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Supply Chain Management: An International Journal
RFId adoption in the FMCG supply chain: an interpretative framework

Raffaello Balocco Giovanni Miragliotta Alessandro Perego Angela Tumino
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Raffaello Balocco Giovanni Miragliotta Alessandro Perego Angela Tumino, (2011),"RFId adoption in the FMCG supply chain: an
interpretative framework", Supply Chain Management: An International Journal, Vol. 16 Iss 5 pp. 299 - 315
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Research paper
RFId adoption in the FMCG supply chain:

an interpretative framework
Raffaello Balocco, Giovanni Miragliotta, Alessandro Perego and Angela Tumino
Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milan, Italy
Abstract
Purpose – In 2003, Walmart issued a sensational RFId mandate for its top 100 suppliers, including a detailed deployment plan under compelling
deadlines. After seven years, very little of that mandate has become a consolidated industry practice. This paper aims to try to offer a complete and
thorough explanation of the reasons behind this fact, providing a sound strategic view of what is happening and could happen in the future.
Design/methodology/approach – The study is based on a twofold methodological approach: first, it relies on an in-depth literature review covering
the assessment of RFId applications in the fast moving consumer goods (FMCG) industry; second, it leverages on a five-year research program carried
out by the RFId Solution Center of Politecnico di Milano in cooperation with GS1 Italy, which provided both quantitative data (used to develop and feed
an analytical profitability assessment model) and qualitative knowledge to understand the “soft” implications of RFId adoption in the industry.
Findings – Despite the great potential of RFId technology, there are still some significant barriers preventing its diffusion. Case-level tagging is
required to enable a substantial redesign of the supply chain, but profit-sharing and reading reliability should be carefully considered to ensure
economic and technological feasibility. The comparison with the fashion industry evidences some key success factors of RFId; while some of them are
industry-specific, others can be replicated in the FMCG as well, but further efforts are still needed.
Originality/value – This is one of the first attempts to provide a comprehensive analysis of RFId potential in the FMCG supply chain, taking into
account all the major factors involved. Moreover, the quantitative results illustrated in the paper could be a valuable support to companies in defining
their RFId strategies.
Keywords Radio frequency identification, Supply chain management
Paper type Research paper
1. Introduction suppliers were already involved but small and medium

enterprises were very reluctant; similarly, some of the adopters
In 2003, Walmart caused a tremendous hype when it issued a declared that the RFId mandate was accepted not because of
compelling Radio Frequency Identification (RFId) mandate any profit expectation, but because “ROI would be an
for its top 100 suppliers. The mandate, which required pallet
improved relationship with Walmart” (Weier, 2007).
and cases shipped to the Walmart distribution center in Dallas
According to the latest news available, this trend is
to be tagged with ultra high frequency (UHF) electronic
spreading as the rollout plans are constantly being updated,
product code (EPC) Gen1 tags by mid-2004, was soon
penalties for non-tagged shipments have been decreased by a
strengthened by other development plans involving five
factor of 10, and major suppliers (like Procter & Gamble) are
distribution centers, 1,000 stores and more than 600
reconsidering their cooperation with Walmart. Something
suppliers in the RFId project by the end of 2006 (Byrne,
very similar happened to the pharmaceutical industry as well,
2004). In 2006, the RFId revolution was at its climax when
the first study describing the impact of this technology on from the climax of excitement of the FDA Electronic Pedigree
stock-out reduction became available, and showed remarkable Program in 2006 (Matalka et al., 2009) to the slow-down
outcomes (Hardgrave et al., 2006). Nevertheless, at the registered in the recent past.
beginning of 2007 this momentum seemed to diminish: 600 Actually, not every RFId initiative in the fast moving
consumer goods (FMCG) industry has come to nothing, and
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-8546.htm The authors would like to thank Massimo Bolchini, Technical Director of
GS1 Italy, for the inspiring discussions with him, and the reviewers for
their valuable comments and suggestions.
Supply Chain Management: An International Journal Received: August 2010

16/5 (2011) 299– 315 Revised: January 2011
q Emerald Group Publishing Limited [ISSN 1359-8546] March 2011
[DOI 10.1108/13598541111155820] Accepted: April 2011
299
RFId adoption in the FMCG supply chain Supply Chain Management: An International Journal
Raffaello Balocco, Giovanni Miragliotta, Alessandro Perego and Angela Tumino Volume 16 · Number 5 · 2011 · 299 –315
some significant outcomes have been achieved. For example, .

