Improvement of Supply Chain Performances Using RFID Technology

Abstract

As markets become more global and competition intensifies, firms are beginning to realize that competition is not exclusively a firm versus firm domain, but a supply chain against supply chain phenomenon (***a, 2008). Under these circumstances, an increasing strategic importance to any organization independent of size or of sector, is to deliver information, goods and services in full, on time and error-free to customers. From demand forecasting, to the sourcing of raw materials, right through to manufacture and dispatchvisibility in the supply chain is becoming an important facet of any modern operation (Coltman et al., 2008). But at this moment, the interconnectivity between various links in the supply chain is incomplete and inaccurate, every link in the chain being an individualistic entity with different processes. This leads to poor product visibility and stock transparency across the supply chain. For companies looking at multiple markets, the lack of visibility in their supply chain can lead to tremendous loss of revenue. But even if information technology is used within a supply chain to share information on end-customer demand and inventory levels, there is still often a discrepancy between this information and the real physical flow of products. This discrepancy frequently derives from the missing real-time or near real-time data in concordance with the physical flow of goods. The result is inaccurate inventory information. Reasons why information system inventory records are inaccurate include external and internal theft, unsaleables (e.g. damaged, out-of-date, discontinued, promotional, or seasonal items that cannot be sold any longer), incorrect incoming and outgoing deliveries (Raman et al., 2001; Fleisch & Tellkamp, 2003), as well as misplaced items (Raman et al., 2001). Thus, even when inventory records are accurate, misplaced items mean that they were not out of stock, but rather misplaced in storage areas or in the wrong location within the store. The phenomenon of inventory inaccuracy is well-known. As Raman et al. (Raman et al., 2001) show in their case study, most retailers cannot precisely identify the number of units of a given item available at a store; thus for more than 65% of stock keeping units (SKUs) in retail stores, information on inventory in the inventory management system was inaccurate (i.e. the information system inventory differed from physical inventory). The difference was on average 35% of the target inventory. In a second case study, the authors found that a median of 3.4% of SKUs were not found on the sales floor although inventory was available O pe n A cc es s D at ab as e w w w .in te ch w eb .o rg