Impact of RFID on manufacturing effectiveness and efficiency

Abstract

PurposeThe purpose of this paper is to examine the impact of radio frequency identification (RFID) technology utilization in manufacturing firms on manufacturing efficiency and effectiveness.Design/methodology/approachUsing systems theory as a basis, a RFID utilization and outcome(s) performance model was developed from the literature. Data from a sample of 155 manufacturers were collected and the model was assessed using a structural equation methodology.FindingsFindings indicate that utilization of RFID technology leads to improved manufacturing efficiency and manufacturing effectiveness. Improvements in efficiency lead directly to improved organizational performance, and improvements in effectiveness lead directly to improved supply chain performance.Research limitations/implicationsData were collected during the growth stage of RFID technology adoption and were only collected from firms in the manufacturing sector. Results should be interpreted with these limitations in mind.Practical implicationsThe implementation of RFID technology can result in improved manufacturing efficiency and effectiveness. Practitioners considering adoption of the technology should fully account for these potential efficiency and effectiveness related benefits when determining the justification for adoption of this technology.Originality/valueThe paper describes one of the first empirically‐based studies investigating the impact of RFID technology implementation on supply chain and organizational performance in manufacturing organizations.