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CPMR-IJT Vol. 2, No.1, June 2012

Technology Evolution in Supply Chain Management: BARCODE to RFID

Sachin Modgil* Vishal S. Patyal** Tanvi Agrawal***

ABSTRACT
Technology adoption in supply chain management may create major breakthrough achievements. This paper aims at exploring different aspects of technology adoption in supply chain management (SCM) through six thinking strategies of decision makers at different stages in different sectors viz. FMCG, electrical, heavy engineering, electronics and pharmaceutical & chemicals) to recognize operations at different level through six thinking strategies. In supply chain structure, supply chain length can be different for different business, although some of the practices are similar. This paper explored the technology adoption in different phases among different industries with Radio Frequency Identification (RFID) and BARCODE. This paper can be useful for decision makers of a firm to take crucial decisions for particular technology adoption in particular phase of value chain by considering different pros and cons. The technical application may differ from sector to sector, hence this paper provide useful guidance for implementation of technology in different phases.

Keywords- RFID, BARCODE, Six thinking strategies, technical applications, and business performance

I. INTRODUCTION
In todays scenario competition is increasing day by day as new entrants are creating pressure on others. The business environment is much complex and competitive today [1]. As competition is growing, technology adoption has become essential to achieve faster growth rate leading to reduced manual efforts to speed up the operations. Demand from consumers is increasing day by day with respect to product features and cost [2]. Consumers require higher service levels and customized products leading to their satisfaction [3]. Innovation through technology adoption in the firm for different operations is a leading challenge [4]. Previously focus of organization was on to reduce cost and to improve quality, leveraging competitive advantage. To achieve competitive advantage, it is necessary to have support of technologies in operations. As multiple factors may affect a firm decision to adopt and implement specific technology [5] decision makers must know about, that which technology has to be adopted in particular phase of the multiple operations taking place in a firm.

*National Institute of Industrial Engineering (NITIE), Mumbai, Maharashtra, India **National Institute of Industrial Engineering (NITIE), Mumbai, Maharashtra, India ***National Institute of Industrial Engineering (NITIE), Mumbai, Maharashtra, India

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The decision takers like top management, middle management and other employees play an important role by taking day to day decisions. The whole supply chain include the planning and management of all the activities starting from sourcing and procurement, conversion process (core production process), logistics and transportation as well as coordination and collaboration with channel partner [6]. Here six thinking hat perspectives have been considered as decision takers can think differently at different stages. The global supply chain has upgraded the technology from BARCODE to RFID till now. An integrated system of ERP and technology can be utilized throughout the supply chain [7]. The adoption of these technologies can help to reduce the process bottlenecks. Adoption of technologies in multiple organizations can be beneficial by considering some of the factors such as for some of the products RFID may not be applicable due to its requirement for initial higher cost while BARCODE may be useful in some cases, where time is not that much crucial but cost is a major concern. The emphasis on RFID adoption has seen in previous decade at large. In 2003 Wal-Mart has emphasized the RFID adoption for its suppliers. RFID can be applied in monitoring of inventory at retail-store and can be helpful for replenishment of products on real time basis. A typical supply chain may include, the receipt of raw material from their suppliers, then after sampling and testing, if acceptable, the material will move towards core production processes. This supply structure is applicable in FMCG (fast moving consumer goods) and pharmaceuticals (drugs and injectable), or assembly in case of electrical & electronics (computers, mobile, motors and pumps) and heavy engineering type of industries, like ship manufacturing, airplane manufacturing, and high tech building construction etc. Further this paper includes the literature review, technology adoption and advancement from BARCODE to RFID, six thinking hats perspective, proposed conceptual framework followed by discussion, limitations and directions for future research.
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II. LITERATURE REVIEW

