Effectiveness and Efficiency of RFID technology in Supply Chain Management: Strategic valúes and Challenges

Asghar Sabbaghi, Ganesh Vaidyanathan
2008 Journal of Theoretical and Applied Electronic Commerce Research  
In this study, we examine the fundamental components of RFID technology in a comprehensive supply chain strategy that directly support the effectiveness and efficiency of supply chain management. We examine the appropriate business processes affected by the RFID technology, the required planning and examination for successful implementation, and many potential impacts on effectiveness and efficiency of supply chain management. We emphasize on business values and strategic advantages of RFID
more » ... nology as well as the challenges and recommendations in adoption of the technology particularly when a company extends its supply chain to upstream suppliers and downstream customers, as their external integration needs to gain in capacity planning and in efficiency. Using four major supply chain processes, we highlight economic opportunities and challenges when planning and implementing RFID technology within an existing supply chain framework. We will focus on the capabilities of RFID in providing security, privacy, and integrity of supply chain processes while facilitating sharing information with upstream suppliers and downstream customers, developing alliances, establishing strategic alliances, and gaining competitive advantages. in order to avoid overwhelming enterprise applications. Applications vary in how they interact with RFID. Some treat RFID reads like keyed data or bar-code scans, and others work specifically with RFID tags. The application of RFID ranges from manufacturing and distribution of physical goods such as automobiles and its various components to minting bank notes, oil exploration, shipping and port operations and pharmaceutical package processes, among others [2] . RFID is a form of automatic identification and data capture (AIDC) technology that uses electric or magnetic fields at radio frequencies for identification, authentication, location, or automatic data acquisition and transmit, and support a wide range of applications-everything from asset management and tracking to access control and automated payment. RFID systems have the capability of sharing information across organizational boundaries, such as supply chain applications. Reno GmbH, one of Europe's largest shoe companies, operating more than 700 stores in 15 countries, plans to embed wireless RFID chips in shoes sold at stores across the continent. Reno has been using RFID technology to track product shipments from its factories to its stores for several years but has not yet used the technology to track individual products inside each store. These wafer-thin RFID chips are designed especially for shoes from its Asian production facilities. By having the RFID tags integrated into its shoes, Reno aims to curb theft for boxed products, those on display, and the shoes customers try on inside the stores. Asghar Sabbaghi Ganesh Vaidyanathan Effectiveness and Efficiency of RFID technology in Supply Chain Management: Strategic values and Challenges complaining about the cost of implementing the technology. However, it is expected that the project will ultimately help to build stronger supply chains that cut costs and improve efficiencies. Effectiveness and Efficiency of RFID technology in Supply Chain Management: Strategic values and Challenges cargoes are equipped with tags showing the contents, so that customs clearance can be done almost automatically. RFID can also provide supply chain security when RFID tags are used to electronically seal containers and monitor movements of the containers, so that any tampering can be tracked. Finally another important benefit of RFID is to facilitate sharing information with customers and suppliers, developing alliances, innovating with suppliers, and establishing strategic alliances. In other words, RFID can facilitate to develop an integrated supply and demand chain or an integrated value chain in which one uses the technology to drive revenues and innovation and create value-not just to reduce cost, and to gain strategic advantage. Effectiveness and Efficiency of RFID technology in Supply Chain Management: Strategic values and Challenges
doi:10.4067/s0718-18762008000100007 fatcat:jrzighlqs5e5tauk2qrcki2u4u