quantitative analyses based on structured assessment models
Marks & Spencer and Metro claim to have gathered lots of (“model”), which aim to develop mathematical and
experience in sales process redesign by leveraging on RFId simulation models to assess the impact of RFId on
technology (Hadfield, 2006; ElAmin, 2007). In Italy some supply chain performance.
remarkable applications in food traceability have been
This same taxonomy can be adopted to classify papers focused
deployed, from meat to cheese tracking (Rollo, 2008), and
on the FMCG industry. Specifically, more than 40 papers
are starting to become consolidated industry practices.
dealing with the introduction of RFId technology in this
Moreover, after a couple of years characterized by
industry have been found and analyzed according to this
significant reductions in RFId expenditures due to the
classification (cf. Table I). While the first attempts mainly
recent economic downturn, some positive trends in the
consisted in qualitative analyses or quantitative evaluations
RFId market can now be observed (ABI Research, 2010).
essentially based on empirical evidence, more attention has been
However, there is a huge gap between the expectations of
paid in recent years to mathematical and simulation models.
2004 and the achievements of 2010, and so the question is:
Moreover, in the last few years quantitative models not focusing
Why, despite all the efforts, investments, pilot projects and so
on individual companies alone but able to provide an evaluation
on, has not RFId yet succeeded to make its way through the
of the overall benefits along the supply chain started to appear
core processes of the FMCG industry? What are the reasons
(e.g. Bottani and Rizzi, 2008; Miragliotta et al., 2009).
for this, and what can be done to change the outlook of RFId A careful analysis of the papers shows that most of the
adoption in the next years? This paper deals with these authors focus only on the benefits of RFId, in some cases
questions and, leveraging on the results of a five-year research comparing them to the required capital and operational
program led by Politecnico di Milano in cooperation with expenditure in order to assess the project profitability. This
GS1 Italy, discusses four high-level factors to explain this has been an important achievement, since the lack of
impasse, using quantitative data as well as qualitative confidence in the RFId benefits and, consequently, in the
judgment, and providing a sound interpretative view of what project profitability generates a greater perception of risk, thus
is happening and could happen in the future. preventing companies from investing in the technology (Dutta
Consistently with the objectives, the remainder of this paper et al., 2007; Reyes and Jaska, 2007; RFId-IPO, 2007).
is arranged as follows. Section 2 provides a classification of However, as discussed in the introduction, despite the
the main scientific contributions on RFId applications in the numerous studies illustrating the RFId benefits in the
FMCG supply chain. Section 3 illustrates the research FMCG supply chain, the technology is not yet adopted by
framework. Section 4 compares RFId with traditional barcode most of the companies in the industry. Other factors can
technology, and outlines the profitability impact from a supply explain this situation, e.g. the non-homogeneous distribution
chain perspective; then section 5 analyzes the profit-sharing of costs and benefits among the supply chain actors (“profit-
issue, so as to address how the increased profitability needs to sharing”) and the impact of the (un)reliability of technology.
be managed within manufacturer-retailer business While the profitability of RFId applications has been studied
relationships. Section 6 deals with technology reliability and by numerous authors, these other factors have received
analyzes the implications of having a less than 100 percent limited attention from academic literature, with just a few
reading rate, whereas section 7 discusses the benchmark with authors mentioning them in their analyses (cf. Table I).
the fashion industry. Finally, Sections 8 draws some Moreover, as evident from a detailed analysis of the papers
conclusions and suggests future research paths. reported in Table I, despite the numerous activities impacted
by the RFId introduction, it is still difficult to identify a
2. Literature review compelling “killer application”, i.e. an area of strong and
undisputable benefit over existing auto-id technologies, able
RFId technologies have attracted much attention from to drive the technology adoption in the industry.
academicians and practitioners in recent years, and the This paper aims to fill this gap. It presents a complete
number of papers published in international journals is analysis of the three high-level factors mentioned above (i.e.
growing exponentially. The deep literature review carried out RFId profitability, profit-sharing, business impact of the
by Ngai et al. (2008) highlights that the first contributions technology’s partial unreliability) and a comparison with the
mainly focus on technological issues, e.g. tag, reader and fashion industry in order to provide an interpretative view of
antenna performance measures. However, as the technology what is happening and could happen in the future in the
has become more and more mature, increasing attention has FMCG supply chain. In fact, although all these factors have
been paid to business and organizational issues. In this regard, already been studied at least to some extent, an analysis of
Miragliotta et al. (2009) provide a taxonomy of the main their joint implications is still missing.
academic contributions on the evaluation of RFId
applications. Specifically, the authors distinguish between:
.
qualitative analyses of the value of RFId (“qualitative”),
3. Research framework
which describe the strategic implications of applying RFId Given the aim of proposing a comprehensive analysis of RFId
to supply chain management, provide a taxonomy and a adoption in the FMCG supply chain, this paper relies on a
qualitative evaluation of the benefits, and analyze the quite articulated research framework (cf. Figure 1).
implementation process; The first pillar of this framework is represented by a new
.
quantitative analyses based on empirical evidence elaboration of the ROI analysis illustrated in Miragliotta et al.
(“empirical”), which seek to provide both a taxonomy and (2009). The original analytical model, which will be shortly
a quantitative evaluation of the benefits stemming from the recapitulated in the paragraphs following in terms of modeling
adoption of RFId, relying on case and field studies; and extent, analyzed activities and considered cost items, is used
300
Table I Analysis of papers focusing on RFId in the FMCG supply chain

Business impact of
Typology RFId profitability Profit-sharing technology performance
Agarwal (2001) Qualitative £
Alexander et al. (2002) Empirical £
Chappell et al. (2002) Empirical £
Alexander et al. (2003) Empirical £
Chappell et al. (2003) Empirical £
Karkkainen (2003) Empirical £ £
Tellkamp (2003) Model £
Fleisch and Tellkamp (2005) Model £
Jones et al. (2005) Qualitative £ £
Larson et al. (2005) Empirical £ £
Loebbecke (2005) Empirical £ £
Prater et al. (2005) Qualitative £
Smith (2005) Model £
Barua et al. (2006) Empirical £
Hardgrave et al. (2006) Empirical £
Bhattacharya et al. (2007) Qualitative £ £
Chaudhuri and Shankar (2007) Qualitative £
Cinicioglu et al. (2007) Qualitative £

Curtin et al. (2007) Qualitative £
Gaukler et al. (2007) Model £ £
Hingley et al. (2007) Qualitative £ £
Lekakos (2007) Qualitative £
Sellitto et al. (2007) Qualitative £
Boeck and Fosso Wamba (2008) Qualitative £
Bottani (2008) Model £
Bottani and Rizzi (2008) Model £ £
Fosso Wamba et al. (2008) Empirical £
Kim et al. (2008) Empirical £
Liu et al. (2008) Model £
Rekik et al. (2008a) Model £
Rekik et al. (2008b) Model £
Veeramani et al. (2008) Model £ £
Deitz et al. (2009) Empirical £
Ilic et al. (2009) Model £
Martinez-Sala et al. (2009) Qualitative £
Miragliotta et al. (2009) Model £ £
Mo (2009) Model £
Mo et al. (2009) Model £
Visich et al. (2009) Empirical £
Bhattacharya et al. (2010) Qualitative £
Bertolini et al. (2010) Empirical £
Bottani et al. (2010) Empirical £
Lee and Lee (2010) Empirical £
Tsai et al. (2010) Empirical £
in this paper to give a broader perspective of the RFId Milano. These tests, whose outcomes are shortly illustrated in
adoption trends. The results in Miragliotta et al. (2009) will section 6, were used to measure the reading effectiveness of
be further expanded here through an enriched sensitivity some best-of-breed RFId solutions in a real life environment
analysis (cf. section 4). Finally, the two main perspectives, and especially to figure out which modifications to the
that of the overall supply chain profitability and that of the packaging design and to the internal logistic processes need to
profitability of each single player (i.e. manufacturer and be done in order to achieve a 100 percent reading target. This
retailer), will be discussed (cf. section 5). information is then included in the ROI evaluation model in
The second pillar is represented by an extensive order to look for a global optimum, made up of the best
technological analysis, relying on hundreds of reading tests combination of better-performing but more expensive tags,
performed at the EPC Lab of GS1 Italy under a joint product packaging modifications and process redesign
cooperation program between GS1 Italy and Politecnico di interventions.
301
Figure 1 The research framework