In recent years there is exponential increase in research papers related to RFID technologies which has engrossed much attention from academicians and practitioners [8]. RFID is Radio frequency identification which consists of three things tag, antenna and reader, where tag formed by a chip connected with an antenna; a reader that emits radio signals and receives in return answers from tags, and lastly a middleware that ties RFID hardware and enterprise applications [9]. RFID is used to construct an internet of things a linkage that would permit enterprises to track their products throughout the global supply chain and run countless applications concurrently [10]. RFID application applied across various sectors like retail, healthcare, textile, automotive and luxury goods industries [11]. Supply chain management is documented as a vital area for information technology innovation and investment [12]. Supply chain Management defined as a set of approaches and performs effectively to integrate suppliers, manufacturers, distributors and customers for improving the long-term performance of the individual firms. Supply chain as a whole works in a cohesive and high-performing business model [13].Superior information interchange between supply chain associates, can be the crucial advantage of an integrated supply chain [14][15],which provides more real time information and permits for more accurate inventory responses to fluctuations in demand. Technology adoption in supply chain gives additional advantages of inventory accuracy and also speeds up the overall processes. Traditionally KAN-BAN process was used to maintain the information. After this BAR-CODE technology brought the advancement to maintain the information. Now a days new technology viz. RFID has made a revolution by reducing the unnecessary time consuming activities and also achieving better accuracy. One of the researchers documented the benefits of using real-time information attained with RFID technology to track the movement of Lorries during the deployment and delivery in the automotive assembly plant [16]. Moreover RFID-based systems obsessed by intelligent algorithms can enhance the timeliness of supply chain
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information, raising the value of the decision making process. Further it is recommended that the benefits of supply chain integration includes, minimizing the bullwhip effect, maximizing the efficiency of conducting activities, minimizing inventories, minimizing cycle times and achieving an acceptable level of quality along the supply chain [15]. One of the researchers administered that after the deployment of RFID technologies, Procter & Gamble and Wal-Mart concurrently reduced inventory levels by 70%, enhanced service levels from 96% to 99%. They also reduced administration costs by re-engineering their supply chains [17].

having some issues which cant be ignored such as cost of implementation, security of information [18]. The difference between BARCODE and RFID technologies is shown in table-1 [19].

IV. CONCEPTUAL FRAMEWORK

The whole supply chain includes the activities from procurement to after sales service to customers. For convenience we have divided the supply chain in to four phases shown in table-2. In next section the conceptual framework based upon table-2 has been discussed.

4.1 FMCG (Fast Moving Consumer Goods) III. TECHNOLOGY EVOLUTIONBARCODE TO RFID
Barcode is being used since 1970s for the identification of items in service sectors. Barcode technology is a wired line of sight technology .A scanner (Optical LASER) is required to read the BARCODE. Barcode is a code made from narrow parallel lines and spaces and can store 20 to 30 characters per inch of coded information called as UPC (Universal Product Code) [18]. One of the problems associated with BARCODE is that, these are prone to environmental conditions, such as temperature, dirt, or hazardous contamination making it difficult for reader to scan the items while RFID can be used in rugged environment. Another alternative technology used for the same is RFID (Radio Frequency Identification) which uses the radio waves for the purpose of communication .This is a contactless technology which requires the tags to store product related information and a reader to collect the item or product information and a middleware to collect information in the form of database which can be used later for useful purpose by company database. RFID technology is originated in early1940s. It came into light, when the US government used transponders to distinguish friendly aircraft from enemy aircraft. Major advantage of RFID over BARCODE is the automation of the identification process and nonrequirement of line of sight. However RFID is also
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Phase I At unloading stage (raw material supply received) supervisor or store assistant measures quantity, quality and appearance of the raw material by sampling and testing methods, if the material complies with specified parameters then it is proceeded and will be ready for production .Here the role of RFID comes into picture when to monitor the quality and quantity of particular consignment. Phase-II In assembly handling process RFID readers could be installed at different places to monitor number of operations in pipeline and semi-finished products i.e. work in process (WIP). Phase-III Once the production stage completed product moves to warehousing area where technologies like RFID/ BARCODE could help to assess the out of stock situation, Inventory visibility and shrinkage errors reduction to speed up the dispatch process.

