Exploring the Potential Benefits of RFID: A Literature-

Based Study
ABSTRAT
RFID (Radio Frequency Identification) has been touted as a major breakthrough in the supply
chain operations. At this stage there are still a limited number of academic studies assessing the
potential of RFID for organi!ations. "ased on a literature analysis this paper summari!es the
business dri#ers $hich are triggering the RFID adoption. Although RFID has many benefits in the
shape of reduced labor costs impro#ed in#entory management and more supply chain #isibility
yet at the same time RFID presents itself as a costly successor to bar codes. %he paper
concludes that ho$ companies respond o#er the ne&t t$o to three years $ill determine e#entual
success or failure of RFID.
!ey"ords
RFID RFID 'et$ork ()* ()*I+ RFID "enefits
I#TR$D%TI$#
+upply *hain ,anagement (+*,) is a set of approaches to efficiently integrate suppliers
manufactures $arehouses and stores so that merchandise is produced and distributed at the
right quantities to the right locations and at the right time in order to minimi!e system $ide costs
$hile satisfying ser#ice le#el requirements -./. ,any companies are becoming a$are of the
importance of +*, for their company0s future success and sur#i#al -1/.
Radio2Frequency Identification (RFID) has opened the door to a ne$ era in +*,. RFID is a
data collection technology that allo$s remote interrogation of objects using radio $a#es to read
data contained in RFID tags $hich are at some distance from an RFID reader -3/. RFID is hailed
as the ne&t generation of Auto2ID as it surpasses bar code technology. 4ith RFID tagged items
could be simultaneously identified in an automated manner #ery quickly and $ithout the need for
line2of2sight. %his technological breakthrough pa#es $ay for impro#ed in#entory management
reduced labor costs and more supply chain #isibility.
"ased on the potential of RFID major retailers like 4al2,art %esco and the Food and Drug
Administration (FDA) ha#e quickly mandated their trading partners to use RFID to track assets
products and materials. 5#er the last couple of years there has been an increasing interest in
RFID technology as many companies ha#e jumped on to the band$agon and are e&ploring the
possible benefits of deploying this cutting edge technology in their supply chain by running pilot
tests. In spite of all that fren!y there is a lot of skepticism playing in the minds of business
community as to ho$ the future of RFID $ill unfold. %here is reluctance to in#est large amounts of
capital in a ne$ technology that has yet to pro#e itself. *ompounding this reluctance is the fact
that many businesses ha#e hea#ily in#ested in barcode technology.
+ince there is limited kno$ledge about the future potential of RFID in supply chain
management particularly $ithin the academic literature the paper aims to critically e&amine the
business dri#ers propelling RFID adoption and the long2term benefits promised $ith
implementation of the technology. For the purpose of this study #arious literature $as re#ie$ed
and analy!ed. 6i#en that RFID is an emerging technology reliance on literature $as mainly
based on a $ide range of online industry sources such as RFID #endor $eb sites standard
organi!ations and press releases. %he online sources $ere complemented by $hite papers from
Auto2ID *enter the pioneer of RFID technology. "ased on the analysis of the e&isting literature
a detailed description of $hat RFID technology entails and a number of potential benefits of RFID
$hich dri#e organi!ations to adopt are identified and discussed systematically. %hese potential
benefits result in significant cost sa#ings and increased re#enue for organi!ations $hich $ill
positi#ely affect the profitability in a long run. +uch understanding is #aluable for both academic
and practitioners $ho are in#ol#ed and ha#e interest in the adoption and use of RFID technology.
In the ne&t section an o#er#ie$ of e&isting RFID applications is presented follo$ed by a
description of the RFID net$ork. %hen #arious benefits of the RFID technology $hich are
supported by some real cases $hene#er a#ailable from the literature are discussed. Finally
conclusions are dra$n and some future studies are outlined.