The third pillar is represented by a more judgmental analysis et al., 2009). This question is crucial because the barcode –
in which the FMCG supply chain is benchmarked against the especially in combination with WiFi infrastructures – allows
Fashion industry (cf. section 7). The parallel is intended to very high levels of efficiency and accuracy to be reached, and
illustrate the major factors explaining the faster adoption rate the additional productivity benefits promised by RFId could
of RFId technologies in the Fashion supply chain, in order to be insufficient to justify the additional capital and operational
analyze whether they are specific of this industry or, hopefully, expenditures. Politecnico di Milano and GS1 Italy dedicated a
they are to some extent common with the FMCG, and can specific research stream to this topic over a period of three
therefore be levered to promote the diffusion of RFId. years. The methodological approach, the numerical results
and the validation process have been detailed by Miragliotta
4. RFId vs barcode: a profitability analysis et al. (2009). In this paper the main quantitative results of the
latter study will be briefly recalled and the outcomes of
4.1 The analytical model additional sensitivity analyses will be illustrated, focusing on
RFId is the most powerful auto-id technology available today: high-level conclusions concerning the profitability advantages
its distinctive features (direct line-of-sight not needed, of RFId with respect to the barcode.
multiple readings, higher memory capacity and robustness, The model reproduces the entire FMCG supply chain and
to name a few) allow to speed up processes and to increase the relevant activity drivers to assess the costs and benefits of
accuracy in data collection as never before (Jones et al., 2005, RFId adoption in the industry, which resulted from direct
Martinez-Sala et al., 2009, Roh et al., 2009). Nevertheless, interviews with managers and operational employees of about
RFId has to face the strong competition of other auto-id 30 companies. As shown in Figure 2, the supply chain is
technologies, including the leading one, i.e. the barcode, structured in five stages, three regarding the manufacturer’s
which may be less performing, but is also much cheaper and network (plant, plant warehouse and distribution center) and
simpler. Since the 1970s, companies have adopted the two involving the retailer’s network (distribution center and
barcode to improve data management and handling store). The products flow across the supply chain in full pallet
efficiency throughout the supply chain, as illustrated by loads until they are picked by case in the retailer distribution
numerous articles and white papers (Brown, 1997; McCathie center, and mixed pallet loads are shipped to the stores. The
and Michael, 2005; Beck et al., 2007). The massive diffusion model includes all the handling activities from the end of the
of the barcode is also proved by the fact that about 90 percent manufacturer production line to the receiving docks at the
of Fortune 500 companies have automated their warehouses store, which are summarized in Table II.
with barcode systems (Varchaver, 2007), and that the British The information collected during the interviews was used to
Science Association (www.britishscienceassociation.org) develop the analytical model, which was extensively validated
included the barcode in the top-ten “inventions” that with sample companies. The assessment of the benefits is
changed the world. based on the well-established activity based modeling
The question of profitability when switching from barcode approach, and consists in comparing the time and costs of
to RFId is probably the first one that both researchers and the operational activities before and after the RFId
practitioners have asked since the Walmart mandate, and introduction. For illustrative purposes, The Appendix
much knowledge has been gathered in these years, analyzing reports the activity-based model proposed for the receiving
all the internal logistics processes (Attaran, 2007; Fosso activity in the retailer distribution center. Two RFId scenarios
Wamba et al., 2008) and the implications on data are considered in the model, i.e. RFId tags placed only on
management (Chalasani and Boppana, 2007; Welbourne pallet loads (R1) and RFId tags placed on both pallet loads
302
Figure 2 The reference supply chain
Table II The macro-activities considered in the model

Supply chain
Manufacturer Retailer
Macro-activity Plant Plant warehouse Distribution center Distribution center Store
Productivity-related
Packaging (production line end) £
Receiving £ £ £ £
Putting away £ £ £ £ £
Storage £ £ £
Inventory controls £ £ £
Order assembly £ £ £
Shipping £ £ £
Complaints management £ £ £
Visibility-related
Out-of-stock reduction £ £ £ £ £
Contentious issues reduction £ £ £ £ £
Shrinkage reduction £ £ £ £ £
Note: In the manufacturer plant, the putting away activity includes only the movement of the pallet loads to the plant warehouse
and cases (R2). In both scenarios, the tags are initialized at cases/year was studied. Figure 3 illustrates the cost reduction
the end of the production line according to the electronic enabled by RFId (ecent/case) from the entire supply chain
product code (EPC) standard, which states that a unique point-of-view.
identifier must be written on the tag. The benchmark adopted In the R1 scenario, i.e. when tags are applied to pallet loads
to assess the technology impacts is represented by a base-line only, the benefits are comparable with the increased
scenario that assumes that every distribution center and store operational expenditure (1.92 ecent/case, i.e. about e1.15/
is equipped with a Wi-Fi network and that barcodes are used pallet load). The automatic identification of the pallet loads
for 100 percent of current identification needs. generates improvements mainly in the receiving and putting
The assessment of the costs incorporates the evaluation of away activities. There are also benefits in dispatching as a
the capital (CapEx) and operational expenditure (OpEx) in result of automatic identification and the elimination of
the two RFId scenarios. The CapEx includes the costs of controls. Conversely, order preparation is not significantly
hardware (e.g. readers, antennas, tags), the software affected in the R1 scenario, and the same is true for out-of-
(middleware and software development/integration), and stocks, contentious issues and shrinkage. The benefits
project management (design, implementation, test and achieved in the R2 scenario, i.e. RFId tags on both pallet
change management, project management). The OpEx loads and cases, are much higher than in the previous one
includes the cost of tags (on pallet loads and/or cases), the (12.44 ecent/case, i.e. e7.5/pallet load). In addition to the
maintenance of the RFId infrastructure, and the information previously described advantages, there are also significant
transmission costs. gains in the handling activities performed on cases (e.g.
picking, controls on mixed pallet loads, receiving in the
4.2 Results retailer DC and at the point of sale) and in visibility-related
The analytical model was instanced by Miragliotta et al. benefits (i.e. mainly shrinkage and out-of-stocks), which
(2009) to quantify the benefits enabled by RFId, and to assess account for 30 percent of the overall benefits.
the investment profitability. In the aforementioned study, a From a supply chain perspective, the above-mentioned
focus-group methodology was adopted to gather inputs benefits lead to a payback time which is often far from being
intended to be representative of the average FMCG supply attractive. Table III illustrates the results obtained in the two
chain. Specifically, a general supply chain handling 30 million RFId scenarios (R1, R2) considering two levels of tag prices
303
Figure 3 The benefits enabled by RFId technology in the FMCG supply classes of cost drivers have been considered, i.e. time to
chain: breakdown by activity perform identification and counting activities (i.e. initial
operational efficiency), initial level of out-of-stock at the POS,
and the product value. Table IV reports the ranges of values
considered for the sensitivity analysis, whereas Figures 4 and
5 report the impacts on the payback time. While a variation in
the initial operational efficiency affects both RFId scenarios,
the change in the other two variables impacts only on stock-
out costs and therefore only on the R2 scenario.
As apparent from Figure 4, the application of RFId tags
exclusively on pallet loads (R1) becomes a bit more attractive
only in those supply chains characterized by very low initial
operational efficiency, irrespective of the costs of the tag. Read
it another way, this scenario carries limited benefits when
compared with the use of barcodes, and therefore investments
in RFId technology can be hardly justified except when the
investment brings a leap-forward increase from a very
inefficient current state. The situation is significantly
different when RFId tags are also put on cases (R2), as
shown in Figure 5a. In fact, a lower tag price (i.e. 5 ecent/tag)
leads to very short pay-back times also in those supply chains
characterized by good initial efficiency, which is the typical
result of using barcodes and WiFi connectivity altogether.