Phase IV
In this phase after delivery of products to distributor/ retailer some of the products may be unacceptable due to damage or lack in quality and can be monitored through technology like RFID.
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4.2 Electrical & Electronics

Phase I OEM places the order and receives supply of components other than standard one .At the reception time of components OEM could use RFID to measure the specifications and quantity.

retailer to locate which product is going to expire so to overcome this problem RFID can help in a better way to recognize the products which are going to expire so that retailer can sell or dump as soon as possible.

4.4 Heavy Engineering

Phase I Unlike electrical and electronics industry, in this domain individual components are ordered and received. So this recognition and unloading process may require the technology like RFID as it gives the complete information of individual components (Quality, Quantity). Phase II Individual components in first phase make the base assembly which can be utilize the BARCODE technology. Phase III The next phase after base assembly goes to main assembly, which includes the installation of capital items/ components which may require monitoring through RFID technology. Phase IV Once OEMs base assembly and main assembly completes the product it is delivered to customer.From after sales service point of view, RFID can locate which component, assembly or subassembly is due for maintenance or failure occurred.

Phase II
RFID can help to monitor the order processing of a product for particular customer (e.g. Computer Assembly Status). Phase III After finished product get ready for shipment either BARCODE or RFID can help in shipment status. Phase IV After delivery from the maintenance point of view RFID can help to locate the failure position of a component.

4.3 Pharmaceuticals/Chemicals
Phase I In pharmaceuticals single product is produced by the combination of several organic/Inorganic compounds. The raw material can be managed by KAN-BAN process. Hence there is little scope for technology adoption. Phase-II In Production process, pharmaceuticals need certain factors to be taken care of viz. security, accuracy and impurity free. Hence there is a great scope of RFID implementation to monitor the above mentioned factors and WIP. Phase-III To monitor the inventory flow from OEM to dealers/ retailer or hospitals, RFID can be used .By adopting RFID the OEM will be able to forecast the future demand. Phase-IV Pharmaceuticals products like drugs & injectable are prone to expiry date. Sometime it is very difficult for
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V. MANAGERIAL IMPLICATIONS
This paper made an attempt to provide rational framework to take decisions for executives, throughout supply chain by adopting technologies like RFID and BARCOD. The supply chain phases may differ from industry to industry, but the thinking process can be almost same corresponding to activities included in four phases.

VI. DISCUSSION AND LIMITATIONS

This paper made an attempt to give an overview of different perspective of six hats on technologies like
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RFID and BARCODE adoption in different manufacturing sectors of supply chain. In this paper authors have explained the case study evidence of FMCG, Electricals & Electronics, Pharmaceuticals & Chemicals and Heavy Engineering. Based on this case study we can predict that RFID can be adopted in the processes where full automation is the requirement by replacing the huge manpower to achieve the accuracy and BARCODE can be adopted where processes and products do not include huge capital but flow should be maintained to reduce overall cost. This study is a framework for the adoption of RFID and BARCODE technology only. Integration of RFID and BARCODE with SAS, SAP and ORACLE can be included or studied for better results. RFID implementation and adoption is a costly affair which may not be possible for every industry. In this study we have taken only four industries, one can include other industries like automobiles, textiles, cosmetics and footwear etc. Further this framework can be used for validation which will bring more generality.