$&ER&IE' $F RFID APPLIATI$#S
RFID is a mature technology and has been around for quite some time. %he earliest use of
RFID technology dates back to 4orld 4ar II for identifying friend or foe onboard military aircrafts
-7/. 5#er the years there ha#e been many notable applications of the RFID technology. For
e&ample high$ay authorities in many metropolitan areas let tra#elers pay tolls using RFID tags
linked to debit accounts. In addition RFID tags are also being used as credit2card2like payment
tokens. A reader sends the serial number associated $ith a tag o#er a net$ork and a remote
computer debits #alue from the consumer0s account. ,oreo#er RFID technology is also being
used as a means for remote keyless entry for automobiles. In these systems the car key
incorporates an RFID tag that the steering column authenticates thereby enabling #ehicle
operation. Another noticeable e&ample of RFID usage is animal tracking. 5rgani!ations and
indi#iduals are no$ equipping pets li#estock and endangered species $ith RFID tags to enable
tracking reco#ery and management -7/.
%he RFID technology has also been embraced by the business community to impro#e
operational efficiency and in#entory management -3/. %ren+tar tags beer kegs as they mo#e
through the supply chain to identify black market sales and eliminate misdirected shipments.
8ike$ise 9arley Da#idson tags bins carrying parts of custom motorcycles during assembly to
automatically display manufacturing instructions for employees at each stage of the assembly
process. Furthermore 8as :egas airport uses RFID technology in automatically rerouting
baggage to ensure that each piece of luggage is sent back to the right airline. International )aper
tags rolls of large paper to reduce lost and misdirected rolls. %his ability of RFID to track and trace
goods has pro#ided the impetus for it to be e&tended in the supply chain management across
different trading partners.
,any retailers ha#e started implementing RFID $ithin their supply chain. 4al2,art for
e&ample announced in 1;;3 that its top .;; suppliers must put RFID tags carrying ()* on
pallets by <anuary 1;;=. All 4al2,art suppliers $ould fall under this directi#e by the end of 1;;>
-=/. Reinforcing this supply chain re#olution $ere other major retailers including %arget
Albertsons "est "uy and 9ome Dept of the ?.+.@ ,arks A +pencer %esco and 4ool$orths of the
?.B@ the ,etro 6roup of 6ermany@ and *arrefour of France. In addition ?.+. Food and Drug
Administration is pushing the pharmaceutical industry to tag medicines by 1;;C ->/.
RFID should not be #ie$ed as a replacement to bar code or as a data collection method but
more as an enabler to automation. %he dri#ing force behind this change is the patronage of
strong industry leaders (4al2,art ,arks A +pencer and Department of Defense) major
technology partners and #endors and a business2led industry standard structure ()*global.
%his alliance has really spurred the momentum of RFID uptake. %he manifestation can be seen in
recent A,R Research sur#ey $hich re#ealed that >DE of respondents sur#eyed are planning to
e#aluate pilot or implement RFID in 1;;= $ith a#erage budget more than F=7GB and increasing
to FCC.B by 1;;C -1;/. %he sur#ey results are summari!ed in Figure ..
Figure 1 - AMR RFID Adoption Survey Results
9o$e#er at the stage it is still challenging for the RFID technology to be implemented
beyond company0s boundary due to the non2e&istence of $idely adopted data standard to track
and trace products as they pass bet$een partners in the supply chain. As a result RFID
technology $as confined $ithin company0s boundaries and not $idely used across trading
partners. %o e&acerbate the situation further RFID solutions at different companies $ere mutually
incompatible operating at different frequencies and using different protocols $hich acted as a
stumbling block to$ards $idespread RFID deployment -7/. As a remedy to this situation the
(lectronic )roduct *ode (()*) net$ork has been established.
T(E ELETR$#I PR$D%T $DE )EP* #ET'$R!
%o allo$ the RFID technology to be used more $idely $ithin supply chains a single
comprehensi#e standard $hich tracks and traces products as they pass bet$een partners in the
supply chain $as required. %his $as accomplished $ith the creation the ()* net$ork to connect
a product tagged $ith RFID to a net$ork. %he ()* net$ork consists of si& fundamental
technology components $hich are described belo$.