Payback times in the R2 scenario when tag cost is set at 5
ecent depend also on the product value (cf. Figure 5c) – thus
confirming that for high-value goods it is easier to have a
positive return on investment – and – to a lesser extent – on
the initial out-of-stock level (cf. Figure 5b). When the tag cost
is set at 10 ecent, acceptable payback times are obtainable
only in supply chains that have low operational efficiency or
high product value or, of course, both features combined (cf.
Figures 5a and 5c).
These results do not consider the transient period and the
cost/benefit sharing issue and they assume that the technology
is completely reliable (100 percent of success). Therefore,
they represent an upper bound of the economic potential of
the RFId technology in this industry. Nevertheless they point
out that there is a wide area of economic convenience, at least
for the supply chain as a whole, when a case-level application
is addressed and tag costs are assumed close to the 5 ecent/tag
threshold. In this regard, the Walmart mandate was probably
issued too early given the RFId cost structure of 2004,
whereas it could be sustainable today, with the current tag
Table III Payback time – supply chain perspective costs.
RFId scenario Tag unit cost Payback time

5. From theory to practice: the profit-sharing
R1 10 ecent/tag 7.5 years issue
5 ecent/tag 6 years
R2 10 ecent/tag .10 years The numerical evidence presented in section 4 fails to
5 ecent/tag 3 years
consider some important issues, the first one being the
distribution of benefits and costs among supply chain
partners. In this regard, upstream suppliers generally feel
they are required to invest in RFId technology only to pass on
(i.e. a conservative price of 10 ecent/tag and 5 ecent/tag). It the benefits to their powerful retail customers (Agarwal,
can be noted that the payback time in the R1 scenario is 2001). Only a few authors have addressed this subject
always quite long, whereas the R2 scenario turns out to be explicitly (cf. Table I).
interesting if the tag costs 5 ecent, with a three-year payback An insight on the profit-sharing issue can be obtained by
time. rearranging the output of the model presented by Miragliotta
In order to investigate how the results depend on variables et al. (2009) and depicted in Figure 3 in terms of operational
other than the tag price, some additional sensitivity analyses benefits achieved by manufacturers and retailers. Figure 6
have been performed using the model proposed by illustrates the benefits (e cent/case) for the two players in the
Miragliotta et al. (2009), which is now encoded in the RFId scenarios described before (i.e. R1 and R2) and Table V
current ROI tool distributed by GS1 Italy. Specifically, three reports the payback times obtained by the manufacturer and
304
Table IV Drivers for the sensitivity analysis

Average Simulated range: [250% 4 1 100%]
Drivers
Time to perform identification Time for a single bar-code scan: 7s 3.5s 4 14s
and counting activities Time to count the cases in a pallet load: 20s 10s 4 40s
Time to control a pallet load – store: 20s 10s 4 40s
Stock-out Out of stock at the retail store: 8 percent 4% 4 16%
Product value Value of a pallet load shipped by the manufacturer: e1,000 e500 4 e2,000
Figure 4 Sensitivity analysis – R1 scenario Figure 5 Sensitivity analysis – R2 scenario

sensitivity analysis illustrated in section 4 – i.e. varying the

initial efficiency, the initial level of stock-outs and the product
value – is conducted.
It is therefore clear that it is not worth it for the
manufacturers to invest in RFId technology unless they are
forced to do so by their powerful retail customers, even if the
project could be profitable from a supply chain perspective
the retailer. It can be noted that in the R1 scenario (i.e. RFId
(cf. Table V, payback time ¼ 3 years when the tag cost is 5
tags on pallet loads) the manufacturer and the retailer enjoy
ecents).
similar benefits, although the retailer has slightly better
A viable way to escape from this deadlock situation would
investment profitability thanks to the lower investments
be to design a cost-sharing agreement between manufacturers
sustained. More specifically, when a tag cost of 5 ecent/tag is and retailers to divide the tag costs in some proportion, either
considered, the retailer’s payback time is about five years vs fixed or dependent on the achievable benefits. However, this
the seven-year payback time of the manufacturer. However, it path is extremely challenging: sensitive data will have to be
is in the R2 Scenario (i.e. RFId tags on both pallet loads and shared in an industry where information asymmetry is part of
cases) that the sharing of the benefits and costs becomes the the conventional way of doing business.
real issue. In fact, in this scenario, the benefits achieved by the
retailer are five times higher than those of the manufacturer,
6. Business implications of technology
whereas it is the manufacturer who applies the RFId tags to
every case and sustains most of the costs. The result is that the (un)reliability
manufacturer has an infinite payback time (i.e. the net present The results presented in section 4 and 5 have been obtained
value is always negative) even when tags cost 5 ecents, under the assumption of perfect technology reliability, i.e. 100
whereas the investment is very interesting for the retailer, who percent reading rate in each scenario. Despite the
can significantly speed up all the activities in which cases are technological developments occurred in recent years, this is
individually handled, e.g. order preparing (cf. Figure 3). a result that has yet to be consolidated, especially when the
These considerations do not change substantially if the tags are applied to single cases (R2 scenario).
305
Figure 6 The benefits enabled by RFId technology in the FMCG supply chain: breakdown by supply chain member
Table V Payback time – manufacturer and retailer (by metal) so that some tags may be unreachable by the
interrogator’s field, or, if reached, may not respond.
Payback time Table VI reports the outcome of several technological tests
RFId Tag unit Supply carried out at the EPC Lab of GS1 Italy (Ferro et al., 2008).
scenario cost Manufacturer Retailer chain The tests consisted in reading the RFId/EPC tags applied on
R1 10 ecent/tag 8 years 6.5 years 7.5 years all the cases within a pallet load when moving it with a forklift
5 ecent/tag 7 years 5.5 years 6 years through an RFId gate made of an RFId reader and four
R2 10 ecent/tag 1 1.5 years .10 years antennas. This simulates the typical environment when
5 ecent/tag 1 1.5 years 3 years receiving and shipping activities are performed. It can be
noted that the technology performances depend on the
product and/or packaging features: specifically, the
For the sake of simplicity, products can be divided into “RF- concurrence of high amounts of small cases on the pallet
friendly” and “RF-hostile”. Where “RF-friendly” products loads and the presence of liquid and/or metal might lead to
are considered, all the tags can be easily read in almost every reading failures.
operational process of the supply chain. Usually, “RF- In order to understand the implications of reading failures,
friendly” products have certain characteristics – regarding the type of RFId application should be considered. Basically,
the products themselves, the primary packaging, the RFId can be adopted to support:
secondary packaging and the pallet layout – that do not
.
transactions between two parties when official documents
prevent the radio frequency field generated by the reader to are exchanged (e.g. check-out process in a POS); and
.
operational activities, with the aim of improving the
reach the tags located on the cases, so that enough energy can
efficiency and accuracy of handling activities (e.g. receiving,
be harvested to wake up the tag and respond to the
picking, etc.).
interrogating reader. Products not containing liquids and/or
metals usually belong to this class. When “RF-hostile” The former require, by definition, 100 percent reading
products (i.e. containing liquids and/or metals) are reliability, since the financial transactions must rely on precise
considered, the energy transmitted in the UHF radio- product identification. The latter, instead, could be
frequency field might be absorbed (by water) or reflected implemented even with less-than-100 percent reading rates,
306
Table VI Technological tests carried out at the EPC Lab of GS1 Italy – main outcomes
Product Small cakes Pet food Bleach Coke (1) Shampoo Ground coffee Coke (2) Milk
Category Dry Dry Liquid Liquid Liquid Metal Liquid and metal Liquid and metal
Secondary packaging Cardboard Cardboard tray þ Cardboard Plastic film Cardboard Plastic film Cardboard tray þ Cardboard
plastic film plastic film
Primary packaging Plastic Plastic bag Plastic bottle Plastic bottles Plastic bottle Aluminum film Aluminum cans Tetrapack
No. cases per pallet 54 18 45 72 96 84 117 120
Reading rate (%) 100 100 100 100 47 0 92 98
although the achievable benefits would be reduced. (e.g. pallet layout, flow speed, single vs. massive reading,
Therefore, the consequence of the reading failures reported etc.).
in Table VI is that RFId cannot be adopted to automate This evidence explains why the solution of reading
financial transactions (e.g. to issue an invoice just by scanning problems is so complex: the actors who control these levers
the pallet content), but it can already be introduced to (product and packaging design, logistic processes and
support the logistic process operations (e.g. to speed up the technology solutions) are different, and may have conflicting
reconciliation between the goods received and the shipping objectives.
list). Of course, reading rates lower than 100 percent limit the In order to illustrate this concept, consider the case of the
profitability of the innovation, reducing the feasible logistic process of a very RF-hostile product: ground coffee
application areas and the degree of automation of the with aluminum packaging, whose characteristics are
impacted processes. illustrated in the upper quadrant of Figure 8. At the

