goods as they travel from the producer to the end customer. Traditionally, this process can be supported by using bar codes or other means of manual identification. With the use of radio frequency identification (RFID) however, the efficiency of SCM can be improved. This paper describes key features of SCM and elaborates on the basics of RFID technology. The potential benefits arise from increase in supply chain visibility, increase in efficiencies and decrease in costs due to better data synchronization, increase in responsiveness to changes due to real time information visibility and a number of additional industry / vertical specific benefits. RFID promises to have a major impact on supply chains allowing trading partners to collaborate more effectively and achieve new levels of efficiency and responsiveness. Keywords: SCM, RFID.

1.0 INTRODUCTION
An essential ingredient for an effective and efficiently managed supply chain includes accurate, real-time information about products within the chain. The integration of RFID systems within a companys supply chain offers an abundance of economic and productive capabilities. An RFID is a white tag with an imbedded microchip containing product information which can be accessed by a receiver using radio frequencies. The white tag is affixed to the product at the pallet level while still at the warehouse prior to shipment. Companies such as GAP, CVS, Gillette, Proctor &Gamble and Wal-Mart have recognized the importance of leveraging RFID technology to improve and increase operating efficiencies in the supply chain, which is benefiting from recent advances in electronic cataloguing. With RFID systems, companies would have increased product visibility, reduce out-of-stock items, trim warehouse costs, eliminate stock errors, reduce theft and shrinkage and allow companies to regularly update their logistics and inventory databases .Several pilot studies are underway globally to study RFID system application and its integration within existing ERP systems. Most companies are taking a cautious approach and initially focusing their study of RFIDs at the pallet level before progressing towards each product unit stored in a box. RFID is the latest magic bulletin in the technological scope that has the potential to make a sweeping shift in the way any organizations approach their supply chain. Leading the way in embracing this technology are retailers, particularly Wal-Mart and their suppliers. RFID is enabling companies to see further into the supply chain than ever before, providing more accurate real-time information and improvements in process efficiency. The increased visibility can result in faster inventory turns, less shrinkage, reduced labour and higher material flow through warehouse or distribution center. Greater efficiency means RFID-enabled processes take less time and effort; entire pallets of product can be recognized in seconds without the need to break them down, and cycle counting inventory can be accomplished in hours or even minutes instead of days. RFID tags are small, wireless devices that help identify objects and people. Thanks to dropping cost, they are likely to proliferate into the billions in the next several years-and eventually into the trillions. RFID tags track objects in supply chains, and are working their way into the pockets, belongings, and even the bodies of consumers.

1.1 SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain). Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration

among supply chain partners, thus improving inventory visibility and the velocity of inventory movement.

1.2 RADIO FREQUENCY IDENTIFICATION (RFID)

Radio Frequency Identification (RFID) is a means of identifying a person or object using a radio frequency transmission, typically 125 kHz, 13.56 MHz or 800-900MHz. There are several methods of identification, but the most common is to store a serial number that identifies a person or object, and perhaps other information, on a microchip that is attached to an antenna (the chip and the antenna together are called an RFID transponder or an RFID tag). The antenna enables the chip to transmit the identification information to a reader. The reader converts the radio waves reflected back from the RFID tag into digital information that can then be passed on to computers that can make use of it. Radio frequency identification (RFID) systems are made up of readers and tagstiny microchips or integrated circuits with an antenna attached and embedded into labels. The antenna enables the chip to transmit the labels identification information to a reader. When the reader is prompted, the tag broadcasts the information onto its chip. The reader converts the radio waves reflected back from an RFID tag into digital information that can then be passed on to computers or computer mainframes. There the information is collected, sorted, and converted into relevant data that can be used to measure future demand. There is effectively no upper limit on what an RFID tag can store (although more memory requires more power). Tags can be either active or passive. Radio tags can be applied on everything from car tires to hospital patients. Unlike traditional bar-codes, RFID chips give every tagged object a unique identification code. Companies will soon use RFID to track the billions of objects transported around the world every year in planes, trucks and ships, through ports and warehouses, on to store shelves, and into homes and offices. Accurate tracking will save hundreds of billions of dollars a year by improving the channels of distribution and reducing labor costs, inventory, and theft.

