The Improvement of logistic management using
Lean and RFID technology
Satit Kravenkit
Department of Computer Science
Faculty of Science
KhonKaen University, Thailand
Email:satkra@nkc.kku.ac.th
Abstract —One of the successful strategies in business
competition is effectiveness of logistic management, especially
when agriculture products, which have a short life-cycle, are
concerned. This means that time management directly affect
freshness of products. This study was based on Lean and RFID
technology to reduce the amount of time in non-value-added
germinated brown rice (GBR) logistic operations in a rice mill. In
this study, it began with analysis of the GBR logistic operations
in rice mill after that there was an investigation of 8 operation
management. Finally, Value Stream Mapping in current state
was drawn to show the GBR logistic operations, while Value
Stream Mapping in future state was used to draw current maps
integrated with Lean and RFID. The result of design using Lean
and RFID showed that the GBR logistic operations significantly
reduce time 617 from 3,731.5 minutes accounting for 16.53%.
Moreover, according to evaluation analysis, break event point
(BEP) is 3 years and the return on investment (ROI) is to be in
the following the 28.77%.
Keywords— Radio Frequency Identification, Lean, Value
Stream Mapping, Germinated Brown Rice, Logistics management,
Break Event Point, Return on Investment
I. INTRODUCTION
Thailand mainly depends on income from rice industry for
country’s economic development. This industry has generated
considerable benefit and income to the country due to many
reasons. In Thailand, There are a lot of personnel with
cultivation ability and processing production. Moreover, most
consumers are concerned about their health and consumed
food. It seems that the number of rice consumers is increasing.
However, there are some potential factors affecting rice
industries. In addition to intensive competitions, agriculture
products have a short life-cycle. Therefore, one of the ways to
deal with this problem is to adopt and explore some strategies,
effective ways or technology to improve logistic operations in
order to deliver customers service under the lowest price.
Lean [1] has been considered one of the alternative
solutions for waste elimination in a variety of business
operations. Lean practices start form drawing VSM [2] in
current state, a tool for modeling real physical processes. If the
VSM were improved, which results in waste elimination in the
978-1-4799-0604-8/13/$31.00 ©2013 IEEE
Somjit Arch-int
Department of Computer Science
Faculty of Science
KhonKaen University, Thailand
Email:somjit@kku.ac.th
operation management, there will be high likelihood of an
efficient VSM in future state.
RFID technology [3][4] is one of the alternative ways to
optimize the logistic and supply chain operations, due to the
fact that, it can identify, classify and count a considerable
number of objects in the short time. Consequently, it
contributes to such a variety of benefits, as a reduction of
receiving and shipping process, time of barcodes scan for
product numbering.
In this study, Lean and RFID are adopted to reduce the
amount of time in non-value-added GBR logistic operations in
rice mill. VSM is the main tool used to analyze operation. A
performance indicator for evaluation of total time in operation
and RFID investment estimation consist of BEP and ROI. The
result of this study is verified that Lean and RFID tend to
improve GBR logistic operations and in terms of economics, it
is worth for rice mills.
The remainder of this paper is divided into five sections:
related works, analysis of GBR logistic operations, apply Lean
and RFID in logistic operations, evaluation, and conclusion.
II. RELETED WORKS
This section reports literature related to Lean and VSM, and
RFID technology.
Lean [5] is an effective tool to improve process in
companies and manufacturing industries. To illustrate, its
versatilities include improving productivity, reducing cost of
product and saving lead time. A VSM is practical of lean
which [6] collects operation process from real-case to show
flow of material, starting from manufacturing process to
transporting products.
RFID technology [7] is a system relying on radio frequency
in a middle communication to send and receive data between 2
devices (Tag, Reader). RFID can identify objects by using a
RFID tag which contains objects data attached to object, able
to classify objects and acknowledge real-time data.
RFID is adopted to integrate logistic operations.
Introducing RFID into member through supply chain may
result in development of tracking and tracing of product and
reduction a total time in transportation, count, and preparing
product.
