Sei sulla pagina 1di 5

IS J AA

International Journal of Systems , Algorithms & Applications

RADIO FREQUENCY IDENTIFICATION - AN ENABLER OF SUPPLY CHAIN OPERATIONS IN RETAIL SECTOR


P. LALITHA PRAVEENA Assistant Professor, Department Of Business Management, R.B.V.R.R. Womens College, Narayanguda, Hyderabad, A.P. e-mail: sripravi08@gmail.com

Abstract- The desire to cut supply chain costs has made RFID technology one of todays most discussed retail technologies. Given the current implementation pace, the objective of this paper is to go beyond the hype and explore basic issues related to RFID technology, including its promises as well as its pitfalls. Design/methodology/approach The paper provides a conceptual discussion of the evolution of RFID, addresses its capabilities and its application in various industries, discusses implementation challenges, identifies adoption phases, and reviews RFIDs success factors. It also examines some of the popular RFID products and services. Keywords: Supply chain management, Universal coding system, Tracking, Barcodes

track rail movements and provide the data for route planning of trains and cargo. General Motors (GM) first implemented RFID in its production process in 1984. Today, GM and most other car manufacturers depend on RFID for tracking cars and parts through production. THE VISION The vision is that tags and readers will become so inexpensive that nearly every product and subcomponent of products will be tagged throughout the entire supply chain. Imagine a can of soda leaving the factory on a pallet to a wholesaler or retailer as it comes off the production line.

INTRODUCTION What is Radio frequency identification (RFID) ? Radio frequency identification (RFID) or automatic identification data capture (AIDC) or smart tags are tags that contain identity information about a product (similar to a bar code). These tags enable businesses to identify and track assets wirelessly. Typically, RFID tags consist of a very small silicon chip encoded with numbers known as an electronic product code (EPC), which uniquely identifies the product and potentially even the individual item (two boxes of identical soap could have unique identification codes). This chip is attached to a small antenna, and the combination can be attached to a product, much like a small label. Radio frequency readers read the tag and identify the product. Bar codes serve an almost identical purpose; however, they require a direct line of light, rather than radio waves, and require a specific action to read the bar code. The primary advantages over existing bar code technology are that the data are collected continuously, at some distance from the actual product, with no direct line of sight and without labour. This allows for theoretical real-time visibility and tracking of assets and inventory throughout the supply chain. Tags come in various levels of smartness (data storage capabilities), and readers can locate tags from various distances. Low-frequency passive tags can be read from one to two feet away, while higher-frequency passive tags, which cost about $0.30, can be read from up to 20 feet. Active tags contain batteries, allowing them to transmit their data over hundreds of feet. These tags, however, are quite costly, ranging from a few dollars to several hundred dollars apiece in complex applications. Railways and car manufacturers experimented with bar codes in the 1960s and 1970s, in the identification of rail coaches throughout the network and in car production. Both found bar codes were inadequate owing to the obscuring of the labels by dirt and car production processes. The railways switched to the use of RFID in the 1970s, tagging virtually every rail coach in America. Readers were strategically positioned throughout the nation to

As the pallet leaves the factory, an RFID reader verifies that the lorry is correctly loaded, and software automatically generates an Advance Ship Notice (ASN), which is communicated to the customer (see above figure). The lorry is tracked en route with global positioning system (GPS) technology, providing live updates of location and delivery status to the customer. Upon arrival at the customers distribution centre (DC), the order is automatically verified, and a receipt is sent to the manufacturer. Software then routes individual cases on the pallets to storage shelves and to lorries heading to individual stores. Each stores shipment is verified and recorded as it enters the lorry, and again upon arrival at the store. The product is then routed to the stockroom and store shelves. Readers inside the store notify personnel when product is running low on the shelves, or if product is sitting on the wrong shelf (phantom inventory). The consumer, carrying a store smart card, enters the store, selects items for purchase and leaves. The consumers credit card is automatically debited, and a receipt is generated. The manufacturer and retailer share all this information, which goes into plans for production and future deliveries. After consumption of the soda, the recycling plant identifies the soda can, and routes it to the appropriate location (see Figure 2). While sounding futuristic, some of what was just described is already in place in companies today, without the use of RFID. Collaborative planning forecasting and replenishment (CPFR), enterprise resource planning (ERP), warehouse management systems (WMS) and transportation management systems (TMS) cur-