1.3 Why RFID

The task of receiving, transporting, sorting and shelving materials has exploded in recent years. RFID provides a solution to automate much of this handling and return staff to the business of customer service. The use of RFID reduces the amount of time required to perform circulation operations. The most significant time savings are attributable to the facts that information can be read from RFID tags much faster than from bar codes and that several items in a stack can be read at the same time.

1.4 General Component Overview

As long as it is a system that requires inventory to be tracked, the following discussion is applicable. with many other types of automatic identification systems, an RFID system requires a number of interrelated components. From a very high-level perspective, an RFID system must contain a set of tags, one or more antennas, and a reader.

Figure illustrates how these components work in conjunction with each other.

Tags Tags are the devices attached to the items or material that the RFID system is intended to track. The tags may be placed directly on individual items such as in the case of consumer goods or on shipping containers or pallets that hold multiple items. Tags come in all sorts of shapes and sizes. The primary function of the tag is to transmit data to the rest of the RFID system. Tags generally contain three basic parts. These include The electronic integrated circuit A miniature antenna A substrate to hold the integrated circuit and the antenna together and to the inventory item Tags are also classified depending on how they are powered. RFID tags can be either passive, active or battery assisted passive. Passive RFID does not use a battery, while an active has an on-board battery that always broadcasts or beacons its signal. A battery assisted passive (BAP) has a small battery on board that is activated when in the presence of a RFID reader. Most RFID tags contain at least two parts: one is an integrated circuit for storing and processing information, modulating and demodulating a radio-frequency (RF) signal, and other specialized functions; the other is an antenna for receiving and transmitting the signal.

Common RFID tag Scanners and Readers

The RFID reader is a device that creates an electromagnetic signal, which is transmitted to the RFID tags through one or more antennas. Under normal operation, the reader is continuously transmitting the electromagnetic signal in search of one or more RFID tags. The RFID reader also performs a second function of monitoring for electromagnetic signals from the RFID tags via the same antenna. Depending on mobility, RFID readers are classified into two different types: fixed RFID and mobile RFID. If the reader reads tags in a stationary position, it is called fixed RFID. These fixed readers are set up specific interrogation zones and create a "bubble" of RF energy that can be tightly controlled if the physics is well engineered. This allows a very definitive reading area for when tags go in and out of the interrogation zone. On the other hand, if the reader is mobile when the reader reads tags, it is called mobile RFID. Mobile readers include hand helds, carts and vehicle mounted RFID readers from manufacturers such as Motorola, Intermec, Impinj, Sirit, etc.

Common type of RFID reader.

Antennas The function of the antenna is to both transmit and receive electromagnetic signals between the tags and the reader. The effective electromagnetic field that the antenna transmits is in RFID terms known as the interrogation zone. That is, the antenna creates a three dimensional space that is used to communicate with the RFID tags. In order to obtain successful communication, the tags must be within range of the antenna or in the interrogation zone..

RFID Antenna

Host The host is a computer system that communicates with the RFID reader. It is the host that actually makes sense of the input from the reader. The host will typically have a number of software applications to support the RFID system. One application is commonly known as

RFID middleware. This software is used by the user to set up and control the reader. Another needed software application involves data management. This includes functions that perform database and inventory tracking functions.

2.0 RFID TECHNOLOGY IN THE SUPPLY CHAIN MANAGEMENT

The supply chain is a complex multi-stage process which involves everything from the Procurement of raw materials used to develop products, and their delivery to customers via warehouses and distribution centers. Supply chains exist in both service manufacturing and retail organizations. Although, the complexity of the chain may vary greatly from industry to industry and firm to firm. Supply chain management (SCM) can be seen as the supervision of information and finances of these materials, as they move through the different processes, by coordinating and integrating the flows within and among the different companies involved. The efficiency of the supply chain has a direct impact on the profitability of a company. It is no surprise therefore to find that many large corporate companies have made it a key part of their strategy, and invested heavily in software systems (ERP, WMS) and IT infrastructure designed to control inventory, track products and manage associated finance. RFID will help to improve supply chain efficiency by bringing a new dimension to supply chain management by providing a more efficient way of being able to identify and track items at the various stages throughout the supply chain. It will allow product data to be captured automatically, and therefore be more quickly available for use by other processes such as ASN, stock management and real time billing.