 According to previous studies, Lean integrated with RFID
is used in some part of operation management in
organizations. In a study related to effectiveness of supply
chain with Lean and RFID applying [5], this study focused
waste elimination in transportation, storage and retrieval
operations. The result showed that the total of operation time
could be saved 81%.
In addition, The RFID system integrated with VSM [6]
(Dynamic value stream) was studied to determine how much
the object information thought a manufacturing system could
be collected. The result concluded that manager could make
the right decisions at the right time. The manager was given
information where the workers were making change to
processing capacity and that he perceived labor requirement,
flows and cell layout to optimize.
Moreover, there was a study concerned with the innovative
RFID application and lean thinking in the service operation of
apparel retailer [1] in order to increase customer conversion
towards customer and staff are benefit from this new initiative
leading to increasing customer conversion. However, even
though many studies have used of Lean and RFID in many
industry, there has been little research used on the Agriculture
Industry.
III. ANALYSIS OF GBR LOGISTICS OPERATIONS
A. Process Background in Rice mill
The following are data collected from interview and
survey in physical operation in rice mill in order to draw a
VSM current state and analysis of value-added operations and
non-value-added operations. The GBR can be drawn in 8
operations as follows.
1) Purchase and order: Rice miller purchased paddy from
agricultural cooperatives, as a partner.
2) Receive: Operator transported paddy for inspection by
using criterion used for paddy. That is paddy are good grain
and moisture content (MC) level is 14%. Then, operators
weighed paddy.
3) Purchase and order: When paddy MC was less than
14%, operator packed paddy into a jumbo bag and attached
label, but if MC over 14%, paddy moved to drying process.
4) Production: Operator prepared and manually counted
the number of jumbo bags of paddy; the paddy was
transported for following production operation: a) Seeding:
Paddy was soaked in clean water. If paddy is saturated,
pouring out and clean paddy; afterward, paddy were stored in
suitable containers, and then the paddy were covered with
cloth about 24-36 hours in relative humidity about 95%.
Finally, the process was considered complete when a size of
embryo is 0.5-1.0 mm. b) Heating: Operator transported
paddy to heating process to reduce a level of a microscopic. c)
Drying: The temperature used in drying process ranged 40°-
60° c at relative humidity about 60%. When the moisture
content level is 14%, the drying processes are complete. d)
Operating Mill: Making a leave husk is 70%
5) Packing: There were 3 package types; bag, box, and
pallet. GBR was packed in a 5-kilogram bag. 20 bags in a box
and another 10 boxes in pallet, respectively. All of the unit
type were attached with barcode label.
6) GBR warehouse: GBR products were stored in short
time and the number of products were prepared just to respond
customers demand. Operator used barcode system to count the
number of GBR products.
7) Placing of order: Operator checked a validated
purchase of order and managed a quantity in inventory. When
the quantity of products in warehouse outnumbered the
demand of customers, operators transported products to
customer. if the quantity of GBR product was less than the
demand, operator reported purchasing department.
8) Transportation: Operator planed each of the
transportations to increase worth of resource managing.
Operator rechecked and recounted the products. When driver
received delivery document, this operation was complete
B. Analysis of logistic GBR operations on the rice mill
1) Drawing Value Stream Mapping and classifying routine
operation: According to the preliminary study, VSM is
illustrated in Fig 1. This map shows operations of GBR, flow
material (paddy) and product (GBR), number of operator, total
time of value-added logistic (3,731.5 minutes) and non-value-
added logistic operations (1 day 6 hours and 30 minutes).
Fig. 1. Value Stream Mapping in current state
2) Classification routine operation: The 8 logistic
operations can be classified into 19 routine operations to
improve efficiency and detailed operations. Table I shows 4
parts of a GBR logistic routine operations, including routine
operation, total time (TIME), Operation type (VT), and kinds
of waste (ID). Operation type includes, 1: Value-Added (VA)
operation, 2: Necessary But Non-Value-Added (NNVA)
operation, and 3: Non-Value-Added (NVA) operation. Kinds
of waste are a part of NVA [9]. Its consist of 1:
Overproduction, 2: Waiting, 3: transportation, 4: Over-
processing, 5: Inventory, 6: Motion and 7: Defect. These 7
wastes represent the most commonly wasted resources.