Volume 2, Issue ICTM 2011, February 2012, ISSN Online: 2277-2677 ICTM 2011|June 8-9,2011|Hyderabad|India

48

RADIO FREQUENCY IDENTIFICATION - AN ENABLER OF SUPPLY CHAIN OPERATIONS IN RETAIL SECTOR

IS J AA

International Journal of Systems , Algorithms & Applications

rently allow companies to optimize forecasts, production, warehouse operations and transportation. What RFID will deliver is more frequent and less costly data reads into these existing systems, significantly enhancing their usefulness and productivity. The goal of supply chain management is to have the right product at the right price in the right place at the right time.

this view that many cost savings will stem from the overall improvement to supply chain productivity and efficiency. Two other recent reports published in The Grocer (2004a, b) Magazine predict that although retailers may see the greatest financial benefit, manufacturers are likely to experience increased revenue too, suggesting that RFID could increase retailers sales by 3 per cent and manufacturers revenues by 1 per cent.

Figure 1 The RFID costs road map

POTENTIAL ADVANTAGES OF RFID TO SUPPLY CHAIN ORGANIZATIONS A. Increased information for decision making In order for any business to work efficiently it is vital that they have reliable information. Effective communication systems and feedback will enable supply chain businesses to increase efficiency by decreasing inventory and transport costs and help improve responsiveness by aiding the supply chain to better match supply and demand. RFID offers a potentially lower cost solution, capable of capturing accurate and detailed descriptive product data and real time tracking data. The enhanced network visibility provided through this track and trace capability enables supply chains to operate much more efficiently and speedily, and thus, offers the potential to reduce costs and improve product delivery. Kelly and Erickson (2005) emphasize the improvement this would bring to retailer -supplier interactions due to the enhanced ability to resolve disputes over shortages and overages in shipments. Additionally, Hugos (2006, pp. 117-19) identifies the benefits of capture, storage and subsequent sharing of data to supply chain collaboration and overall supply chain productivity. B. Cost Savings Research carried out by different retailers has shown that RFID could bring significant financial benefits. It is reported that Sainsburys carried out an RFID trial and found that while the initial investment was estimated to be between 18 million and 24 million, the total benefits achieved were an estimated 8.5 million a year, mainly through more efficient stock control and rotation. Stevenson (2004), McLeod (2004a) and The Economist (2006) also report that retailers in particular will benefit, from labour cost savings and a reduction in theft and out-of-stocks. However, from the literature reviewed, there appears less in the way of notable cost benefits reported for suppliers. Indeed, more literature focuses on the perceived cost/benefit imbalance considered to be experienced by suppliers following implementation (see later). This is possibly due to the fact that RFID is still in its trial stage and potential benefits are still largely anecdotal, a point raised by Angeles (2005) Although the study was based on the likely benefits to the retailer, the author does believe suppliers will benefit financially from RFID, notably through the potential savings and increased sales volume to be gained from the reduction in the out-of-stock rate of suppliers products. The results from a number of RFID trials, reviewed by Angeles, seem to support
Volume 2, Issue ICTM 2011, February 2012, ISSN Online: 2277-2677 ICTM 2011|June 8-9,2011|Hyderabad|India

