Summary
Mostly fueled by mandates, adoption, and implementation of the RFID, technology in the retail industry is growing rapidly. At these early stages of adoption, one puzzling issue for retailers and suppliers is the compelling business case for RFID. In order to explore the potential business case for RFID, we conducted a case study using actual RFID data collected by a major retailer for the cases shipped by one of its major suppliers. We show the physical layout of the RFID readers on a partial supply-chain covering product movement from distribution centers to retail stores. First, in the analysis phase, we identify several performance metrics that can be computed from the RFID readings. Next, using this RFID data, we compute the values of those performance metrics. These values represent mean time between movements at different locations. Then, we discuss how these measures can assist in improving logistical performance at a micro supply chain level of operations between a distribution center and a retail store. We present how such information can be valuable to both the retail store operator and the supplier. We also discuss the initial lessons learned from actual RFID data collected in the field, in terms of data quality issues.
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Rfid for Better Supply-Chain Management Through Enhanced Information Visibility
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1. IntroductionWith a June 2003 mandate that its top 100 suppliers place RFID tags on pallets and cases shipped to stores in the Dallas, Texas region, Wal-Mart jump started a 50-year-old technology that, until the mandate, had found limited (but successful) use in a variety of niche areas. Since that announcement, the RFID industry has blossomed. The Department of Defense soon followed with its own mandate; Target, Albertson's, and Best Buy, among others, quickly followed suit. Initial efforts focused on the largest suppliers in the retail supply chain (e.g., Procter & Gamble/Gillette, Kraft), but have now spread to include smaller retail suppliers. Wal-Mart's next 200 suppliers began shipping tagged products in January 2006, and its next 300 suppliers are scheduled to begin in January 2007.Mandates by major retailers may have rejuvenated the technology, but a recent survey of 510 companies by Frost and Sullivan found that the number one reason for planned deployment of RFID is "improved process efficiencies", not mandates. Thus, companies are expecting RFID to serve as a business process enabler, but without clear answers as to how it can help (Ware 2004). The answers, ultimately, have to be found in the data produced from an RFID-enabled environment. The objective of this paper is to illustrate, via actual RFID data collected by a major retailer covering one of its largest suppliers' product movement from distribution centers to retail stores in the U.S., the visibility provided by RFID, and discuss the potential value of this visibility to supply chain constituents. In essence, we report on initial lessons learned to provide insight into the question of "what business value can be gained from RFID data?"In this paper, we demonstrate that RFID data can provide information visibility at a granularity never before possible. In the analysis phase, we identify several performance metrics that can be computed from the RFID observations, and discuss how these measures can assist in improving logistical performance at a micro supply chain level of operations between distribution centers and retail stores. We discuss how such information can be valuable to both the re...See the full content of this document
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