Ele+troni+ Produ+t ode )EP*
%he aim of ()* is to pro#ide a unique identifier for each object. It permits mass seriali!ation
as unique serial numbers can be assigned to identify discrete manufactured objects and object
aggregates. An e&ample of the structure of D>2bit ()* is sho$n in Fig 1. It also ser#es as a
lookup key in databases to access information about the tagged object. ()*global H a subsidiary
of the ?niform *ode *ouncil and (A' international H is responsible for the si!e and content of
()* tags $hich typically use a D>2bit numbering scheme to identify objects.
Figure 2 - Sample 96-Bit E!
Tags and Readers
RFID tags come in t$o types H Acti#e and )assi#e. Acti#e tags contain their o$n battery and
are al$ays on. 5n the other hand )assi#e tags deri#e energy from the radio frequencies
transmitted by readers. %hey cost less compared to acti#e tags because they do not require
batteries. %he reader emits radio $a#es of a particular frequency. 4hen passi#e tags enter the
range of a reader their antennas absorb energy from the radio field po$ering the microchip
$hich stores the unique ()* identity code and returning this information back to the reader #ia a
modulation of the radio $a#es. Figure 3 depicts the different parts of RFID tag $hich include a
chip an antenna and a packaging.
Figure " - Stru#ture o$ RFID tag
5ne of the primary ad#antages of RFID is that it does not require a direct line of sight
bet$een the reader and the tag. %his is in contrast to barcodes that require unobstructed
alignment $ith the reader. %agged items can also be read simultaneously. ,oreo#er RFID tags
offer the benefit of programmability as RFID tags are readI$rite capable rather than read only.
%his means that information can be $ritten to the tag perhaps to sho$ that the item being tagged
has gone through a particular process or that its condition has changed someho$ -C/.
Furthermore RFID tags are not only #irtually impossible to copy making them suitable for
security applications but also are e&tremely durable in harsh conditions. +ince RFID tags do not
need to be #isible they can be encased $ithin rugged materials such as harsh fluids and
chemicals -G/.
Filtering, olle+tion and Reporting )-Sa.ant/*
A $ide2scale deployment of RFID tags and readers $ould result in massi#e ra$ data and
could potentially lead to o#erloading of band$idth and database storage capacity. %he role of
filtering collection and reporting soft$are applications $hich is commonly kno$n as Jsa#antK is
to isolate the physical reader infrastructure from the higher2le#el applications and information
systems so that only significant Le#ents0 and summary data packets are propagated upstream
rather than e#ery indi#idual tag read.
+a#ants use a distributed architecture meaning the soft$are runs on different computers
distributed through an organi!ation rather than from one central computer. +a#ants are
organi!ed in a hierarchy and act as the ner#ous system of the ne$ ()* net$ork managing the
flo$ of information. At the edge of the net$ork +a#ants gather data from readers. %hey pass on
only rele#ant information to e&isting business applications such as $hich products are about to
e&pire. A +a#ant running at a distribution center might determine $hen product needs to be
reordered from manufacturers and so on.
()*global is phasing out the name M+a#antsM and introducing the name Application 8e#el
(#ents (A8() as the ne$ name for this filtering middle$are. +ome of the tasks handled by this
filtering layer are listed belo$ -D/N
Data smoothingN +oft$are at the edge of the net$ork $ill smooth data. 'ot e#ery tag is read
e#ery time and sometimes a tag is read incorrectly. "y using algorithms middle$are is able
to correct these errors.
Reader coordinationN If the signals from t$o readers o#erlap they may read the same tag
producing duplicate ()*s. +oft$are must be used to analy!e reads and delete duplicate
codes.
Data forwardingN At each le#el middle$are has to be set up to filter information and pass on
only necessary information to an enterprise application. For instance middle$are in a cold
storage facility might for$ard only changes in the temperature of stored items that e&ceed
certain thresholds.
Data storageN (&isting databases can not handle more than a fe$ hundred transactions a
second so another job of the middle$are is to maintain a real2time in2memory e#ent
database (RI(D). In essence the system $ill take the ()* data that is generated in real time
and store it intelligently so that other enterprise applications ha#e access to the information
but databases are not o#erloaded.
Task managementN (ssentially middle$are is customi!ed to manage data and e&ecute
commands. For instance middle$are running in a $arehouse might be programmed to alert
the manager $hen the number of pallets of a particular product drops belo$ a certain le#el.
