Effectiveness and Efficiency of RFID in Supply Chain Management
Read this article. Sixteen different types of supply chains are presented in Figure 2. Select one type from the High Complex / High Business Impact quadrant, what are some benefits and challenges associated with it?
Literature Review
RFID technology has been promising to enhance
support supply chain management efforts. The
future success of RFID and other mobile services will be strongly
affected by the ability of businesses to offer the right products and
services to consumers. RFID has the potential in other areas of
operations, such as manufacturing, after-sales service support, and
total product life cycle management. An RFID system can be used to
identify many types of objects, such as manufactured goods, animism, and
people. RFID technologies support a wide range of
applicationseverything from asset management and tracking to
manufactured products and related customer services to access controls
and automated payments. Each RFID system has different components and
customizations so that it can support a particular business process for
an enterprise. Depending on the application in an industry and the
enterprise within an industry, A RFID system can be very complex, and
its implementations may vary greatly. Conceptually, RFID system may be
composed of three subsystems as shown in Figure 1: (1) An RF
subsystem, which performs identification and related transactions using
wireless communication, (2) An enterprise subsystem, which contains
computers running specialized software that can store, process, and
analyze data acquired from RF subsystem transactions to make the data
useful to a supported business process, and (3) An inter-enterprise
subsystem, which connects enterprise subsystems when information needs
to be shared across organizational boundaries. Every RFID system
contains an RF subsystem, which is composed of tags and readers. In many
RFID systems, the RF subsystem is supported by an enterprise subsystem
that is composed of middleware, analytic systems, and networking
services. However, in a supply chain application, a tagged product is
tracked throughout its life cycle, from the manufacture to final
purchase, and sometimes even afterwards (e.g., to support targeted
product recalls or related service), and thus its RFID systems has to
share information across organizational boundaries. Thus, the RFID
systems supporting supply chain applications have also an
inter-enterprise subsystem.
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The enterprise subsystem is the
computer system and software that utilizes information stored on RFID
tags. It is the glue that integrates an RFID system. Depending on the
industry context, but usually a front end component manages the readers
and the antennas and a middleware component routes this information to
servers that run the backbone database applications. For example, in a
manufacturing context, the enterprise software will need to be made
aware of RFID ai various levéis depending on how far downstream into
manufacturing and out into the supply chain RFID is implemented. The
middleware technologies are categorized into three levels: (1) software
applications which solve connectivity problems and monitoring in
specific vertical industries, (2) application managers that connect
disparate applications within an enterprise, and (3) device brokers that
connect applications to devices like shop-floor machines and RFID
readers. The Auto-ID Center ai MIT developed a software program
named 'Savant' to manage the enormous amount of data expected to be
generated by RFID readers. In a typical manufacturing scenario, for
example, readers will be picking up a continuous stream of tag data,
which might contain errors such as dupltcate reads and phantom-reads.
The Job of a savant is to filter and manage this data and forward only
clean data 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. 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 applicationseverything 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,
fhose on display, and the shoes customers try on inside the stores.
In
Japan, the RFID chip has become a de fació standard in the last five
years, and credit cards containing RFID are used by millions of people
every day to make railway travel and e-money purchases. In 2004, the
RFID chip by Sony's FeliCa, started getting integrated in cell phones
and today owners of those cell phones can make credit card purchases in
stores. Tokyo's subway and private railway and bus operators are
launching a common travel card based on the FeliCa plafiorm. The Pasmo
system will be interoperable with East Japan Railway Co.'s (JR East's)
Suica card, allowing the 35 million people who live in the Tokyo
Metropolitan área the ability to travel on more than 100 railway lines
and hundreds of bus routes with a single card. The touch-and-go payments
it supports work over a distance of a few centimeters and take 0.1
seconds for each to complete. In addition to Japan, the technology
provides the base for the Octopus subway card in Hong Kong, which has
also morphed into an e-money payment system, and the ez-Link transport
card in Singapore. FeliCa is also used in Shenzhen's TransCard, India's
TravelCard and Bangkok's Metro Card but has yet to break significantly
into European or North American markets.
Schiff Nutrition
International, a midsize company based in Salt Lake City, maker of
vitamins and nutritional supplements, is in the process of a deployment
of the RFID technology in order to continue doing business with Wal-Mart. In 2003, Wal-Mart began setting deadlines for suppliers to start
using RFID tags on their shipments. While it was argued that the RFID
tags weren't resulting in the savings that Wal-Mart expected, many
suppliers were 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.
The International Data Corporation (IDC) has
estimated that the RFID market for related consulting, implementation,
and managed services was expected to grow 47% in 2004 and reached $2
billion worldwide by 2008. It was also estimated that two-third of
enterprise organizations considering RFID applications in 2004 indicated
that they would rely on external resources in implementing RFID. The
Yankee group estimates that RFID technology will be a $4.2 billion
market by 2008. By some estimates, over 1.3 billion RFID tags were
produced in 2005, and that figure is estimated to soarto 33 billion in
2010, and by farthe biggest segment is accounted for supply chain.
However, for a successful deployment of RFID, it is importantto have a
set of widely accepted standards and regulations. According to McCathie
and Michael, the progression of barcode standards from proprietary
to globally accepted open standards had played a pivotal role in a world
wide acceptance of the technology. Therefore, in orderto be effective,
there has to be standards and regulations in the case of RFID as well.
For example, many companies, particularly small-medium enterprises, have
reported that RFID is extremely costly in their supply chain. The cost
of acquiring, installing, and maintaining an RFID system has been a
major and often determining factor in the deployment of RFID in the
commercial sector.