Abstract

This study has been conducting regarding the “Impact of Radio Frequency
Identification (RFID) on efficiency of Supply Chain Management (SCM)”. Study
aims the investigation of Radio Frequency Identification technology in supply chain
management. Identifying the benefits, issues and obstacles of RIFD and explore the
challenges and impact on adopting RFID on supply chain are the objectives of the
study. Literature is conducted as a descriptive and qualitative study while the study
focus on finding literature on referring secondary data on types of books, journals,
articles and web. Finally, study provide the better identification of applications in
SCM that can be adopting RFID and efficiency measures of supply chain
management.

Key words: Radio Frequency Identification (RFID), Supply Chain Management

(SCM), benefits, issues, obstacles, challenges, impact and efficiency.

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 Table of Contents
Abstract.....................................................................................................................................i
Table of Contents.....................................................................................................................ii
List of figures..........................................................................................................................iii
List of abbreviation..................................................................................................................iv
1 INTRODUCTION............................................................................................................1
1.1 Business problem......................................................................................................1
1.2 Research questions....................................................................................................2
1.3 Research aim.............................................................................................................2
1.4 Research objectives...................................................................................................2
2 METHODOLOGY...........................................................................................................3
3 LITERATURE REVIEW.................................................................................................4
3.1 Introduction...............................................................................................................4
3.2 Radio Frequency Identification (RFID)....................................................................4
3.3 Supply Chain Management (SCM)...........................................................................4
3.4 Impact of RFID on SCM...........................................................................................6
3.4.1 Visibility...........................................................................................................6
3.4.2 Authentication...................................................................................................7
3.4.3 Automation.......................................................................................................8
3.4.4 Auxiliary features..............................................................................................8
3.4.5 Impact of RFID on efficiency of SCM..............................................................9
4 Conclusion......................................................................................................................10
5 References......................................................................................................................11

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 List of figures
Figure 1: End-to-End Supply Chain Performance.....................................................................6
Figure 2: Impact of RFIP on SCM efficiency.........................................................................10

iii
 List of abbreviation
RFID - Radio Frequency Identification

SCM - Supply Chain Management

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 1 INTRODUCTION
With the rapid growth and innovations in Information Technology and market
demand, new challenges in warehouse management has been emerged (Guiffrida et
al., 2007). Warehousing is a critical supply chain management tool[ CITATION Ham18
\l 1033 ]. The purpose of warehouse management is to provide goods in the right
vicinity, the right time and the right amount, with minimal waste of time and expense.
Radio Frequency Identification (RFID) is a system that aims to reduce time, price and
growth customer service (Avlijaš et al., 2014). Radio Frequency Identification (RFID)
is an automatic identification and data seize era which consists of 3 factors: a tag
shaped by means of a chip connected with an antenna; a reader that emits radio
indicators and gets in return answers from tags, and eventually a middleware that
bridges RFID hardware and business enterprise applications (Masum et al.,
2013).Throughout a supply chain, RFID technology can define, recognize, and
monitor the flow of products and information. The advanced characteristics of
recognition and communication can improve product traceability and supply chain
visibility. RFID promises to increase process accuracy, productivity and speed, reduce
storage, manage and distribution costs and boost sales by reducing stock-outs (Avlijaš
et al., 2014). Since the impact of RFID varies from industry to industry, sector by
sector (Sabbaghi and Vaidyanathan, 2008) this study is going examine the warehouse
operations of MAC consolidation centre, Sri Lanka.

1.1 Business problem

RFID technology can assist a huge range of groups and individuals along with
hospitals and patients, stores and clients, and manufacturers and vendors at some
stage in the deliver chain to realize full-size productivity profits and efficiencies
(Sabbaghi and Vaidyanathan, 2008). MAC Holdings is nowadays able to stamp its
authority over several sectors that include Aviation, Shipping, Freight & Logistics,
Renewable Energy, Fisheries & Aquaculture, Hospitality & Leisure and Strategic
Investments[ CITATION MAC20 \l 1033 ] . MAC uses its abundant expertise to provide
personalized approaches to any hurdles and minute requirements that may arise.
Whatever the size or complexity of getting customer’s cargo to the final destination,

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they'll treat it correctly from A-Z. Hense, this study examine “ To what extent does
RFID adoption efficency on Supply Chain Management (SCM) of MAC Holdings?”