2.1 COMPARISON OF BAR CODES AND RFID

Bar codes are predominately used today for identifying and tracking products throughout the Supply chain. Even though they can achieve efficiencies in the order of 90%, there are still a number of deficiencies in the technology, for which RFID is able to provide a better solution and further optimization.

Bar code deficiency Line of Sight Technology

RFID improved solution Able to Scan and read from different angles and through certain materials able to function environments in much harsher

Unable to withstand harsh conditions (dust, corrosive), must be clean and not deformed No potential advancement for further Technology

Technology advancement possible due to new chip and packaging techniques EPC code will be able to identify uniquely typically up-to items labor intensive and slow Potential to track items in real time when they move through the supply chain

Can only identify items generically and not as unique objects Poor tracking technology

2.2 ADVANTAGES OF RFID

RFID tags are made rugged and robust so that they can be used in any harsh environments and temperatures. The oldest application of RFID technology is animal husbandry. Earlier, plastic tags were used for tracking the animals. These plastic tags easily worn out after a few weeks. These have been soon replaced by the RFID tags. The RFID tags provide easy tracking of the animals. Injectable RFID tags are also available these days. The injectable RFID tags can be used for tracking the animals easily. These tags have the information about the age of animal, medical history and vaccinations. Any other system does not provide the facility of maintaining all the information in addition to keeping track of the animal. RFID technology has made many tasks in animal husbandry, very easy. The rapid advancement in the RFID technology has made it possible to manufacture RFID tags in many shapes and sizes. Also, the information written on the RFID tags cannot be duplicated easily. RFID tags are thus, superior than the barcode because easy duplication is not possible and can be more effectively for security purposes. Many of the retail shops and stores (especially jewelry stores) used the barcode system, earlier. The barcode system used for security purposes, has known to have failed many times. Even the CCTV cameras do not prove to be helpful, in many cases. These systems are not very effective in avoiding theft. Instead, these systems are used for identifying the thieves after a theft has already occurred. RFID, on the other hand, provides an anti-theft mechanism to the stores. The RFID tags are used with every item in the stores. The RFID reader is usually kept at some place near the exit door of the store, with an alarm system attached to it. The RFID systems are particularly deployed for expensive items to prevent the theft of these valuables. The storage capacity of the RFID tags is greater than that of the barcode. The barcode just gives us the manufacturer and the product type. Additional data related to the product can be stored in the RFID tags and they can form a better tracking system. In retail stores, the customer has to go empty-handed when a certain item or product is out of stock. This situation is tackled by the RFID tracking system. The store-keeper or store incharge is given an alert when the last item of a particular product in a store is purchased, so that adequate stock is always available. This helps to improve customer service and satisfaction and thus, can prove to be advantageous for increasing the business profits. Lastly, the RFID tags are unique. This makes the system highly reliable and error-free. The RFID system reduces the labor cost of the company by providing a good tracking system. The operations like tracking the pallets, cases and cartons can be efficiently done using the RFID technology. The RFID tags are attached to each carton or case and the related information is written on the tag. This technology can be effectively used in stock management.

2.3 THE MAIN BENEFITS OF RFID IN THE SUPPLY CHAIN.

Even though RFID applications are still at the early stages of deployment, many companiesrunning pilot systems have been able to demonstrate some of the significant benefits that RFID promises. There is no doubt that more will be discovered as the industry adopts the technology on a wider scale. The following are examples of what has been identified so far by the different studies and tests/pilots recently completed within the supply chain. Advanced Shipping Notices

RFID is able to automatically detect when either a pallet or shipment has left the Ware house or Distribution Center. This will allow to not only generate an electronic ASN and notify the

recipient, but also to bill clients in real time instead of waiting until the end of the week or month, and doing a batch operation. Shrinkage

