Supply chain assignment help: RFID: A tool for efficient Supply Chain Management
This study is primarily based on the application of RFID by Woolworths (a supermarket chain largely having presence in Australia and New Zealand) and its experience with the technology.
RFID-A Technology
RFID (Radio Frequency IDentificaiton) is a striking invention over its predecessor i.e. barcode reader. Barcode reader technology has ruled the arena of SCM (Supply Chain Management) globally over the years. The companies, especially the ones which are into manufacturing have exploited the benefits of barcode reader machines in inventory stockpiling and its management.
The technology works on a sophisticated platform recording the presence of any object and the meticulous details associated with it using radio signals. The RFID tags placed on the object transmit signals via. modem to the RFID tag readers, thus positioning a particular object or even a person. This certainly is an improvement over its predecessor in structuring the process of SCM.
There are several companies worldwide who have successfully or unsuccessfully piloted the technology and studied its ramifications over a period of time. Companies like Wal-Mart, 3M, Motorola, HP, Amgen, GE and several others have applied this technology on consultation (RFIDacedmecia.com n.d.).
Woolworths’ Application of RFID
Woolworths, Australia initiated the use of RFID in two phases. In the first phase the company traced the movement of products which do not have a large shelf life i.e. products which are sold fresh and move quickly in the supply chain like fruits and vegetables. The second phase was to complement the move made in the first phase i.e. monitoring the temperature levels during the movement of such products at every segment of supply chain (Friedlos 2008).
The company believes that the stock visibility will reduce the wastage and enhance the durability by reducing the procedural hiccups in SCM (Friedlos 2008). The company initiated the use of UHF EPC Gen 2 tags which had built-in sensors to accomplish the second phase trials mentioned above. It feels optimistic about the initial tests it conducted and the accuracy of results but still banks upon its non-usage. It feels that the infancy of the technology does not create an economically viable atmosphere for its mass application, though small scale success is welcome.
It believes the current cost of application does not match the output it generates. The cost of tags, casing and technological infrastructure will enhance the capital expenditure and not give adequate return on investment in a shorter run. ‘When the market does mature and provides a more robust solution to meet our business need then we will see if track and trace can fit into business. For now, we are keeping a watching brief on the technology, and will see if the costs come down’ says Wayne Elision, Woolworths’ RFID Project Manager (Friedlos 2008).
The company’s initial hand on experience has given it enough reasons to avoid the usage in the current scenario. This is not because application of technology in various segments of SCM but because of the high capital expenditure it involves today.
Merits and De-Merits of using RFID by Woolworth
Woolworth’s initial experience has enumerated certain benefits and adversaries in the usage of RFID as a full-fledged process in the SCM. The company as discussed earlier experienced certain advantages and disadvantages of RFID:
Merits
ü An improvement over its predecessor i.e. a barcode reader, providing a tool to meticulously record and maintain data for tracing an object or a person through RFID tags
ü Reducing the wastage of products by continuous monitoring of the movement at every stage in the supply chain especially for products which are consumed fresh like fruits and vegetables.
ü Monitoring the condition of such products by gauging the temperature levels at every stage of such products e.g. storage in extremely cold and watery conditions
ü Reducing the manual and paper work, reducing the overall cost of inventory and labor involved in the tracking of products
ü Mass storage of data ensuring the upkeep of meticulous details about the products like televisions, cars, washing machines which requires storage of large information about a single product and for large number of crates of fruits and vegetables for Woolworth
Demerits
ü The technology is still in a very nascent stage and growing, The application is still restricted by the companies to the testing and pilot level
ü The cost of tags, casings and installation of technical infrastructure would involve huge capital expenditure forcing the companies to defer such practice for some time in future till such costs become bearable
ü Compatibility of RFID tags to extreme temperatures and provide accurate data still remains disputed
ü The awareness and knowledge about the process, applicability and usage of RFID is growing at snail’s pace, hence would take some time for proper understanding of it in the industrial circle
Northwest Food Processors Association President Conny Kirby says, ‘RFID is still new to the food industry and our members don’t have a lot of experience with it’ (Swedberg 2009). Woolworths’ stance has been quite similar to what Kirby says is that the low awareness level has led to lot of speculation about a relatively new technology, the speculation would not help, instead distribution of educational and training modules, conducting interactive sessions and model workshops, would do wonders for the application of RFID. It is accepted that RFID is not a full proof technology but this factor should not work as a hindrance in accomplishment of the objective which it intends to achieve.
A discussion arose related to the exposure of products of food industry to extreme temperatures and conditions like water. The concern is to check the compatibility of RFID tags in such conditions without compromising on the output and to put a check on the cost of inventory at the same time (Wasserman 2009).
Another crucial factor in RFID’s inconsistent application is the huge capital costs it involves. In the current scenario the cost of placing RFID tags on any pallet or product shipped was charged at $2.5 per tag by Sam’s Club (a retail division of Wal-Mart stores), it was reduced to 12 cents in 2008, but even that is considered to be high by some industry experts. This idea is believed to be strictly applicable to companies like Wal-Mart and Woolworths, manufacturing and selling products which involve mass tagging (Roberti 2009).
Ideas influencing the usage of RFID at Woolworths
As discussed above the inevitable situational impediments has made Woolworths to stop itself from the application of RFID, unless
ü A less expensive innovation is evolved for the application of such technology at such and early stage, till then it continues to pilot the usage in all the stores it runs
ü Awareness modules, programs and workshops are held by world RIFD authority to convey the pros and cons of technology and how that can be adjusted to ensure its use with minimum fuss, Woolworths stills banks on the idea of usage for temperature monitoring but does not support its usage till the last stage i.e. when it reaches consumers
ü Technical difficulties in the application of tags is removed by making it more compatible to extreme temperature without compromising on the accuracy of output, until then the application of tagging is restricted to small scale deployment
Need for the usage of RFID in SCM
The notion that the cost involved in the supply chain management of a particular accounts for about 50-60% of its total cost, makes it even more essential on part of the manufacturing and retailing companies to adopt an improved approach for the optimization. The following should be the possible reasons for the application of RFID:
ü The technology has certainly made tracking and locating made a lot easier with compare to the normal manual procedures which are followed worldwide (GAO RFID Inc. n.d.)
ü Another striking feature is the usage of non-line-of-sight scanning which does not require the products or the objects to be in a limited geographical range. This ensures flexibility in monitoring the products or objects at any stage
ü Massive data storage capability gives RFID an edge over its predecessors as well as its contemporaries. This could reduce lot of paper work and manual labor
ü Reducing the wastage of products by monitoring at every stage the movement of such products
ü The continuous monitoring cycles of such products with the usage of RFID in every segment of SCM would ensure the safety of the products i.e. make them real time traceable in case of any pilferage or destruction
ü Reduce all effort in application of all the stages of the SCM to increase overall productivity and customer satisfaction
ü Interestingly, the technology is not a super innovation in terms of data tracking and monitoring but the advantage of applying it in the most intricate processes is what makes the entire concept of RFID a game changer. The monitoring provides strategic edge over the prevailing technology of barcode readers
ü Counterfeiting of products can be avoided by giving every product a unique EPC (Electronic Product Code) number and thus providing ample data to the retailers about every stage the product has passed e.g. the location, time spent at every location where it stopped and conditions of the environment for the life of the product. (AMEinfo.com 2005)
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