1.2 Research questions

Study will answer following questions;

1. What are the benefits of RFID enabled Supply Chain Management (SCM)?
2. What are the potential obstacles of RFID enabled Supply Chain Management
(SCM)?
3. What are the challenges in adopting and implementing RFID technology in
Supply Chain Management (SCM)?
4. What is the level of impact of RFID technology on Supply Chain Management
(SCM)?

1.3 Research aim

The aim of the study is to explore “The impact of Radio Frequency Identification
(RFID) on Supply Chain Management (SCM); specific reference to MAC Holdings”.

1.4 Research objectives

Based on the research questions following objectives are arising for the study;

1. To identify the benefits of RFID enabled Supply Chain Management (SCM).

2. To explore the potential obstacles of RFID enabled Supply Chain
Management (SCM).
3. To analyze the challenges in adopting and implementing RFID technology in
Supply Chain Management (SCM).
4. To estimate the level of impact of RFID technology on Supply Chain
Management (SCM).

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 2 METHODOLOGY
This study conducted as a descriptive qualitative study. To undertake the study of
“The impact of Radio Frequency Identification (RFID) on Supply Chain Management
(SCM)” efficiency, the study refers the secondary data such as books, journals,
articles conference papers and web articles published in latest years. Research
objectives of the study are to identify the benefits of RFID enabled SCM, potential
obstacles, challenges in adopting and implementing RFID technology and to estimate
the level of impact of RFID technology on SCM. The extended literature will provide
the necessary detail on RFID and SCM. Through the literature it is expected to find
factors corporate with RFID on supply chain and identify the effectiveness of supply
chain activities while adopting RFID.

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 3 LITERATURE REVIEW

3.1 Introduction

This chapter will present a review of the literature relevant to the variables included in
the study. It will focus on the definitions, theories and concepts those are relevant to
the impact of Radio Frequency Identification (RFID) on Supply Chain Management
(SCM). This chapter provides base for the establishment of conceptual framework in
the following chapter.

3.2 Radio Frequency Identification (RFID)

Radio Frequency Identification (RFID) is a technology that transmit the identity of an
object using radio waves (Guiffrida et al., 2007). Radio Frequency Identification
Cation (RFID) is an automated identification technology consisting of three elements:
a linked tag (chip) attached to the product; a reader that transmits radio signals and
receives tag answers in return; and a program that links RFID hardware and business
applications (Avlijaš et al., 2014). RFID is an rising technology that has been more
and more utilized in logistics and Supply Chain Management (SCM) in recent years
(Masum et al., 2013).

Eventhough, RFID technology patented in 1973, only recently has its importance on
improving supply chain management performances been recognized and increasingly
act upon (Guiffrida et al., 2007). This technology can identify, categorize, and
manage the drift of goods and information throughout a supply chain. It offers the
potential to significantly improve supply chain performance because of its ability to
provide wealthy and well timed information that will increase visibility and control
over the supply chain (Masum et al., 2013).

3.3 Supply Chain Management (SCM)

The supply chain explains the way a product or service is delivered from start to
finish (Andreas and Simon, 2016). This seeks to create collaboration and alignment
between all processes in the supply chain such as; thus vendors, consumers and
company itself, enhancing supply chain efficiency and lowering costs, for example;
helps to minimize inventory gaps by exchanging demand- and inventory-related
information. (Hamdy et al, 2018).

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SCM has numerous functions, such as inventory, routing, delivery, venue, purchase,
development and marketing (Mostafa and Eltawil, 2016). SCM's key aim is to
achieve optimal efficiency for the lowest possible budget. By adding as much value as
possible, the output can be improved. Since supply chain involves a lot of agents
though. It is critical that they cooperate completely in order to optimize the efficiency
of the supply chain and deliver maximum benefits to all parties involved (Shukla et al,
2011).

The end-to-end supply chain can be defined as the network of entities that participate
directly or indirectly in the fulfillment of a particular product or service's customer
request. Supply chain efficiency depends on efficient and effective management of
inventory information, assets and the position of products in transit and forecasted,
real end-user demand and financial movement (Rajamani and Sriskandarajah, 2014).