[5] Kwon, T.H., Zmud, R.W., 1987. Unifying the fragmented models of information systems implementation. John Wiley & Sons, p. 227251 [6] Council of Supply Chain Management Professionals (CSCMP) (2007).Industrial Management and Data Systems, 107(1), p. 104 [7] Gunasekaran, A., and Ngai, E.W.T., 2004. Info. systems in supply chain integration and management. European Journal of Operational Research, 159(2), p. 269-295. [8] Balocco, R. et al., 2011. RFID adoption in the FMCG supply chain: an interpretative framework. Supply Chain Management an International Journal, 16(5), p.299-315. [9] McFarlane, D., Sarma, S., Chirn, J., Wong, C., Ashton, K., 2003. Auto ID systems and intelligent manufacturing control. Engineering Applications of Artificial Intelligence, 16(4), p.365-376. [10] Violino, B.B., 2000. Leveraging the Internet of things. Maria Badia I Cutchet, eds. Session document, November/D (2009/2224(INI)), p.1-8. [11] Li, S., Visich, J.K., Khumawala, B.M., Zhang, C., 2006. Radio frequency identification technology: applications, technical challenges and strategies. Sensor Review, 26(3), p.193202. [12] Bowersox, D. & Daugherty, P., 1995. Logistics paradigms: The impact of information technology. Journal of Business Logistics, 16(1), p.65-80. [13] Chopra and Meindl (2001). [14] Lee, H.L., Padmanabhan, V. & Whang, S., 1997. The bullwhip effect in supply chains. Sloan Management Review, 38(3), p.93-102. [15] Levary, R.R., 2000. Better supply chains through information technology. Industrial Management, 42 (3), p.2430.
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VII. REFERENCES
[1] Porter, M.E., Stern, S., 2001. Innovation: location matters. MIT Sloan Management Review, 42 (4), p. 2836. [2] Ellinger, A.E., Daugherty, P.J., Gustin, C.M., 1997.The relationship between integrated logistics and customer service. Transportation Research Part E, Logistics & Transportation Review, 33 (3), p. 129138. [3] Lovelace, K ., Shapiro, D. L., & Weingart, L. R., 2 001. Maximizing cross-functional new product teams innovativeness and constraints adherence: A conflict communications perspective. Academy of Management Journal, 44, p.779794. [4] Tornatzky, L.G., M, Fleischer, 1990. The processes of technological innovation. Lexington, New York.
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[16] Kim, J., Tang, K., Kumara, S., Yee, S., Tew, J., 2008. Value analysis of location-enabled radio-frequency identification information on delivery chain performance. International Journal of Production Economics, 112(1), p.403-415. [17] Thonemann, U.W., 2002. Improving supplychain performance by sharing advance demand information. European Journal of Operational Research, 142(1), p.81-107. [18] Mohsen Attaran, 2007. RFID an enabler of supply chain operations International journal of Supply Chain Management, p.250. [19] Klaus Finkenzeller, 2010. RFID handbook Fundamentals and Applications in contactless Smart cards, Radio Frequency Identification and Near-Field [20] Communication Wiley Third Edition: pp1-462

Table 2 Conceptual Framework R-RFID and B.C -Barcode

Conceptual Framework FMCG Hats/ Phase-I Phase-II Phase-III Phase-IV Phases (Unloading) (Conversion) (Warehousing) (Delivery) Red Blue White Green Black Yellow (R) (B.C/R) (R/B.C) (R)

ELECTRICAL & ELECTRONICS

Hats/ Phase-I Phases (Unloading) Blue White Green Black Yellow (R) (R) (B.C) (R) (R) (R) Phase-II (Assembly) (R) Phase-III Phase-IV (Warehousing) (Delivery) (B.C)

APPENDIX
Table 1 Difference between BARCODE and RFID (RFID Handbook by Klaus Finkenzeller, 2010)
System Parameters Line Of Sight Typical data quantity Data Density Machine Readability Readability by people Influence of Dirt/Damp Influence of (optical ) covering Influence of direction and position Degradation/wear Purchase cost/reading electronics Operating costs Unauthorized (copying/ modification) Reading speed(including handling of data carrier) Maximum distance between data carrier and reader BARCODE Required 1-100 Low Good Limited Very High Total Failure Low Limited Very Low Low Slight Low~4s 0-50cm RFID Not Required 16-64k Very High Good Impossible No Influence No Influence No Influence No Influence Medium None Impossible Very Fast~0.5s 0-5m, microwave

PHARMACEUTICALS & CHEMICALS

Hats/ Phase-I Phase-II Phase-III Phase-IV Phases (Unloading) (Production) (Warehousing) (Delivery) Blue White Green Black Yellow NA NA NA NA NA (R) (B.C/RFID) (R) (RFID)

HEAVY ENGINEERING
Hats/ Phase-I Phase-II Phase-III Phase-IV Phases (Unloading) (Base Assembly) (Main Assembly) (Delivery) Blue White Green Black Yellow (B.C) (R) (R) (R) (R) (R)

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