The problem of increasing the reading performance of the beginning of the reading tests, neither individual nor
technology is a cumbersome one, not only because of its multiple readings were possible regardless of the tag type or
intrinsic technical complicacy, but because of the induced positioning, due to the aluminum packaging and to the pallet
system complexity. When dealing with RF communication, in layout. It has thus been fundamental to reconsider product
fact, the system performance is not only the result of the and process factors in order to achieve the required
technology used, but also of the context in which the RF readability. First, reliable individual readings were achieved.
communication takes place (disturbances, interferences, In order to reach this goal, a modification of the secondary
obstacles, etc.). This implies that in order to increase the packaging was needed by introducing a certain distance (at
reading reliability in a given context several variables have to least 4 mm, cf. Figure 8a bottom left) between the aluminum
be tuned, and the optimal solution (both from a technical and primary packaging and the plastic film acting as secondary
an economic point-of-view) must be achieved through a packaging. Keeping in mind the cost and the manufacturing
careful combination of the available levers. As illustrated in constraints, air bubble polyethylene film was selected as the
Figure 7, investing in higher performing tags, in fact, could spacer that best balances effectiveness and costs. Thanks to
usually solve the reading problems, but at a higher cost than if this modification, a single case containing 8 aluminum
investing in a combination of the right tag, a redesigned packages of ground coffee was 100 percent readable using low
product packaging (e.g. materials, physical characteristics, cost, UHF EPC Gen 2 tags. Secondly, the tertiary packaging
shape, dimensions, etc.) and a redesigned logistic process scheme was modified (cf. Figure 8b bottom right) to avoid
Figure 7 The costs of coordinated investment (technology, process and product features) to reach 100 percent reading accuracy
307
Figure 8 Ground coffee with aluminum primary packaging – secondary and tertiary packaging redesign to assure RFId reliability
that, in every layer, four internal cases were hidden and For illustrative purposes, the model is applied to the supply
therefore unreadable. In the new pallet configuration every chain of a medium-large manufacturer, who annually
case has at least one face on the outside of the pallet; produces 4.2 million cases of ground coffee. Once again,
moreover, the external face is always the same (i.e. the shorter the ROI tool distributed by GS1 Italy has been used to obtain
face), so that one single positioning of the tag will work for the presented results. Tables VII and VIII respectively report
every case. All the logistics parameters of the new solution are the main inputs and the results obtained. As before, the non-
equivalent (or superior) to the initial ones. discounted payback time has been used to compare the
After these modifications to both the secondary and tertiary solutions.
packaging, two technological alternatives have been The investment is not profitable in the technology-oriented
considered. The first scenario, named “technology scenario, whereas a payback time of 5 years can be reached if
oriented”, does not require any other significant process a process re-design is also performed and low-cost tags are
change, so high-performance tags (25 ecent/tag) are used in used. A sensitivity analysis showed that when considering a
order to achieve perfect reading reliability when the pallet lower initial performance in terms of quality and service level
load passes through a reading gate (e.g. a loading/unloading requirements and handling efficiency, both alternatives
dock provided with RFId reader and antennas). In the second become profitable, but the process-oriented alternative once
scenario, named “process oriented”, low-cost tags (10 ecent/ again provides greater profitability.
tag) are used on the cases, but in order to obtain a 100 The case of ground coffee with aluminum packaging shows
percent reading rate a process modification is needed: more that only the concurrent optimization of all the available levers
specifically, a rotating station is introduced to identify all the can lead to improved reading performance still maintaining a
cases on the pallet load, thus increasing the time required to good investment profitability. Unfortunately, this requires to
perform the handling activities. Both alternatives have been include many actors in the solution process (in this case, the
validated with the production manager of a prominent coffee coffee producer, its packaging suppliers and all the retailers
manufacturer, have been tested in collaboration with the EPC who may handle that kind of pallet), increasing the
Lab of GS1 Italy, and their related costs have been assessed coordination effort and complicating the profit-sharing
using the model described in section 4. issue, as explained in section 4.
308
Table VII Ground coffee with aluminum primary packaging – main suggested in sections 4, 5 and 6, a detailed comparison
inputs between these industries may help shed light on the future
diffusion of RFId in the FMCG sector as well.
Manufacturer Manufacturer Retailer With regard to the first issue, i.e. profitability, it is pretty
plant DC DC evident that the starting efficiency level of the fashion industry
Forklifts 7 8 18 is much lower if compared to FMCG (Miragliotta et al.,
Order pickers – 15 20
2010), and therefore performance improvements via RFId are
easy to obtain. For instance, although an increasing attention
Unloading docks – 15 20
has been paid to productivity improvements in recent years,
Loading docks 6 15 25
several fashion companies have not yet adopted standard
barcodes to support their supply chain processes. In this
General parameters scenario, the RFId profitability is enhanced also by the fact
Flow of cases per that Fashion products are often high value and high margin:
year (cases/year) 4,200,000 this makes some benefits more significant than in the FMCG
industry (e.g. stock-out reduction, cf. section 4).
Manufacturer plant With regard to the second issue, i.e. profit sharing, as a matter
Packaging lines 5 of fact there are several cases in which the same company owns
both the production and distribution networks, thus
Efficiency eliminating the profit sharing issue from the start (cf. section
Time for a single 5). When this is not true, the brand owner generally has strong
bar-code scan (s) 6 contractual levers to influence its distribution channel
Counting of the (e.g. franchising contracts) so that the actor who pays for the
cases in a pallet tag (i.e. the brand owner) has an adequate bargaining power
load (s) 15 with respect to the actor who has the largest benefits (i.e. the
retailer). For instance, a large fashion manufacturer in Italy is
considering to charge a large fraction of the RFId tag cost to
Moreover, it is impossible to imagine that every single reading its retailers, as a counterpart for the increased efficiency that
problem that may arise could be addressed individually, with the tag will bring in their store management processes.
customized solutions as the one depicted here. Therefore, a With regard to the third issue, i.e. technology reliability,
new set of rules (in terms of packaging, palletizing and most products handled in the industry can be classified as
handling) will have to be defined so that the default reading “RFId friendly”, thus assuring good reading performance in
capability of RFId is pushed up into a more favorable the distribution processes with very low technological costs
“baseline” situation. As a consequence, only a few remaining and few process modifications (cf. section 6). This fact, along
reading problems will be left to be addressed and solved by with the high product value, makes item level tagging already
resorting to such a detailed set of actions. a feasible scenario. As a consequence, the positive impact on
For these reasons, that of reliability represents a major logistic performance, although noticeable, becomes just a
obstacle to the RFId deployment in this industry, and much fraction of the value that RFId can offer for this industry, and
work is still to be done from a technological and a managerial RFId tags have proven to be an outstanding source of
perspective. information to deal with network control issues (anti-
counterfeiting and gray markets) (Rundh, 2008; Al-Kassab
et al., 2009; Kwok and Wu, 2009; Ustundag and Tanyas,
7. The benchmark with the fashion industry
2009) as well as to improve the product presentation (Moon
In recent years, the Fashion industry has shown great interest and Ngai, 2008; Miragliotta et al., 2010). Moreover, item
in RFId technology, which was promising to enhance supply level tagging enables several benefits in retail stores (Aberdeen
chain performance trough increased information accuracy Group, 2010). First, the automatic identification of the
and process visibility. For these reasons, global leading players incoming and outgoing products allows for accurate up-to-
have launched pilot projects to introduce the technology in date inventory records (Ustundag and Tanyas, 2009), which
their supply chains (e.g. Roberti, 2010; Swedberg, 2010). are essential to increase product availability especially during
What emerges from the published results of the pilot projects hot-selling periods (Moon and Ngai, 2008). Second, RFId
carried out in the industry is that the adoption rate in the can be used as an identification means to encourage cross-
Fashion industry appears to be significantly faster than in the selling (Thiesse and Al-Kassab, 2010). Third, despite not
FMCG supply chain. Following the investigation path being perfectly accountable as an electronic article
Table VIII Ground coffee with aluminum primary packaging – economic results