Figure 1: End-to-End Supply Chain Performance

Yee and Oh, (2013) state that adoption of RFID technology on supply chain management
have many advantages/ benefits for both business and the end user-customer. Implement
inefficient infrastructure for information sharing, and save investment money is the major
importance of RFID. Easy control of industry standards, savings on time and effort, quicker
new partner connectivity, interoperatability value proposition efforts are the additional
benefits.

A technology that allows for greater speed, performance, precision and real-time sharing of
information is needed to achieve a more sensitive control system for the supply chain. Such a
system would be able to achieve the following essential capabilities: fulfillment of custom-
made orders, fulfillment of customer commitments, timely delivery, rapid response to
customer demands and desires, improved adaptability and quicker response to external
changes [ CITATION Chu17 \l 1033 ]. Radio Frequency Identification (RFID) may, in this

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context, be an enabling technology to develop a more efficient supply chain management
system (Zhong et al., 2015).

3.4 Impact of RFID on SCM

Applications of RFID in supply chain have expanded (Masum et al., 2013). Its
advanced identification and communique characteristics can improve the product
traceability and the visibility among supply chains. RFID promise to increase
accuracy, efficiency and pace of tactics, reduce storage, managing and distribution
expenses and improve sales via reducing the quantity of inventory-outs (Avlijaš et al.,
2014).

Many RFID vendors and organizations see RFID technology as a solution to product
shrinkage in the retail industry. Visibility, Authentication, Automation, Auxiliary
features are the range of techniques and applications that allow this technology to
reduce product contraction across the retail supply chain[ CITATION kat17 \l 1033 ].

3.4.1 Visibility
Visibility is defined as the ability of an company to reliably track and monitor product
movements across the supply chain. Visibility across the supply chain allows a
retailer to gather accurate information to support decision-making. Additionally,
product visibility in the supply chain cycle improves the probability of a product
meeting its destination; the consumer. If a store has the ability to locate and recognize
the exact position of its items, it can actually minimize: Warehouse discrimination,
theft and misplaced and lost [ CITATION Rek08 \l 1033 ].

Warehouse discrimination: As suggested by Pisello, by validating the accuracy of

deliveries and shipments, RFID can help the process of successful responses to
consumer demand with efficiency. Inaccuracies found in a retail supply chain are
usually referred to as discrimination. Using RFID, a supplier has the ability to reduce
warehouse discrepancies by accurately checking the load of a delivery vehicle.
Reducing errors in the planning and delivery of supplies from the fulfillment center to
the retail outlet is anticipated to result in a decrease in total product shrinkage
rates[ CITATION kat17 \l 1033 ].

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Theft: Using RFID to counter shrinkage sources warehouse management have the
ability to keep track of products in and out of the store. Using RFID to actively
control products at a retail outlet can potentially help deter theft [ CITATION Pis \l
1033 ]. Employees will be notified using a warning system to watch the person who
removed the items and ensure that the goods are paid for before the shopper leaves the
store.

Misplaced and lost: Items that were 'shifted' were usually shifted to a misallocated
portion of a warehouse or retail outlet. If a product is not found within a given
timeline, however, its status is said to be 'lost' or undercounted for. Usually,
unrecovered products are believed to be lost and are thus added to the gross shrinkage
of missing items. RFID has the ability to mark and trace a specific product at item
level during the entire supply chain cycle[ CITATION kat17 \l 1033 ].

3.4.2 Authentication
RFID may also give value by reducing shrinkage of the product through its ability to
easily authenticate a labeled item. A retailer can leverage this function by scrutinizing
branded items at any point in the supply chain. Authentication may be used to locate
faulty goods, detect potential acts of fraud and identify counterfeit items during
recalls (Mall and Mishra, 2015).

Recalls: Products must follow certain safety requirements. The ability to authenticate
a product using RFID will mitigate the overall effect of product recalls and attempts
to extort the product. Retail employees can reliably identify a desired product using an
RFID scanning tool, and decide if it is subject to recall[ CITATION kat17 \l 1033 ].

Fraud: Barcode fraud may also occur anywhere in the supply chain. If a product can
be detected and verified as previously owned by a retailer, there is a greater likelihood
for the value of the goods to be maintained by the retailer and not lost due to fraud.
The RFID can help by authenticating the point of origin of a product (Mall and
Mishra, 2015).

Countries: Serial numbers are a requirement for an effective anti-counterfeit solution.