According to the table I, the operations and their total time
spent in VA, NNVA and NVA are 4, 8 and 7 at 2,813.5, 258
and 660 minutes, respectively. Of 7 operations, 6 operations
are reported waste time spent on over-processing operation.
Therefore, it is likely that if the time-wasting operation were
reduced, efficiency in the logistic operations would improve.
TABLE I. ANALYSIS OF ROUTINE OPERATION IN CURRENT STATE 4) Production: RFID handheld is used to count products.
Routine operation Time VT ID 5) Packing: There are 3 types of packages: bag, box, and
1. Purchase and order 95 pallet. All types of packages are to be attached with RFID tag.
1. Selecting suppliers. Creating purchase order (PO) and recording 80 2 - 6) GBR warehouse: RFID reader counts and captures data
data into computer. Sending PO to supplier.
2. Suppliers sends perceived document to operators. Operators record 15 2 - of products attached with RFID tag.
data into computer.
2. Receive 70
7) Placing of order: Rice miller receives information of
1. paddy is inspected with criteria of moisture content is less than 30 3 4 current state and on-going activities of their customers as soon
14% and type of fine grain to agree with paddy cost.
2. Truck contains paddy are weighted. Unload paddy out off a truck 10 3 4 as the products of the customers pass through the door
and weigh only truck to calculated weight of paddy installed with RFID system. This means that rice miller can
3. Operators makes PO bill and record data into computer. 30 2 -
3. Paddy warehouse 540 prepare the number of products responding those state and
1. Transporting paddy to drying process. 500 3 4 activities.
2. Operators pack paddy into jumbo bag and attach label code. 15 1 -
3. Operator counts the number of jumbo bag of paddy with operations 25 3 4 8) Transportation: In this operation, RFID reader is used
manual and store paddy in warehouse. to count products instead of the traditional barcode reader.
4. Production 2430
1. Operators prepare and manually counts the number of paddy. 30 3 4
2. Seeding, Heating, Drying, Rough Milling operation , respectively. 2400 1 -
5. Packing 398.5
1. GBR packed in a 5 kilogram bag, 20 bags packed into a box. 384 1 -
2. 10 boxes are packed in pallet. 14.5 1 -
6. GBR warehouse 36
1. Operator use barcode reader to count a number of products. Data 6 2 -
of product are recorded into computer.
2. Operator store GBR products in warehouse. 30 3 5
7. Placing of order 111
1. Operators check a validity a purchase order. Considerings quantity 35 3 4
of product in warehouse. If the quantity of product is not enough,
operators inform purchase department to order paddy.
2. Operator records purchase order data and send the perceived 30 2 -
information and invoice document to customers.
3. Operator prepares and count product with barcode reader system. 46 2 -
Products are load into area transport
8. Transportation 51
1. Operators plans the routing of a transportation. Registration of 20 2 -
data of a driver and truck into computer. Fig. 2. Lean and RFID integrated with GBR logistic operations
2. Operators check validity products by barcode reader. Drivers 31 2 -
receive delivery document.
B. Reorganization of GBR logistic operations
1) Drawing VSM in future state: Fig. 3 shows the amount
IV. APPLY LEAN AND RFID IN LOGISTIC OPERATIONS of time in operations including: Receive, Paddy warehouse,
A. Reorganization of GBR logistic operations Production, GBR warehouse, Placing of order, and
To improve efficiency of GBR logistic operations, two Transportation are saved from 70, 540, 2430, 36, 111, and 51
policies are introduced. The first policy is to replace barcode minutes to 35, 26, 2425, 25, 80, and 30 minutes, respectively.
system with RFID system. That is, first, the door of warehouse
of rice mill is installed with RFID reader to count a number of
products. Second, the door of customers warehouse is also
installed with RFID system at either entrance-outer or back-
room. When the products attached with RFID tag pass through
the door, RFID reader automatically captures data from RFID
tag and send the data of the current state and on-going
activities to the rice miller. This means that the total time in
operation in paddy warehouse, GBR warehouse, and
transportation is reduced. The second policy is to create
following rules for suppliers. It is necessary that first moisture Fig. 3. Value Stream Mapping in future state
content of paddy be less than 14%; packaging be clean;
storing time of paddy be less than 1 year and the source of 2) Classification routine operation in future state: The
paddy be identified. According to this policy, rice miller can following section shows the routine operations integration
reduce the total time in receiving operation as drying and with 2 policies as table II.
packing operations are eliminated.
