Economical assessment of the impact of RFID technology and EPC system on the fast-moving consumer goods supply chain

Abstract

This paper describes a research whose aim is to quantitatively assess the impact of radio frequency identification (RFID) technology and electronic product code (EPC) system on the main processes of the fast-moving consumer goods (FMCG) supply chain. A three-echelon supply chain is examined, composed of manufacturers, distributors and retailers of FMCG. A questionnaire survey was performed to collect both quantitative and qualitative data related to logistics processes of each player. Starting from these data, a feasibility study has been carried out in order to assess the economical suitability of RFID and EPC adoption in the FMCG supply chain, both for each player and for the FMCG supply chain as a whole. Results of the feasibility study show that RFID and EPC implementation is still not profitable for all echelons examined. Specifically, both from a “non-integrated” and from an “integrated” scenario, RFID adoption with pallet-level tagging provides positive revenues for all supply-chain players. Conversely, adopting a case-level tagging, substantial costs arise for manufacturers, involving negative economical results. Outcomes of this study provide an economical justification to the RFID and EPC implementation in the FMCG supply chain.