Technology-oriented Process-oriented
RFId infrastructure Packaging redesign Operative savings RFId infrastructure Packaging redesign Operative savings
CapEx (e) 318,000 150,000 614,000 150,000
OpEx (e/year) 554,000 248,000 301,000 204,000
Benefits (e/year) 376,000 338,000
Pay-back (years) 1 1 1 5 5 5
309
surveillance (EAS) system, RFId has some advantages with this could happen. The “RFId dilemma” could be
respect to classic anti-shoplifting magnetic systems (Wyld and summarized as follows. Applications to pallet loads would
Budden, 2009), which require much labor and are be sustainable at present, and profit-sharing and technology
inappropriate for premium items due to garment perforation. reliability would not be significant problems. However,
All in all, this comparison seems to confirm that the three substantial investments would be needed to achieve limited
issues analyzed in this paper can really explain the RFId benefits. In this scenario, manufacturers and retailers would
adoption speed. However, the current level of adoption is still not be so keen on investing. Consequently, a scenario in
lower than expected with many pilot projects and just a few which RFId tags were used only on pallet loads would be
widespread implementations. Therefore even in this industry, undermined from the outset and would probably never be
where the illustrated barriers are either inherently less critical deployed. Conversely, the scenario in which RFId tags are
or have been addressed more effectively than in FMCG, an used also on cases to automate logistic processes has the
additional explanation should be sought to account for a potential to offer greater benefits to retailers, who in fact were
slower-than-expected pace of adoption. In our opinion, this the first to move and to foster its adoption worldwide.
missing factor is the absence of a single killer application that However, substantial costs will have to be borne by
can alone justify the introduction of RFId. Instead, RFId manufactures, who are reluctant to do so because their part
requires a pervasive technology shift in which profitability of the process is the simplest and already the most optimized,
stems from a combination of benefits arising in a large and yet just a few benefits are expected from RFId. Moreover,
number of processes (i.e. logistics, brand protection, product case-level tagging might require product and/or process
presentation, store management). Such pervasive adoption redesign to achieve the optimal (technical and economical)
requires large investments, complex implementation tasks, solution in the presence of RFId-hostile products. This brings
difficult fine-tuning, widespread training and modifications to in further complexity, since the actors who control these
the current processes. levers may be different and with conflicting objectives.
The authors think that what is happening in the Fashion These considerations explain why large international RFId
industry may be of interest also for players in the FMCG projects are taking place in other industries (e.g. Fashion) rather
sector. First, the fact that complex, supply-chain-wide RFId than in the FMCG one, in which RFId was initially proposed as
projects are taking place in the fashion industry may be of the future identification technology. The diffusion of RFId in
help for the take-over of RFId in the FMCG sector. In fact, the FMCG supply chain therefore depends on being able to
both technology providers and company users in the Fashion solve the illustrated dilemma. In this regard, our paper provides
industry (e.g. Marks & Spencer), which are sometimes also contributions on three subjects, which have significant
players in the FMCG industry, are learning how to exploit the implications on managers operating in the FMCG industry
technology, and part of that experience and of the required and suggests the main directions for future research: investment
investments may also turn out to be a valuable asset for future profitability, technology and new pilots.
implementations in the FMCG supply chain. Second, the From a managerial perspective, the profit-sharing issue
Fashion industry is showing how important is the search of all must be addressed openly, and a suitable agreement has to be
types of benefits achievable with RFId. In this regard, another found between manufacturers (who pay for the tag variable
potential area in which RFId could represent a step forward costs) and retailers (who use the tag and the embedded
for the FMCG industry is that of product visibility, tracking information). For sure the amount of costs to be shared will
and tracing. In fact, product tracing can increase the company decrease as technology undergoes new developments, but this
resilience in the adverse event of large product recalls or factor may represent a short-term barrier, and therefore has to
withdrawals, as this area is undergoing severe regulatory be addressed now. The results presented in Sections 4 and 5,
constraints needs. This requirement, although driven by very which include benefits stemming from the increase accuracy
different forces (brand protection in Fashion, regulations in and visibility, could really help in this direction, and represent
FMCG), is common to the two industries, and may represent a good starting point for an open discussion. On the
a further opportunity for RFId to break into the business technology side, the paper shows that the implementation of
playground. Of course, this benefit has not to be an RFId project requires much more than simply applying a
overestimated since, once again, the RFId can offer only tag to every case. In this regard, as illustrated in the case of
incremental advantages with respect to the barcode combined ground coffee with aluminum packaging described in section
with well designed EDI infrastructure. Anyway, it is evident 6, all the available levers (i.e. technology, product, packaging)
that only a combination of all these sources of benefit - should be concurrently optimized in order to improve reading
achieved in many application areas (from handling reliability still maintaining good investment profitability. In
productivity to stock-out reductions, from inventory this sense, product and packaging design play a critical role in
management to product tracking) – may drive the adoption the success of an RFId application, thus potentially leading to
of RFId in the FMCG industry. the development of a new discipline, i.e. the “design for
RFId”. This may be summarized into a sort of “ten
commandments” list for every actor in the supply chain,
8. Conclusions
from product and packaging designers to final retailers, in
There is a conflicting situation regarding RFId technology in order to deal with the operative constraints of RFId, especially
the FMCG supply chain, a sort of “RFId dilemma” which when it comes to RF-hostile products. To this extent, a lot of
explains its current low adoption level. In fact, despite the information is already available, both from academic research
considerable interest in the technology and the huge and from pilot projects of companies, so what is needed is a
investments of large retailers in pushing and fostering its coordinated deployment plan. Lastly, the results presented in
adoption, very few concrete steps have been made since 2003, the paper also allow to identify those application areas in
and several signals indicate that many years will pass before which the RFId adoption could be easier, or more profitable
310
in the short term, and therefore which are more suitable for Alexander, K., Gilliam, T., Gramling, K., Kindy, M.,
launching pilot projects in the FMCG industry. These Moogimane, D., Schultz, M. and Woods, M. (2003),
application areas could be searched by type of goods “Focus on the supply chain: applying auto-ID within the
(e.g. consumer electronics, high-value food, etc.) or by distribution center”, white paper, Auto-ID Center, MIT,
purpose (e.g. compliancy to product traceability regulations, available at: www.fmi.org/technology/FMI_PWC_Dist.pdf
advanced marketing services, anti-counterfeiting needs), and Attaran, M. (2007), “RFID: an enabler of supply chain
may represent the Trojan horse through which this industry operations”, Supply Chain Management: An International
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gathering experience and starting to cover the fixed costs. Barua, A., Mani, D. and Whinston, A.B. (2006), “Assessing
With regard to future research, the value of RFId-enabled the financial impacts of RFID technologies on the retail and
healthcare sectors”, working paper, Center for Research in
effectiveness improvements has to be better investigated. In
Electronic Commerce, Department of IROM, McCombs
fact, despite there is clear intuition that this will play a
School of Business, The University of Texas at Austin, TX,
fundamental role in providing incentives to RFId adoption, available at: www.pharmamanufacturing.com/articles/2006/
factors like timeliness, customer service and improved U%20of%20TX%20ROI-RFID%20Study.pdf
traceability are still poorly investigated in literature Beck, J., Grajek, M. and Wey, C. (2007), “Estimating level
(cf. section 2), at least in quantitative terms. More, the effects in diffusion of a new technology: barcode scanning
mechanism through with such effectiveness benefits may be at the checkout counter”, ESMT working paper no. 07-002,
achieved is not addressed, and the improvement in 2007, available at: http://ssrn.com/abstract¼1072902
effectiveness performance is treated as an unknown model Bertolini, M., Bottani, E., Rizzi, A. and Volpi, A. (2010),
parameter, to be simulated (cf. Bottani et al., 2009). This will “The benefits of RFID and EPC in the supply chain:
require to put together what to investigate (i.e. how lessons from an Italian pilot study”, in Giusto, D., Iera, A.,
Morabito, G. and Atzori, L. (Eds), The Internet of Things,
effectiveness benefits may arise) and how to investigate it