V. EVALUATION
Figure 2 illustrates GBR logistic operations using 2
policies. A. Evaluation of time in GBR logistic operations
1) Purchase and order: Rice miller makes order of paddy According to table III, results indicate that a total time in
from agriculture cooperative. future state of VA and NVA operations decreases by 14 and
2) Receive: Rice miller follows the second policy. 615 minutes from 2873.5 and 660 minutes, respectively, while
3) Paddy warehouse: Operators attach RFID tag to jumbo a total time of NNVA increases 12 from 258 minutes.
bag and transport to warehouse.
TABLE II. ANALYSIS OF ROUTINE OPERATION IN FUTURE STATE

Routine operation Time VT ID Break Event Point = (Yearly NPV Cash Flow – Overall NPV
1. Purchase and order. 95 Cash Flow) / Yearly NPV Cash Flow. (1)
1. Selecting suppliers. Creating purchase order (PO) and recording 80 2 - Break Event Point (%) = (127,575 - 98,075) * 100 /
data into computer. Sending PO to supplier.
2. Suppliers sends perceived document to operators. Operators record 15 2 - 127,575 = 23.12% or 3 years.
data into computer.
2. Receive 35
Net Present Value = Benefit Cost - Investment Cost (2)
1. Total time is Reduced in paddy inspection (MC=14% and good 20 3 4 Net Present Value = 439,020 - 340,945 = 98,075.
grain) and weight paddy inspection.
2. Operators make purchase order bill and record data into computer. 15 2 -
ROI = Net Present Value / Investment Cost. (3)
3. paddy warehouse 26 ROI (%) = 98,075 * 100 / 340,945 = 28.77%.
1. Operators attach RFID tag to jumbo bag. 1 1 -
2. Operator counts the number of products with RFID handheld. 25 2 -
Storing jumbo bag of paddy in a warehouse. VI. CONCLUSION
4. Production 2,425
1. Operators prepares and count the number of jumbo bags of paddy 25 2 - In GBR logistic operations analysis, the VSM on current
with RFID handheld. state consists of 8 main processes and 19 routine operations.
2. Seeding, Heating, Drying, Rough Milling operation respectively. 2400 1 -
5. Packing 398.5 The number of NVA is 7 operations, which spent 660
1. GBR are packed in a 5 kilogram bag, 20 bags packed into a box. 384 1 - minutes, while the number of VA is 4 operations, which spent
2. 10 boxes are packed in pallet 14.5 1 -
6. GBR warehouse 25 is 2,813.5 minutes. After reorganization with applying of Lean
1. Products are attached with RFID tag and passed through the door. 25 3 5 and RFID, the map reduces from 19 to 17 routine operations
Its are automatically counted. Storing products in warehouse.
7. Placing of order 80 where time spent in NVA and VA remains at 45 and 2,799.5
1) When the attached products pass through the door of customers,
RFID reader capture data from RFID tag and send the signalized data
5 2 - minutes respectively.
to rice mill. Compared with a total time in current operation, future
2) Operator considers quantity of products in warehouse and Remain- 5 2 -
ing quantity in warehouse of customers for sufficient preparation.
operation (Lean and RFID) can result in time reduction from
1. Operators records purchased order data and send acknowledgement 30 2 - 3,731.5 to 3,114.5 minutes. Moreover, according to the
and invoice document to customers.