C. Increased stock availability Availability can be seen as an important competitive tool in delivering customer satisfaction and retention. An IGD (2003) study reported that 46 per cent of shoppers faced out of stock situations often or sometimes with 37 per cent of them stating they would buy the product from another store as a result. These findings are reflected in the work conducted by Corsten and Gruen (2004) who studied over 71,000 consumers worldwide and found that in the event of non-availability, 26 per cent responded that they would substitute the product with a different brand and 31 per cent would buy the item in another store. In reference to these latter findings, Christopher (2005, p. 51) warns that persistent stock-outs can drive customers away from the brand and/or the store permanently. The real-time tracking capability offered by RFID provides an accurate inventory database, enabling greater efficiency in shelf replenishment and forecasting and resulting in less out of stock occurrences. This technology could, therefore, lead to greater levels of customer satisfaction and customer loyalty and provide retailers and manufacturers with a source of competitive advantage. D. Improvements in customer service and customer targeting There are many benefits to the process of returning goods. Tags hold information about who bought the product, when and where it was paid for. Researchers also stress the operational efficiencies to be gained from use in promotional material, for example embedding RFID tags in store-issued coupons would facilitate scanning at checkout. In addition to such operational benefits, they propose scenarios where retailers can use information held on chips to their advantage by tracking purchase behavior; leading to clearer targeting of customers. E. Time and inventory efficiencies Through implementing RFID in a supply chain, human intervention is dramatically reduced. An RFID reader will prevent someone having to individually scan every pallet or case as it will be able to read multiple objects in one. According to Gilbert (2003), RFID should allow retailers and suppliers to have real-time responsiveness. Tags provide critical information on customer demand in real time, with no time delay between the stock moving and its movement being captured by the system. There are reports on the significant time savings in inventory
49

RADIO FREQUENCY IDENTIFICATION - AN ENABLER OF SUPPLY CHAIN OPERATIONS IN RETAIL SECTOR

IS J AA

International Journal of Systems , Algorithms & Applications

and stock control and a declining incidence of human error that has been achieved with RFID. RFID-enabled systems will become highly automated, facilitating the use of warehouse and distribution centre space as goods will not need to be stored according to product type. The use of a tag and reader should improve the efficiency and accuracy of locating and picking goods. According to a Logistics Manager RFID tags on crates allows data to be captured and processed some 83 per cent faster than traditional barcode scanning . . . This, in turn, will help different areas of an individual business and of a supply chain to work together and become more synchronized. The use of RFID can also help maintain lower inventory levels due to the availability of a real time inventory count, and should mean that stock levels can be monitored more quickly and with more ease than current systems. It is believed that by using RFID technology a complete warehouse inventory could be accomplished in a matter of minutes or hours rather than days, weeks or months, and that RFID has the capability to revolutionize many business applications just as bar code technology has since the early 1980s. Costs in the supply chain will therefore be cut as processes speed up and the amount of labour needed is reduced. F. Improved traceability and reduction in shrinkage RFID tags are used throughout the supply chain, at item level, the traceability and authenticity of products would be completely guaranteed. RFID will enable all product information to be recalled when scanned, and this will help the traceability system used today become even more sophisticated and accurate. There is an improved traceability that RFID technology will be the solution to assure food from farm to fork. Similarly, RFID has the potential to offer substantial improvements to the speed and efficiency of the product recall process. Overall, such traceability systems will greatly facilitate compliance to legislation and rapid response to a food safety incident should it be required. This track and trace capability will also reduce product shrinkage as a result of employee/ customer theft. I Tag frequencies and Frequencies Tags application areas 125 KHz Car and asset management 13.56MHz Inventories, books, libraries 2.45GHz General 5.8GHz General UHF860-950MH For pallets and individual boxes UHF 915MHz Used in USA UHF 868MHz Used in Europe 900MHz Used in oil refinery POTENTIAL DISADVANTAGES OF RFID TO SUPPLY CHAIN ORGANIZATIONS In terms of improvements to efficiency, accuracy and security, RFID does offer huge potential to supply chain organizations. However, acceptance and implementation difficulties are recognized. The main disadvantages are summarized by Smith (2005) as: cost, lack of available tags, failure rate, radio-wave interference problems, disposal problems, lack of user awareness, security issues and privacy issues. Jones et al. (2004b) also refers to a number of these in identifying challenges of RFID implementation for businesses: Integration of RFID into existing databases and applications and within their business processes and relationships with suppliers and distributors.