RFID's use for anti-counterfeiting purposes in the retail industry is more likely to
include clothing and other high-end items. RFID's anti-counterfeiting technology will
reduce product shrinkage by reducing the risk of a retailer investing unknowingly in
counterfeit goods[ CITATION kat17 \l 1033 ].

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3.4.3 Automation
Checking goods using a barcode system requires scanning the barcode of a product at
any point in the supply chain by hand. The Electronic Product Code (EPC) standard
for storing data on an RFID tag is designed to automatically classify goods in the
retail supply chain. An EPC code identifies the manufacturer, product category and
individual object. The purpose of automated recognition of these data is to minimize
human interference errors[ CITATION kat17 \l 1033 ].

Human errors: RFID allows automated inventory auditing. Taking stock usually
involves using barcode scanners to classify items that are then counted manually by
hand. Miscalculated goods are most likely associated with human errors which then
contribute to the overall amount of product shrinkage. Reducing errors due to human
interference, however, is not the only advantage where RFID can minimize shrinking
of the product [ CITATION Rek08 \l 1033 ].

3.4.4 Auxiliary features

Goods are usually spoiled when they are: damaged, broken, unsealed, exposed to
incorrect or out of date temperatures. Goods that have been ruined are usually
discarded, and thus lead to vast amounts of dwindling stock. Using the following
auxiliary features RFID will reduce product shrinkage [ CITATION kat17 \l 1033 ].

Damage: When a manufacturer is able to report harm goods they can receive credit
through insurance or other structured arrangements with their suppliers. RFID Vendor
transporting goods using RFID essentially removes the human contact as items are
automatically scanned. Minimal management of stock by staff leads to a further
reduction in the risk of unintentionally losing or mishandling of goods [ CITATION
kat17 \l 1033 ].

Temperature: A temperature sensor can be mounted on an RFID tag as an additional

device, according to RFID Vendor. Sensors can track the temperature levels either in
real time or at different intervals. Tags may be applied to a shipping container, a
vehicle or an individual product for this reason. Using this type of RFID application,

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retailer as well as customer can be confident of the temperature of a product during
the entire supply chain phase [ CITATION kat17 \l 1033 ].

Expiration date: Monitoring the full inventory list of a retailer's expiry dates is a
difficult task. RFID can be used to track the expiry of a drug. If a seller can tell
quickly when a product is about to expire, goods can be positioned strategically or re-
priced for fast sales [ CITATION kat17 \l 1033 ].

Stock rotation: The expiry date of a product is closely related to stock turnover
practice. Advances in RFID will ensure that retailers are continuously aware of goods
that are approaching expiry. If the product can be transferred to the front of the shelf,
workers should be alerted in real-time. This simple procedure plays a role in reducing
product shrinkage [ CITATION kat17 \l 1033 ].

3.4.5 Impact of RFID on efficiency of SCM

Rajamani and Sriskandarajah, (2014) expain, knowing what, where and when
inventory assets are available in real time, and where and how easily they can be
delivered provides major opportunities to increase the efficiency of the supply chain.
It can be accomplished from an internal business process perspective through
reducing inventory through enhancing visibility, monitoring, replenishment and
forecasting; reducing cycle times by enhancing procedures, efficiencies and removing
bottlenecks; improving resource usage by automating, and duplication, raising
efficiency; raising service rates and introducing repeat customer businesses; and
improving quality through more precise inventory allowing more efficient tracking
and correction of product faults (Rajamani and Sriskandarajah, 2014).

SCM
RFIP Efficiency
Visibility Reduced inventory
Authentication Reduced cycle time
Automation Improve quality
Auxiliary features Improve resource
utilization
Improve service

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 Figure 2: Impact of RFIP on SCM efficiency

4 Conclusion
Supply Chain Management (SCM)is an essential point in business which connect the
supplier, distributor and the end user - customer. With the ongoing technological
world adopting modern, advance technology for the business activities is gain
competitive advantage for the business. In this context adopting Radio Frequency
Identification (RFID) on supply chain management is add an extra advantage, security
and cost efficiency. Literature review identify the RFID plays a role in reducing
product shrinkage by visibility, authentication, automation and auxiliary features in
supply chain and as a result RFID effectively reduced inventory, reduced cycle time,
improve quality, improve resource utilization, improve service and improve
information share of supply chain.

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