The $01e+t #a2e Ser.i+e )$#S*
%he 5bject 'ame +er#ice (5'+) is used to con#ert an ()* into a number of internet
addresses $here further information about a gi#en object may be found. (#ery company $hich
uses RFID 'et$ork $ill run an 5'+ +er#er hosting the details of its products. %he root 5'+
directory $ill be hosted by :eri+ign. 5'+ helps in finding the ser#er on $hich information about a
particular product resides. 5'+ specification is based on the Domain 'ame +ystem (D'+) $hich
pro#ides I) address lookup for the internet. 4hen an interrogator reads an RFID tag the ()* is
passed to sa#ant $hich in turn goes to an 5'+ on a local net$ork or the Internet to find $here
information on the product is stored. 5'+ points the sa#ant to a ser#er $here a file about that
product is stored. %he sa#ant retrie#es the file (after proper authentication) and the information
about the product in the file can be for$arded to a companyOs in#entory or supply chain
applications -D/.
Physi+al 3ar4up Language )P3L*
%he (lectronic )roduct *ode identifies indi#idual products but all the useful information
about the product $ould be $ritten in a ne$ standard computer language called the )hysical
,arkup 8anguage (),8). ),8 is based on the $idely accepted ePtensible ,arkup 8anguage
(P,8). "ecause it is meant to be a uni#ersal standard for describing all physical objects
processes and en#ironments ),8 $ill be broad and $ill co#er all industries. It $ill pro#ide a
common method for describing physical objects and $ill be broadly hierarchical. For instance a
can of *oke might be described as a carbonated be#erage $hich $ould fall under the
subcategory soft drink $hich $ould fall under the broader category food -D/.
All of the data regarding the product composition such as si!e shape quantity category
e&piry date manufacture date etc. $ill be all reside in a ),8 file along $ith dynamic data and
temporal data. Dynamic data in a ),8 file might include the temperature of a shipment of fruit.
%emporal data changes discretely and intermittently throughout an objectOs life such as objectOs
location.
The EP Infor2ation Ser.i+e )EPIS*
),8 files $ill be stored in online databases that $ill be part of (lectronic )roduct *ode
Information +er#ice (()*I+). "uild around 4eb +er#ices model $ith emphasis on direct
programmatic access to the precise item of data of interest ()*I+ is a set of soft$are standards
that $ill allo$ companies to more easily e&change find and record ()* data as it mo#es through
the supply chain. +ince an (lectronic )roduct *ode (()*) gi#es each object a unique serial
number each indi#idual object can be tracked independently and fine2grained real2time
information about each indi#idual object can be collected stored and acted upon.
()* Information +er#ices are a $ay for supply chain partners to share and e&change
information efficiently because a standard interface allo$s trading partners to use the same
functions or methods for querying data across the supply chain. ()*I+ allo$s trading partners to
access and e&change li#e2real time data $ith full $eb ser#ice security access controls and
authentication $hile interfacing the back2end to di#erse databases and information systems from
multiple #endors $ithout their partner needing to kno$ the details or ha#e direct access to
underlying systems -.;/.
Furthermore ()*I+ is the first layer $here business logic can be mi&ed $ith read Le#ents0
coming from RFID readers. All the layers underneath ()*I+ (e.g. Filtering A *ollection -A8(/
Reader )rotocol etc.) are primarily concerned $ith simple triples of data (Reader %ag ()*
timestamp). ()*I+ allo$s for higher2le#el meanings to be stored or accessed in#ol#ing business
processes and business transactions i.e. +hipment QPPP corresponding to ).5. Q RRR arri#ed at
time QSSS rather than just (()*s .13 7=> CGD seen at Reader G71 at time QSSS) -../.
In terms of implementing an ()*I+ a company can choose to either host its o$n ()*I+
interface coupled to its e&isting databases or subscribe to a technology solution pro#ider hosting
a managed ()*I+ ser#ice. +upply chain partners can then query the ()*I+ repository using
()*I+ query interface to look up for information regarding a particular ()*. +imilarly supply
chain partners can insert data into ()*I+ repository through ()*I+ capture interface.