(i.e. pilot-based on-field research) so as to carry on focused Springer, New York, NY, pp. 293-302.
action research programs, to understand the mechanism Bhattacharya, M., Chu, C. and Mullen, T. (2007), “RFID
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effectiveness. On the technology side, future research is and challenges”, working paper, College of Information
expected to provide not only increased theoretical Sciences and Technology – The Pennsylvania State
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performances. For example, the tuning of a portal to
sector”, Operations Management Research, Vol. 3 Nos 1/2,
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reading shampoos. So researchers have to work on the Boeck, H. and Fosso Wamba, S. (2008), “RFID and buyer-
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313
Appendix
Table AI Example of activity-based model – retailer distribution center (example: receiving)

Macro-
activity Activity Elementary activity Resource consumption drivers Formula
Receiving Truck acceptance Truck acceptance Time to accept the entering truck (t_acc) cost_receiving ¼ t_receiving *cost_labour/
Truck unloading Truck unloading Time to unload the truck (t_unload) usage_factor
(Re-labeling) Move to the printer Time to move to the printer t_receiving ¼ t_acc þ t_unload þ t_label þ
(t_label_moving) t_control þ t_error þ t_repal þ t_location
Mean number of pallet loads per ingoing t_label ¼ t_label_making þ
truck (N_pal_in) t_label_sticking þ t_moving/N_pal_in
Move back to the pallet Time to move back to the pallet load þ t_pallet_moving
load (t_pallet_moving) t_control ¼ t_id_pallet_load þ t_counting þ
Print the label Mean number of pallet loads per ingoing t_quality_ctrl þ t_counting_ctrl þ
truck (N_pal_in) t_case_ctrl *N_cases_ceck *perc_ceck
Time to print a label (t_label_print) t_error ¼ (perc_err_compil *t_compil þ
Stick the label on the pallet Time to stick the label on the pallet load perc_err_call *t_call) þ (perc_err_returned *
load (t_label_sticking) t_reload) þ (perc_err_admin *t_admin)
Controls Identify the pallet load Time to identify the pallet load (t_id_pl) t_repal ¼ perc_rep *(t_pallet þ t_unwr þ
Count the cases on the Time to count the cases on the pallet load t_posit þ t_lay þ t_adj þ 2 *t_wrap þ
pallet load (t_counting) t_label þ t_counting þ t_id_pl þ t_is)
t_location ¼ (t_id_pl þ t_wms þ t_is)
Re-count the cases on the Time to control the manual counting

