By some estimates, over 1. However, for a successful deployment of RFID, it is importantto have a set of widely accepted standards and regulations. According to McCathie and Michael [21], the progression of barcode standards from proprietary to globally accepted open standards had played a pivotal role in a world wide acceptance of the technology.
Therefore, in orderto be effective, there has to be standards and regulations in the case of RFID as well. For example, many companies, particularly small-medium enterprises, have reported that RFID is extremely costly in their supply chain.
The cost of acquiring, installing, and maintaining an RFID system has been a major and often determining factor in the deployment of RFID in the commercial sector. In exploring the effectiveness and efficiency of RFID applications, we consider the eight key processes [8], [7] that make up the supply chain management process.
These processes provide a framework for various aspects of strategic and tactical issues present in the management of the supply chain. These eight processes and their functions are described as follows:. Identifies target customer groups as part of the business mission and develops agreements with key accounts. Performance reporte also measure profitability and financial impact for key customers.
This would include forecasting demand and managing the demand in production, procurement, distribution, and in all other outputs of the company. This would require the management of partnerships maintained by the company to meet customer requirements. Requires management of product flow and maintaining the flexibility established. Similar to customer relationship management, partnership management is required to develop key relationship with core suppliers potentially providing a competitive advantage.
In the s, IBM created companywide organizations for procurement, logistics, fulfillment and manufacturing. The company had to balance two ways of measuring supply-chain performance: 1 effectiveness: flexibility and responsiveness, and 2 efficiency: lowering costs as much as possible.
It was reported in the same paper [11] that the supply-chain optimization effort torced IBM to seek opportunities to balance effectiveness versus efficiency in all four dimensions: a data collected at various points in the supply chain, b the business processes involved in the supply chain, c the information systems involved and d the organizations involved in carrying outthe various business practices.
In order to measure effectiveness and efficiency, firms need to have a clear picture of the key supply chain processes and a measure of performance in each one of the processes. Companies in many industries, such as fast-moving consumer goods industry, manufactures, consumer electronics, apparel industries, are in their infancy stages in the implementation of new technologies that use EPC and RFID.
This technology will extend the abilities of firms to capture accurate information on the location and status of physical objects across the supply chain. The pace of implementation in Wal-Mart has been slower than the giant retailer had predicted due to insufficient infrastructure of supply chain for RFID and the cost of implementing the technology.
To better understand supply chain management and RFID technology as well as the opportunities and the challenges, we will discuss supply chain infrastructure, particularly as it relates to the enterprise and inter-enterprise subsystems of RFID systems.
According to the Suppiy-Chain Council, "The supply-chain encompasses every effort involved in producing and delivering a final product or service, from the supplier's supplier to the customer's customer. Supply-chain management includes managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventorytracking, order entry and order management, distribution across all channels, and delivery to the customer.
However, due to its wide scope, supply-chain management must address complex interdependencies and accordingly be open to reengineer its appropriate processes. In effect, material and service suppiiers, channel supply partners that include wholesalers, distributors, retailers, and customers, supply chain management consultants, software product suppiiers and system developers, become key players in the supply chain process.
In this manner, data collected across the supply chain may be analyzed to provide information for evaluation of the supply chain performance and its reconfiguration, as well as conducting what-if scenarios to measure the effectiveness and efficiency of supply chain. What has been developed and presented as a supply chain within distinct companies has varied widely.
In essence, no two companies' supply chains look alike. There are many supply chain models, and these models only effectively deliver on their promise when aligned with the way in which the company wants to go to market. Furthermore, most companies don't merely have one chain. They have many, and several of them are actually networks. As shown in the figure 2 , on the basis of business impact and complexity, Cavinato [5] distinguishes sixteen types of supply chains.
With respect to complexity, supply chains can range from a very basic form to a very sophisticated complex chain and based on business impact, they range from a very traditional to a supply chain with competitive advantage.
As one move toward more sophistication and business impact, atthe high end, the emphasis is placed on the model of supply chain with information networks, and on data access that can be converted into information, knowledge, and intelligence.
Literature survey presented by Ngai et al. A simple RFID system includes three main components: tag, reader and computer or enterprise system Fig. Tag is composed of a small microchip and an antenna and can be embedded into or attached to objects of any kind e.