5'+ guides supply chain partners in finding ()*I+ of another trading partner.
All the si& aforementioned elements together form the core infrastructure of the ()*
'et$ork and pro#ide the potential for automatic and unique identification of any tagged product
(+ee Figure 7).
Figure % & RFID 'et(or)
All of the elements are required to $ork collaborati#ely to push to$ards ubiquitous RFID. %o
illustrate ho$ this $orks suppose there is manufacturer called A"* $hich produces soft drinks.
(#ery bottle produced by the manufacture $ill ha#e a ),8 file $hich $ill be stored in the ()*I+
repository. A ),8 file $ill contain the product composition such as si!e shape quantity category
e&piry date manufacture date etc. All of these product descriptors $ill be pulled from enterprise
databases $hich are connected to the ()*I+ repository. In addition each bottle $ill ha#e a
unique ()* number. If PRS a trading partner of A"* (retailer) $ants to look up for product
description of any bottle the retailer $ill enter the unique ()* number of the bottle through an
5'+ interface and in return be pro#ided $ith the ?R8 address of the online database or the
()*I+ repository of the A"* manufacturer. 5'+ +er#er $ill facilitate this transaction as for each
()* there $ill e&ist a unique ?R8 address. 5nce pro#ided $ith the ?R8 address of the ()*I+
repository of A"* manufacturer PRS can easily query the status of any soft drink bottle #ia
()*I+ query interface. ,oreo#er $hen the soft drink bottles are shipped from the manufacturer
to the retailer the retailer can also send up2to2date information to the manufacturer #ia ()*I+
capture interface $hich $ill be inserted and updated in the respecti#e ),8 files of the each
product item. For each read to happen RFID readers $ill emit electromagnetic $a#es of
particular frequency po$ering the RFID tag $hen RFID tags enter the range of the reader. 5nce
in the range tags $ill then send ()* identity code back to the reader #ia a modulation $a#es.
%his information is then filtered by +a#ants or the A8( layer before being sent to the ()*I+
repository.
Business Dri.ers for RFID adoption
Despite the emerging nature of the ()* net$ork many organi!ations ha#e been acti#ely
adopting the RFID technology because there are many potential benefits that can be gained.
%hese benefits can be categori!ed into three major classesN operation cost reduction $orking
capital reduction and sales #olume increase as summari!ed in Figure =. %hey $ill lead to
increased cost sa#ings or increase re#enue $hich in turn lead to increased profit and
shareholder #alue. (ach benefit is discussed belo$.
Figure * & Business Drivers $or RFID Adoption
Redu+ed La0or osts
8abor costs are in#ol#ed in gathering data using bar code because someone has to
physically touch and scan each product. RFID technology automates data capture leading to
further labor reduction. %he major cost component for typical distribution centers is labor
accounting for around =;2G;E of their total distribution costs. Beith et al. (1;;1) predict that
recei#ing check2in time could be reduced by >;2D3E $ith RFID technology -.1/. It is also
predicted that RFID could yield labor sa#ings of up to 3>E in order picking and a D;E reduction
in the #erification costs for shipping process.
I2pro.ed 'arehouse and 5ard 3anage2ent
Applying an RFID tag to trailer $ill yield impro#ements in yard and dock acti#ities as the
manager can kno$ the contents of that trailer as soon as it enters the yard. If the contents are
important the trailer can be unloaded right a$ay. 5n the outbound side RFID can pro#ide proofs
of deli#ery $hen good are recei#ed allo$ing shippers to close out transactions more quickly and
accelerate the cash2to2cash cycle -.3/. RFID can also reduce in#oice reductions and charge2
backs from some retailers $ho claim that product did not get shipped $hen it may ha#e been
actually just lost in the $arehouse. Furthermore RFID promises less need for all parties in the
supply chain to (re)check (re)audit and (re)#erify their order accuracy.
