Supply chains have become increasingly complex and interdependent in the globalization era. Regulatory authorities are demanding stricter customer compliance, and customers are demanding real-time data for better decision making. At the same time, customer demand is becoming more erratic thus the need for enhanced supply chain coordination with an objective to enhance overall customer value. Radio Frequency Identification RFID, an enabler of supply chain visibility, has the potential to provide customers with large amounts of information at any point in the movement of goods through the supply chain. This technology complements the barcode technology. However, with the acceptance of RFID technology, several managerial and technical issues arise. The focus of this chapter is to thus discuss the relevance of RFID technology for enabling supply chain visibility and adoption related issues. introduCtion
Supply Chain Visibility Enablers
A range of technologies, such as barcodes, biometrics, machine vision, magnetic stripe, optical card readers, voice recognition, and smart cards have been developed for automated data collection to augment Enterprise Resource Planning (ERP) (Gupta 2000). Barcodes are already widely used to improve supply chain efficiency especially in quick checkouts at supermarket counters. Since its adoption thirty years ago, it has enabled the creation of important new applications ranging from tracking customer buying habits to managing inventory. The U.S. Postal Service uses bar-coding as a way of identifying product shipments and to gain greater visibility into a product's physical location and status as it moves through the chain. The barcode is an excellent example of the power a single technological innovation can have in changing core business processes.
However, bar-code technology alone is insufficient for handling changing customer demand towards greater supply chain visibility. Radio Frequency Identification (RFID) technology, which permits tagging and tracking of physical goods, is considered a significant improvement over the conventional barcode, which needs to be read by scanners in a line-of-sight fashion and can be stripped away if the paper product labels get ripped or damaged (Angeles 2005). RFID can also facilitate inter-organizational E-Commerce initiatives such as continuous replenishment or vendor-managed inventory (Smaros and Holmstrom, 2000).
Key Terms in this Chapter
Network effect: A network effect is a characteristic that causes a good or service to have a value to a potential customer which depends on the number of other customers who own the good or are users of the service. In other words, the number of prior adopters is a term in the value available to the next adopter.
Supply Chain Visibility: Supply chain visibility refers to customer’s ability to monitor their inventory in motion and at rest, optimize asset utilization, track and trace the status of their orders whenever, and from wherever, they want. In other words, the whole supply chain is visible to the customers.
Inductive Coupling: Inductive coupling refers to the transfer of energy from one circuit component to another through a shared magnetic field. A change in current flow through one device induces current flow in the other device.
Customer Relationship Management: Customer relationship management (CRM) is a broad term that covers concepts used by companies to manage their relationships with customers, including the capture, storage and analysis of customer, vendor, partner, and internal process information. E-Commerce: Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks.
Supply Chain Management: Supply chain management (SCM) is the process of efficiently planning, implementing, and controlling the operations of the supply chain. It spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption
Barcode: A barcode (also bar code) is a machine-readable representation of information (usually dark ink on a light background to create high and low reflectance which is converted to 1s and 0s). Originally, barcodes stored data in the widths and spacings of printed parallel lines, but today they also come in patterns of dots, concentric circles, and text codes hidden within images.
Enterprise Resource Planning: Enterprise Resource Planning (ERP) system integrates all data and processes of an organization into a unified system using multiple components of computer software and hardware and a unified database to store data for the various system modules.