Tags have different shapes and sizes and have a memory for data storage. These are specific data such as a unique identification number, product price, product location, date of manufacturing, current inventory, type, description, dimensions and so on.
Components of RFID system. Active tags have feature of read and write data and larger data storage than passive tags. Also, active tags are self-powered and do not depend on the electromagnetic field of the reader in order to be activated. Active tags use their own batteries as a power source that is integrated on the tag, as opposed to passive tags that receive power from the reader when they are within range of reader. Activation of passive tag depends on the electromagnetic field that is induced by the RFID reader.
RFID reader transmits radio signals through antenna in order to activate tag and the identification and recording of data. When tag is activated then data transfers according to signals sent from the antenna. Passive tags are much more used in various RFID applications and duration of passive tags is longer than the active tags, but active tags can transmit signals over a longer distance than passive tags.
The most common choice of tag for supply chain usage is passive tags that take effect in the UHF frequency range Tajima, RFID reader reads the information stored in the memory of tags and transfers them to a computer or enterprise application. This information can quickly be read by a wireless communication among compatible reader and tags in the readers range.
RFID system has to computerise a large amount of data and improve efficiency of operations. These functions are performed by middleware. The RFID middleware system between readers and applications is composed of two interfaces, namely the application interface and the reader interface, to communicate with the environment.
One of the major problems in the application of RFID systems is existence of different standards. Presently only a few frequencies are consistent around the world. Low-frequency passive tags have an effective range of approximately 30 cm, while high-frequency passive tags are useful in the range about 1 m. RFID technology is not new technology. Commercial use of RFID starts during 's the electronic article surveillance EAS system, animal tagging, toll road payment systems, using RFID in automotive industries for assembly lines , but the application in supply chain management is relatively new Tajima, RFID usage has increased in recent years in a wide range of various application and we can expect significant growth of RFID market in the next years.
The Electronic Product Code EPC is a common way for automatic and unique identification of objects parts, products, pallets, locations, etc. The EPC is prevalent method for assigning unique product identification in the modern supply chain environment. Use of RFID technology as well as bar codes, facilitates automation of processes and improves operations management through reduction of workload and elimination of human errors.
There are some limitations about RFID application, e. Application of RFID technology is possible in wide area of human activity. An increasing variety of enterprises are using RFID to improve their efficiency of operations and to gain a competitive advantage. The innovation in RFID is not in the technology itself, but in its use in real-business processes. The rapid development of information technology and reducing cost of RFID system components enable continuous expansion of application areas.
Applications of radio frequency identification RFID technology within supply chain management have received particular attention in the past few years by many authors.
Kim et al.. Ko, ; T. Application of RFID technology is increasing in various industries as prices continuously decrease. Authors explained that fact with high costs of RFID employment per unit with compare to low costs of labour that retailers employ for product labelling. As seen in Fig.
Providing that supply chain operations performed according to plan is a significant continuous activity. For internal end external supply chain it is very important that the real-time information flow is oriented backwards through the integrated supply chain, as parts, components, products, etc.
Thereby, it is possible to reduce order delays, lead times and inventory and therefore, increase customer satisfaction.
Our conceptual framework for integration of ERP system and RFID technology with aim of providing information visibility in internal as well as external supply chain is based on just-in-time principles produce and deliver products or services as needed by customer or required by hierarchically superior level in the required quantities, just in time when needed and at right place avoiding storage whenever possible or using minimal inventories.
Automated RFID systems have been examined for achieving a high level of information transparency, inventory visibility, product availability, and system responsiveness and agility, however, discussion on the potential advantages and the effects of RFID technology on the decision making of logistics operations and on the formulation of logistics strategies is limited.
This article focuses on investigating the impact of RFID adoption on logistics business strategy and operation. A strategy analysis is developed by employing the resource-based view RBV which examines the link between RFID systems and logistics strategy. With these improvements also came cost reductions as adoption started to increase on a much larger scale.
Functions of RFID in manufacturing: Inventory Traceability — Tagging components, WIP and finished products with RFID tags provides real time visibility into manufacturing operations and provides manufacturing operators with continuous data flow to improve decision making.
This helps them to increase asset utilization by more effectively scheduling production. This helps to reduce inventory carrying costs as items are replenished as needed rather than kept on hand in large quantities.
As production is completed this data can be used to assist in staging outgoing shipments.
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