2. Operators prepare and count products with RFID reader system. 40 2 -
analysis of break event point, this operation can yield 3 years
Products are load into area transport and return on investment is 28.77%. The reduction of total
8. Transportation 30
1. Operator plans the routing of transportation. Registration of data 20 2 - time in operations of logistic means reduction of lead time,
of assigned driver and truck are processed into computer. which may contribute to high benefits for subject
20 2 -2. Operators check validity of products by RFID reader. Drivers 10 2 -
receive delivery document organizations and members in the supply chain.

TABLE III. ANALYSIS OF ROUTINE OPERATION IN FUTURE STATE REFERENCES

[1] S. C. K. So, “A novel RFID application for realizing lean services based
Routine operation Current Time Future Time on customer chain operations reference model,” in Industrial
Value-Added 4 2,813.5 4 2,799.5 Engineering and Engineering Management (IEEM), 2010 IEEE
Necessary But Non-value-Added 8 258.0 11 270.0 International Confer-ence on, 2010, pp. 400-404.
Non-Value-Added 7 660.0 2 45.0
Total 19 3,731.5 17 3,114.5 [2] F. A. Abdulmalek and J. Rajgopal, “Analyzing the benefits of lean
manufacturing and value stream mapping via simulation: A process
B. Break Event Point and Return On Investment analysis sector case study,” International Journal of Production Economics, vol.
107, pp. 223-236, 2007.
In analysis of BEP and ROI with Lean and RFID, the cost
of RFID system (328,750 THB) is related with both hardware [3] X. Zhu, S. K. Mukhopadhyay, and H. Kurata, “A review of RFID
technology and its managerial applications in different industries,”
and software. Hardware includes a computer server (30,000 Journal of Engineering and Technology Management, vol. 29, pp. 152-
THB), 2 personal computers (30,000 THB), 2 RFID readers 167, 2012.
(160,000 THB), a printer (50,000 THB) and 5,000 RFID tags [4] E. W. T. Ngai, K. K. L. Moon, F. J. Riggins, and C. Y. Yi, “RFID
(3,750 THB), respectively. Software covers RFID system research: An academic literature review (1995 - 2005) and future
installation (10,000 THB), software development (40,000 research directions,” International Journal of Production Economics, vol.
THB), and maintenance (5,000 THB/years), respectively. Table 112, pp. 510-520, 2008.
IV shows cumulative investment cost and benefit in 3 years [5] J. C. Chen, C.-H. Cheng, and P. B. Huang, “Supply chain management
with lean production and RFID application: A case study,” Expert
with interest 10% per a year. When RFID system is introduced Systems with Applications, vol. 40, pp. 3389-3397, 2013.
in a rice mill, it can reduce 1 operator, who is paid [6] M. Ramadan, W. Zelong, and B. Noche, “RFID- Enabled dynamic
approximately 180,000 THB per year. To illustrate, A Yearly Value Stream Mapping,” in Service Operations and Logistic, and
NPV Cash Flow is benefit subtract from Investment Cost, Informatics (SOLI), 2012 IEEE International Conference on, 2012, pp.
Overall NPV Cash Flow is Benefit Cumulative subtract from 117-122.
Investment Cumulative. A year of BEP and percentage of ROI [7] A. Sarac, N. Absi, and S. Dauzre-Prs, “A literature review on the impact
are calculated as follows. of RFID technologies on supply chain management,” International
Journal of Production Economics, vol. 128, pp. 77-95, 2010.
TABLE IV. A PERIOD OF PAYBACK WITH INTEREST 10% [8] E. Bottani and A. Rizzi, “Economical assessment of the impact of RFID
technology and EPC system on the fast-moving consumer goods supply
Year 0 Year 1 Year 2 Year 3 chain,” International Journal of Production Economics, vol. 112, pp.
Investment Cumulative 328,750 333,250 337,300 340,945 548-569,2008.
Benefit Cumulative 0 162,000 307,800 439,020
Year NPV Cash Flow -328,750 157,500 141,750 127,575 [9] T. Ohno, Toyota Production System. Portland: Productivity Press, 1988.
Overall NPV Cash Flow -328,750 -171,250 -29,500 98,075