An Analysis of Issues and Possible Remedies in the Adoption of RFID in Retail Supply Chains of India

An Analysis of Issues and Possible Remedies in the Adoption of RFID in Retail Supply Chains of India

Sumeet Gupta (Shri Shakaracharya Institute of Technology and Management, India) and Sanjib Pal (Shri Shakaracharya Institute of Technology and Management, India)
DOI: 10.4018/978-1-4666-0065-2.ch018
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This case study examines issues faced by Indian retail industry in the adoption of RFID technology as an enabler of efficient retail supply chains. An in-depth case study of Big Bazaar (Future Group) was conducted for a period of two months for identifying and categorizing the issues in RFID adoption.
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Literature Review

A Brief Review of RFID Technology

The RFID value chain involves three parts: tags, readers and enterprise integration software that power these systems. Tagging is done similar to barcode and tags can be placed at an item level, pellet level, container level or on the transporting vehicle level depending upon the cost efficiency obtained from the product. These tags are scanned by tag readers. Unlike barcodes which require line of visibility between the barcode and the reader, tag readers can read barcode anywhere between 1-30 meters of range. When coupled with global positioning systems (GPS), RFID technology can help track the product or shipment anywhere in the world.

The data generated by the application software can interface with other systems, such as, Enterprise Resource Planning (ERP), Supply Chain Management (SCM) and Customer Relationship Management (CRM), used in an enterprise.

There are three types of RFID tags: active, passive and semi-passive. When most people talk about RFID, they talk about passive tags. In passive tags radio frequency is sent from a transmitter to a chip or card. Passive tags do not have power cell and it uses the transmitted signal to power itself long enough to respond with a coded identifier. This numeric identifier really carries no information other than a unique number, but keyed against a database that associates that number with other data, the RFID tag's identifier can evoke all information in the database keyed to that number. An active tag has its own internal power source and can store as well as send even more detailed information. Active tags are traceable over a much longer distance than passive tags which work within a specific range of one meter (Curtin et al. 2005). Semi-passive tags use both battery and the waves sent out by the reader to power themselves. Typically, active and semi-passive tags are used for higher-value goods, while passive tags are used for lower-value goods.

Consider the prices of the products sold in organized retail stores. These can vary from as low as Rs. 2.00 to Rs. 20000. The cost of a RFID tag is Rs. 7.00 to Rs. 100. So these tags can be used only with expensive products, where the margin is very high. For cheap products, tagging can be done at the pellet level (or box level) whereby a bulk quantity of products is tagged together. In such cases cheaper tags can be put at level of small boxes. These tags are then used to give information to costlier active tags which can submit information to a central server. Another strategy is to reuse the tags and thus preventing their cost to affect the cost of products substantially.

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