One of the major problems in the supply chain is product loss or shrinkage, which can account for anything from 2 to 5 % of stock. The causes may vary from misplaced orders, employee and customer theft or inefficient stock management. RFID with its superior tracking and identification capability will be able to localize where losses are occurring. Returned Goods Full visibility and automation can be potentially achieved on returned goods thereby reducing fraud. Anti counterfeit

Illegal duplication and manufacture of high value products, is one of the industrie smost well known problems. By integrating a tag into items, for example the body ofan expensive ladies handbag, RFID has the potential to authenticate a product , and combat the sale of false goods on the black markets. Supply Chain efficiency

RFID will enable the traceability and reduction in the number of discrepancies between what a supplier invoiced, and what a customer actually received. Improved stock management

Managing stock is the key priority for many retailers. Studies have shown that on average, products are not on the store shelves 7% of the time due to inefficiencies in stock management, which means of course a potential purchase loss. Implementing RFID at the item level and on shelves will give an automatic way of knowing and managing stock levels. However in order to achieve this on a large scale, it is recognized that tags will have to come down in price to around 5 cents or less, and readers to around 100 USD. Reduction in labor costs

At DC s (Distribution Centers) labor accounts for nearly 70% of costs. It is estimated that RFID could reduce this by nearly 30% by removing the need for manual intervention and use of barcodes when loading cases or stocking pallets.

2.4 DISADVANTAGES OF RFID TECHNOLOGY Expense

RFID systems are typically more expensive than alternatives such as barcode systems. While passive tag reading is similar to (and generally less expensive than) barcode reading, active tags are costly due to their complexity. Active tags consist of an antenna, radio transceiver and microchip, increasing the overall cost of an RFID system.

Collision

Tag collision and reader collision are common problems with RFID. Tag collision occurs when numerous tags are present in a confined area. The RFID tag reader energizes multiple tags simultaneously, all of which reflect their signals back to the reader. This results in tag collision, and the RFID reader fails to differentiate between incoming data. RFID reader collision results when the coverage area managed by one RFID reader overlaps with the coverage area of another reader. This causes signal interference and multiple reads of the same tag. Security

RFID technology gives rise to numerous security concerns. Since the system is not limited to line-of-sight, external (and malicious) high-intensity directional antennas could be used to scan sensitive tags. Fraud is always a possibility when the technology is used for high-security operations, such as payment verification. Ghost tags

In rare cases, if multiple tags are read at the same time the reader will sometimes read a tag that does not exist. Therefore, some type of read verification, such as a CRC, should be implemented in either the tag, the reader or the data read from the tag. Proximity issues

Tags cannot be read well when placed on metal or liquid objects or when these objects are between the reader and the tag. Nearly any object that is between the reader and the tag reduces the distance the tag can be read from. Unread tags

When reading multiple tags at the same time, it is possible that some tags will not be read and there is no sure method of determining this when the objects are not in sight. This problem does not occur with barcodes, because when the barcode is scanned, it is instantly verified when read by a beep from the scanner and the data can then be entered manually if it does not scan. Vulnerable to damage

Water, static discharge or high power magnetic surges (such as from a close lightning strike) may damage the tags.

3.0 CONCLUSION
RFIDs have tremendous opportunities for increasing value to a firm by providing increased product visibility, reduce out-of-stock items, trim warehouse costs, eliminate stock errors, reduce theft and shrinkage and allow companies to regularly update their logistics and inventory databases. Furthermore, it enables firms with such capability to competitive globally.

But Unfortunately, RFID technology has a number of operational factors which can adversely impact its efficient operation. For instance, organizations must address issues regarding RFID command language, the presence of moisture, inclement weather, radiation, invisible RF interference (i.e., WLANs), attenuation, reflection and refraction of radio waves, the material to which a tag is affixed and to some extent building material content. Additionally, RFID operating standards do not exist for global operation, which would make tracing and tracking difficult for both import and export goods. Continued research needs to be carried before RFID can realize its full implementation at a reduced cost structure.

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