I2pro.ed In.entory 3anage2ent
4ith impro#ed information accuracy and real2time #isibility through RFID deployment
companies can effecti#ely deal $ith commonly e&perienced Jbull$hip effectK -.7/. "ull$hip effect
refers to an increase in order #ariability $ithin the supply chain due to a lack of information
#isibility across the chain. %his results in high in#entory le#els and poor customer ser#ice le#els
$ithin the supply chain -./. Information sharing across the supply chain is a pro#en strategy to
combat the bull$hip effect. %he real2time information sharing made possible by the RFID
technology across the supply chain $ill pro#ide unprecedented #isibility into unanticipated
customer demand #ariability. It is estimated that impro#ed in#entory tracking $ith RFID $ill lo$er
out2of2stock shelf fulfillment and facilitate in impro#ed promotional planning $hich translates into
potential CE boost in sales -.=/. 6ap employed the RFID technology to reduce obsolete in#entory
$hile enabling staff to locate specific articles. %he result $as an almost .;;E on shelf a#ailability
of the RFID tagged merchandise and .1E increase in store sales compared to stores that $ere
not using RFID system.
Effi+ient Produ+t Re+alls
)roduct recalls can be attributed as a costly source of loss in the supply chain. %his is due to
the fact that in the absence of a unique product identifier organi!ations find it difficult to e&actly
pinpoint the faulty products. %his risk can be effecti#ely mitigated $ith the ()* as it uniquely
identifies each product produced thus allo$ing manufactures to issue targeted recalls of only
affected products.
Redu+ed In.entory
6illette has #entured into testing +mart shelf $here an RFID reader is incorporated into the
shelf and stocked $ith tagged product. %he +mart +helf monitors its rate of depletion pro#ides an
alert $hen stock runs lo$ and automates reordering to minimi!e out of stocks -.>/. %he e&ample
illustrates that through effecti#e and no#el use of RFID not only in#entory le#els can be reduced
but also out2of2stock situation can be eliminated.
Redu+ed %nsalea0les
+ince RFID tags can store manufacture and e&piry dates goods $ith close e&piration dates
can be better managed reducing the need to $rite2offs due to spoilage. %his is particularly
important to perishable goods and date2specific goods. 6ap employed RFID technology to
reduce obsolete in#entory $hile enabling staff to locate specific articles. %he result $as an almost
.;;E on shelf a#ailability of the RFID tagged merchandise and .1E increase in store sales
compared to stores that $ere not using RFID system.
Redu+ed out-of-sto+4s
%agging pallets and cases $ill allo$ for better tracking of goods $ithin stores thus reducing
out of stock situations. 4ith better in#entory tracking in#entory le#el can be potentially reduced
by eliminating erroneous replenishment orders for products that are a#ailable but cannot be
found. ?.+. retail industry is losing about FC; billion annually due to its inefficient supply chain
practices and about 71E of this comes from product una#ailable on the retail shelf for consumer
-.C/.
4ith RFID technology 4al2,art no$ can kno$ $hat is in the back room and $hat is on the
retail shelf. During the busiest shopping times 4al2,art employees at times can only fill one out
of e#ery t$el#e out2of2stock situations on the store floor -.>/. "y harnessing the po$er of RFID
4al2,art can locate merchandise in the back room quickly and prioriti!e the replenishment
process according to the highest2priority merchandise.
Redu+ed ounterfeit Produ+ts
4orld 9ealth 5rgani!ation (495) estimates that bet$een fi#e and eight percent of the
$orld$ide trade in pharmaceuticals is counterfeit -.G/. RFID offers the capabilities of track and
trace $here product is assigned a unique identifier and its mo#ement is constantly monitored
from the time it $as created till the time it $as consumed. +uch rich information can act as
deterrent to counterfeit and illegal products. For e&ample $hen goods arri#e in a particular
country for sale they can be easily checked $ithout ha#ing to remo#e the packaging and then
sample audits can take place at retail points to check that genuine drugs are being sold and also
the route taken to reach the shop. +ample store checks can also be used to make sure country
specific pricing is employed and that retailers do not buy drugs cheaply in another country and
sell in a country $here they are not supposed to.
Redu+ed Produ+t Shrin4age
%heft or also kno$n as product shrinkage is a serious problem for retailers and
manufactures. In ?+ CCE of the total shrinkage cost is due to theft $hile in (urope it is >.E
(Figure >) -.D/. RFID 'et$ork allo$s products to be tracked and traced $ith total real2time
#isibility. %his feature can alert +*, systems $ith specific details $hen products are missing
allo$ing the organi!ations to take anti2theft measures.