Their ability to make effective use of the data captured through RFID. The provision of training for all involved personnel. These disadvantages have lead suppliers, in particular, to hold rather a negative view towards RFID at present. Some of the main areas of concern are detailed below. A. High costs One of the most pressing issues facing companies looking to invest in RFID technology is the costs involved in implementation and development. Product tags, the integration of RFtechnology into existing distribution, warehousing and management systems and the costs involved in maintenance; application upgrades, readers and software and employee training make RFID adoption a costly exercise. Reports from recent business application detail the high costs associated with the initial purchase of tags and readers, in addition to costs associated with project and change management. The high-tag costs have resulted in organizations such as Wal-Mart and Gillette currently focusing on pallets and cases at this stage, rather than item level tagging. These costs will have a significant impact and are a large investment for any company. In a study, the resulting disagreement that can evolve over the sharing of the necessary investments in the technology and the benefits received was highlighted, and does appear to still be an issue presently. Many suppliers are particularly frustrated as the majority of the cost savings seem likely to go the retailer, with suppliers being burdened with much of the costs of implementation. There are reports on negative feeling from suppliers, especially with reference to the associated costs and share of benefits, where Alistair Price from Dairy Crest considers We as a supplier will take 95 per cent of the cost and only get 5 per cent of the benefit. In the USA, Wal-Mart has made RFID compulsory for suppliers serving some depots. It has been estimated that suppliers have spent an average of $500,000 each to comply with the request to RFID-tag cases and pallets that are going to their Texas depot some suppliers may see this as very unfair. A majority of the retailers in the UK have not yet indicated who will pay for tags if they are fully implemented although the suppliers will need to fund the cost of the readers, writers and computer system in their own factories. Although the cost of the tags is one of the biggest concerns about the introduction of RFID, it is likely to fall. Like most new technologies the initial cost has been very high, but as more companies use the technology, the price will reduce (Faber, 2002). At this stage, it is hard to predict how low they will fall, and also even if they fall to a few pence, will this still be too much for suppliers to sustain? Researchers goes on to express that suppliers will be able to see some benefits, but it is unlikely if these benefits are big enough for them to want to invest. A survey conducted by Nestle e-centre showed that 47 per cent of supply chain managers thought the costs of RFID outweighed the potential benefits, compared to 37 per cent who believed the investment would pay off. This is supported by the 2004 IGD study on RFID which looked at fresh, frozen ambient and chilled foods. However, both Watson (2005) and IGD (2004) note that many respondents do believe that RFID will deliver better results; a positive outlook for the future providing the associated costs are affordable. B. Technical limitations RFID technology is not without its problems; researchers report that from an environmental perspective the radio waves can be absorbed by moisture or can be hidden or distorted by
50

Volume 2, Issue ICTM 2011, February 2012, ISSN Online: 2277-2677 ICTM 2011|June 8-9,2011|Hyderabad|India

RADIO FREQUENCY IDENTIFICATION - AN ENABLER OF SUPPLY CHAIN OPERATIONS IN RETAIL SECTOR

IS J AA

International Journal of Systems , Algorithms & Applications

metal and noise from electric motors and fluorescent lights. Smith (2005) adds that, like bar coding, tags cannot be placed on all products, for example, certain chips may not be able to function in an extremely cold environment and that successful implementation and adoption by retailers and their supply base will require the availability of inexpensive variations of environmental-specific designs. Angeles (2005) does review an RFID trail conducted at United Biscuits, identifying the possible technical difficulties that could occur in an environment characterized by moisture, metal and variable temperatures. However, while the trial reports improvements to the business it fails to identify whether any problems arose as a result of the difficult environment. Today, the safety of working locations, products, transportations and customers are important issues to managers. In the Pharmaceutical industry these issues are even more important due to public safety concerns. Refreshable goods often require strict control of storage/transportation environments such as high and low temperature. The expirationate must be taken into consideration as well. Tracking and tracing processes offer the documentation needed to ensure these safety requirements. Tracking and tracing have been found to be ineffective in numerous instances given that they are reactive instead of proactive. If we use EPC technology, products can be tracked and traced very easily. Any person who has access to information along the supply chain can find out the historical background on a particular drug, as well as its current location. EPC technology verifies information at every point along the supply chain helping to ensure product integrity EPC technology employs RFID tags, which are physically placed on bottles, boxes, cases and pallets at the beginning of the supply chain. RFID tags are subsequently read by RFID readers. In EPC verification, goods are scanned and status is checked. Status can come back as okay, expired or recalled. As products move through the supply chain, the RFID tags enable them to be tracked. Information is gathered about the current location of the shipment and other vital statistics. To develop an RFID-based supply chain system seven main points must be taken into consideration. These points are : The pilot is only the beginning of the RFID implementation. How RFID can improve the existing processes. Determine criteria for RFID integration partners. Develop success criteria for RFID pilot and implementation. Use exception handling as a process for learning. Change left unmanaged hinders potential ROI. Build an RFID road map based on key learning. CASE STUDY Kim et al. (2007) proposed a study on supply chain using RFID technology to monitor the states of supply chain system real time. A methodology is suggested to transform the state vectors obtained from RFID into bi-directional cause-effect knowledge for the management of dynamic supply chain. This research was aimed to mine bidirectional cause-effect knowledge from the state data. To do so, authors has discussed following steps: 1. A fuzzy cognitive map (FCM) model of supply chain is developed. 2. The weight matrix of the FCM model is discovered using the past data and genetic algorithm.
Volume 2, Issue ICTM 2011, February 2012, ISSN Online: 2277-2677 ICTM 2011|June 8-9,2011|Hyderabad|India