pallet load [B] (t_counting_ctrl)
Control the case Time to control the case (t_case_ctrl)
Number of checked cases per pallet load
(N_cases_ceck)
% checked pallet loads (perc_ceck)
Quality controls Time to quality control (t_quality_ctrl)
(Errors management) Time to compile the shipping note
(t_compil)
Time to reload the rejected pallet load
(t_reload)
Percent of errors that are required to compile
the shipping note (perc_err_compil)
Percent of errors that are required to call a
supervisor (perc_err_call)
Percent of errors that require administrative
activities (perc_err_admin)
Time to call the supervisor (t_call)
Time for administrative activities (t_admin)
(Re-palletization) Take a new pallet Time to take a new pallet (t_pallet)
Percent of re-palletisation (perc_rep)
Unwrapping Time to unwrap the pallet load (t_unwr)
Positioning Positioning time (t_posit)
Move one or more layers Time to move the layers (t_lay)
to the new pallet
Adjust the new pallet load Time to adjust the new pallet load (t_adj)
Wrapping of the new Wrapping time (t_wrap)
pallet load
Wrapping of the original Wrapping time (t_wrap)
pallet load
Labeling of the new pallet See the re-labeling activity
load
Count the cases on the Time to count the cases on the pallet load
pallet load (t_counting)
Identify the new pallet Time to identify the pallet load (t_id_pl)
load
Communication with the IS Time to communicate the data to the
information system (t_is)
Definition of the Identify the pallet load Time to identify the pallet load (t_id_pl)
pallet load
location
WMS interrogation Time for WMS interrogation (t_wms)
Load the data on the IS Time to load the data on the information
system (t_is)
314
About the authors management in Luxury Companies, Supply Chain

Management.
Raffaello Balocco is Assistant Professor at the Department of Alessandro Perego is Full Professor and currently holds the
Management Engineering at Politecnico di Milano where he chair of Logistics Management and eOperations at
also lectures Management and Organisation, Strategic Politecnico di Milano, Department of Management,
Planning and eBusiness. He is Co-Director of the Executive Economics and Industrial Engineering. He is Deputy
Master of Business Administration (EMBA) at the MIP Director of the Department of Management, Economics
Consortium, the Business School of Politecnico di Milano. and Industrial Engineering, Director of the RFId Solution
He is involved in several research and business projects within Center, Director of the Observatories on RFId, Mobile and
the “ICT and Management Osservatori”, promoted by the Wireless Business, Intelligent Transportation Systems, B2b,
School of Management of Politecnico di Milano. He eCommerce B2c. He is also Director of the “Master Course
published a number of papers in international journals and in Supply Chain Management and Strategy”. Main research
in Italian and international conference proceedings on the themes: Logistic Networks Design, Supply Chain Planning,
strategic use of information technology by companies and eBusiness (eProcurement, eSupply Chain), RFId.
Institutions. Professional experience: consultant for many companies on
Giovanni Miragliotta is Assistant Professor at the national and international projects.
Department of Management, Economics and Industrial Angela Tumino is Assistant Researcher at the Department
Engineering, Politecnico di Milano. He holds the chairs of of Management, Economics and Industrial Engineering of
“Industrial Plants” and “Management of Production and Politecnico di Milano, Italy. She is Researcher of the RFId
Logistic Systems”. He is member of the Faculty of MIP, the Solution Center of Politecnico di Milano. She is member of
Business School of Politecnico di Milano, co-director of the the International Technical Committee of the iCiret2010
Italian Observatory on NFC and RFId Applications and (International Conference on Innovative Research in
project manager of RFId Solution Center of Politecnico di Engineering and Technology). Her main research themes
Milano. Professional experience: Operations and Accounting include Radio Frequency Identification (RFId), logistics,
consultant for leading international corporations. Major supply chain management, visibility and information sharing,
research areas: New Mobile Technologies and their impact value assessment. Angela Tumino is the corresponding author
on Operations and Business processes, Operations and can be contacted at: angela.tumino@polimi.it
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints
315
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Supply Chain Management: An International Journal

RFId adoption in the FMCG supply chain: an interpretative framework

*Related content and download information correct at time of download.

RFId adoption in the FMCG supply chain:

Keywords Radio frequency identification, Supply chain management

Paper type Research paper

1. Introduction suppliers were already involved but small and medium

Supply Chain Management: An International Journal Received: August 2010

some significant outcomes have been achieved. For example, .

Table I Analysis of papers focusing on RFId in the FMCG supply chain

Cinicioglu et al. (2007) Qualitative £

Figure 1 The research framework

Figure 2 The reference supply chain

Table II The macro-activities considered in the model

result of using barcodes and WiFi connectivity altogether.

RFId scenario Tag unit cost Payback time

Table IV Drivers for the sensitivity analysis

Figure 4 Sensitivity analysis – R1 scenario Figure 5 Sensitivity analysis – R2 scenario

sensitivity analysis illustrated in section 4 – i.e. varying the

impacted processes. illustrated in the upper quadrant of Figure 8. At the

effectiveness benefits may arise) and how to investigate it

paper, Auto-ID Center, MIT, available at: www.autoidlab ienmarchand.free.fr/RFID/IMG/pdf/Does_RFID_reduce_o

pp. 87-110. and Korean retailers”, Industrial Marketing Management,

Table AI Example of activity-based model – retailer distribution center (example: receiving)

Re-count the cases on the Time to control the manual counting

About the authors management in Luxury Companies, Supply Chain

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

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