Figure 6 & +,e$t -osses
6uality ontrol and Produ+t Differentiation
RFID empo$ers organi!ations to monitor the quality of products as they mo#e along the
supply chain. %ags can monitor things like temperatures bacteria le#els and pro#ide tamper
e#idence regardless of the product position in the supply chain. %his information is highly
#aluable in the food safety area due to concerns like mad co$ disease and bird flu. If tainted
material is found in the food #alue chain all companies can accurately and quickly locate
quarantine recall and destroy all affected materials.
I2pro.ed pro2otional planning
6illette is using RFID to impro#e its in#entory tracking so that during promotional campaigns
there is a minimal chance of running out2of2stock. 4ith RFID readers 6illette can track $hen
products arri#e at the retail store and $hen they are mo#ed from retail store0s back room to the
retail shelf -.>/. (quipped $ith this information 6illette ran promotional ad#ertisements for
,3)o$er ra!or and then measured the preparedness of retail stores in regard to the promotion.
All the retail stores recei#ed the product before the promotion ran. 9o$e#er a#erage dollars per
point of sale $as 7GE higher for those stores that mo#ed the products from the back room to the
store shelf before the promotion start date compared to those stores $ho mo#ed the products
after the promotion start date.
DIS%SSI$# A#D $#L%SI$#S
For companies to reap the many benefits of RFID companies ha#e to re#amp their business
processes to take ad#antage of the process automation capabilities it offers. %his means source
tagging $hich in#ol#es placing the tags on finished goods at plant rather than Jslip and shipK
approach 2 manually printing and applying 2 should be adopted@ additional business intelligence
soft$are should be le#eraged@ 4arehouse ,anagement +ystems should be integrated across the
$hole supply chain@ more RFID readers should be planted in the supply chain net$ork and
tighter integration should be forced on to supply chain partners. Figure C sho$s RFID
RequirementsI"enefits cur#e. As the RFID infrastructure requirements gets bigger and bigger so
does the benefits. ,ost companies are still in )hase . $ith limited participants and standalone
capability. %his is partly due to current immature technology stalling the progress but in the long
run to reach the #ision of total supply chain #isibility companies ha#e to get more mature and
sophisticated in terms of collaboration and system integration. 5nce the technology matures the
$hole burden of RFID success hinges on ho$ supply chain partners implement and use the
technology. Future benefits of RFID en#isioned as error2free in#entory counts cashier2less
checkouts instant container inspection and production orders based on real2time consumer
usage are promising only $hen entities in the supply chain $ork in unison. +egregated
implementation of RFID $ith operations running at arm0s length $ill surely jeopardi!e the future of
RFID.
Figure . & RFID Re/uirements0Bene$its !urve
Despite the many potential benefits of RFID ho$e#er RFID infrastructure is ill2equipped. At
the moment technology prices act as the greatest inhibitor for large scale deployment coupled
$ith premature technology standards. Another obstacle standing in the $ay of RFID progress is
the back2end soft$are infrastructure and systems integration $hich is required to crunch RFID
data across different supply chain partners to produce supply chain #isibility. %here ha#e also
been some issues regarding pri#acy concerns around the deployment of RFID.
Apart from o#ercoming some challenges in RFID adoption all benefits of RFID can only be
reali!ed $ith greater collaboration bet$een all concerned partners. +uccessful RFID
implementation demands more synergism across the board. RFID has the potential in impro#ing
manufacturing and retail business processes yet at the same time supply chain partners run the
risk of sinking it under their o$n $eight by not cooperating. 9o$ the companies respond o#er the
ne&t t$o to three years $ill determine e#entual success or failure of RFID.
%his study has pro#ided a better understanding of $hat organi!ations can e&pect from the
RFID technology. %he findings of the study ho$e#er ha#e many limitations because they are
only based on secondary data. A further study to in#estigate the actual impact of RFID
implementation on a specific organi!ation as $ell as challenges faced during the implementation
$ill therefore complement the findings of this study.
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