3. Through the detection of a sudden change in certain state, its cause is sought from the past state data throughout backward analysis. 4. Computer simulation was used to show the performance of the forward-backward analysis methodology. In this study, the state of the supply chain is divided into three cases of: 1. External states; 2. Policy states; and 3. Internal states. The supply chain considered here is a three stage supply chain comprised of a supplier, a manufacturer, and a retailerNotice that the edges show causal direction. Internal states can be observed through RFID information system. The Mfg inventory level is an internal state. The increase in the Mfg inventory level points to this fact that less products needs to be produced which causes the Mfg production rate to go down. From here the impacts on the Mfg work in process, Mfg inventory level and Mfg production rate can be seen. The forward analysis method showed an average of 86 percent accuracy with fuzzication and an average of 76 percent was obtained by the backward analysis method. The accuracy of the backward analysis is 83 percent without fuzzication.

Figure 2 shows the cognition map of the supply chain having three external states, three policy states and 12 internal states.

CONCLUSION Using RFID technology as a tool for timely and accurate information gathering about the demand and inventory in the supply chain, an in-depth knowledge of the market can be obtained. This allows management to use revenue management tools and techniques to optimize product mix, prices, inventory and workforce level, product promotion, and sales efforts to enhance the companies level of profitability and hence the productivity. RFID is an emerging technology with full potential for global deployment. This technology will provide opportunities for improving supply chain efficiency and hence the safety of the public in return. With the presence of major database software developers in the development stage of the RFID products, a series of RFID industry solution architectures are under development. EPC technology employs RFID tags, which are physically placed on bottles, boxes and cases at the beginning of the supply chain. The RFID tags are read by specially designed RFID readers. Large US companies and many large global companies will be the initial beneficiaries of positive enhancements provided by RFID technol51

RADIO FREQUENCY IDENTIFICATION - AN ENABLER OF SUPPLY CHAIN OPERATIONS IN RETAIL SECTOR

IS J AA

International Journal of Systems , Algorithms & Applications

ogy compared to barcodes. This means that many companies will take advantage of this technology to increase profitability and enhance productivity. REFERENCES
[1] Anonymous (2005a), Seven considerations for your RFID projects, available at: www.RFIDinAction.com [2] Anonymous (2005b), RFID in the pharmaceutical supply chain, available at: www.rfidsolutiononline.com [3] Anonymous (2005c), Technology by OMRON to produce RFID tags, OMRON Corporation, Wakahiro, Kawai.

[4] Anonymous (2005d), About symbol technology, available at: www.symbol.com [5] Kim, M.-C., Kim, C.O., Hong, S.R. and Kwon, I.-H. (2007), Forward-backward analysis of RFID-enabled supply chain using fuzzy cognitive map and genetic algorithm, Expert Systems with Application. [6] Information technology for Retail, Giridhar Joshi, Oxford University Press [7] Retail Marketing Management, David Gilbert, Pearson Education [8] Retail management Functional principles and practices, Gibson. G. Vedamani, jaico Publishing House

Volume 2, Issue ICTM 2011, February 2012, ISSN Online: 2277-2677 ICTM 2011|June 8-9,2011|Hyderabad|India

52

Potrebbero piacerti anche