J. Eng. Technol. Manage.

29 (2012) 152–167

Contents lists available at SciVerse ScienceDirect

Journal of Engineering and

Technology Management
journal homepage: www.elsevier.com/locate/jengtecman

A review of RFID technology and its managerial applications

in different industries
Xiaowei Zhu a, Samar K. Mukhopadhyay b,*, Hisashi Kurata c
a
College of Business and Public Affairs, West Chester University of Pennsylvania, West Chester, PA 19383, United States
b
SungKyunKwan University – GSB, Jongno gu, Seoul 110-745, Republic of Korea
c
Graduate School of International Management, International University of Japan, 777 Kokusai-cho, Minami-Uonuma city, Niigata
949-7277, Japan

A R T I C L E I N F O A B S T R A C T

JEL classification: Radio frequency identification (RFID) is an emerging technology

L86 that is increasingly being used in supply chain management. RFID
O32 technology plays an important role in supporting logistics and
Keywords: supply chain processes because of their ability to identify, trace and
RFID
track information throughout the supply chain. The technology can
Quick response
Supply chain management
provide suppliers, manufacturers, distributors and retailers precise
real time information about the products. This accurate knowledge
of the inventory would result in lower labor cost, simplified
business processes and improved supply chain efficiency. If
properly used, it has the potential to cut ordering lead time and
cost on inventory control, increase the accuracy of inventory
information, help avoid stockouts and boost the number of
inventory turns. In this paper, we provide an overview of the
current state of RFID applications in different industries and its
impact on business operations. We provide extensive literature
survey and develop a framework for future research areas in this
field.
ß 2011 Elsevier B.V. All rights reserved.

Introduction

In recent years, a new inventory tracking technology has been introduced in the marketplace. This
is the technology of radio frequency identification or RFID in short. RFID technology is being used in
diverse applications: from inventory tracking to building access. This technology has great promise for

* Corresponding author. Tel.: +82 2 740 1522; fax: +82 2 740 1503.
E-mail addresses: xzhu@wcupa.edu (X. Zhu), samar@skku.edu (S.K. Mukhopadhyay), kurata@iuj.ac.jp (H. Kurata).

0923-4748/$ – see front matter ß 2011 Elsevier B.V. All rights reserved.
doi:10.1016/j.jengtecman.2011.09.011
 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167 153

diversified use in many industries with numerous practical applications. Much great potential have
been realized and many are being explored. Predictably, a vast amount of academic research is being
carried out in this field. Now, the time is right for an in-depth review of this technology, the academic
research and the potential future use. The purpose of this paper is to provide such a review. We would
focus on the management issues and applications of RFID, instead of on the technical issues. The goal is
to highlight the importance of RFID technology and its application in quick response systems. This will
provide insights into current RFID research so that researchers would be able to develop this area with
further research and thereby help the practitioners with the state-of-the-art.
The use of RFID has been in diverse industries. It has great potential for logistics, supply chain
management and quick response systems. RFID can be used to identify and track location of shipping
containers and items (like apparel, book, drug, and others) in warehouses and on the entire shipping
route. RFID can also be used to make the inventory control system more efficient. According to Collins
(2003), RFID will be the fastest-growing among all the smart label market segments in near future. He
predicts that falling prices, technological advances and the establishment of uniform RFID
communications standards would fuel this growth. RFID adoption will be globally widespread with
the US leading by a wide margin. The other countries adopting the technology include United
Kingdom, Japan, Germany, China, France, Australia, the Netherlands, Korea, and Canada (Spiegel,
2006).
In academic research, there has been a significant increase in the publication of RFID research.
Several journals, including Production and Operations Management, International Journal of Production
Economics, and others provided special issues on the topic. Ngai et al. (2008a) gave a comprehensive
review and classified 85 academic papers that were published on the subject between 1995 and 2005.
Chao et al. (2007) gave a historical review of RFID research from 1991 to 2005 and explore RFID
technological trends and forecasts. This paper serves as a comprehensive literature review of
contemporary RFID research. In addition, it cites a number of real world RFID application examples.
The purpose of this paper is to enable researchers to quickly grasp the various issues/applications of
RFID. It can be mainly used like taxonomy of RFID including an extensive literature survey.
In the next section, we give a brief overview of the RFID technology and its potential as a
management tool to improve operational efficiency.

The technology behind RFID

RFID technology is composed of an RFID tag and an RFID reader linked to a computer system. The
tag is the part that collects real time data and then transmits that data via radio waves. The tags
usually have two parts, a small chip and an antenna. Information is stored and processed by the chip
while the antenna is used to receive and transmit the information. The chip, in most applications, is
used to store information about a product or a shipment. The object, product or shipment that is
being tracked, is provided with a unique identifying number. This number is a part of the information
that is stored in the chip that is embedded in the tag. All the relevant information about the object is
gathered and stored in the chip. This information is read by an RFID reader when a tag passes by it. The
information stored in a RFID tag is detected and recorded by the reader. The reader thus tracks the
physical movement of the tag, and thereby that of the object to which the tag is attached. The reader,
thus, can track the tag’s movement in real time and pass its digital identity and other relevant
information to a computer system. Currently, two types of RFID tags are in use: an active RFID tag
which contains its own power source like a battery, and a passive RFID tag with no battery. For the
passive RFID tag, the power comes from the signal transmitted by the antenna. The active RFID tags,
on the other hand, have their own internal power source, which is used to power the chip and to
broadcast the signal back to the RFID reader. Generally, the active tags have larger memories than the
passive tags and have a much larger range of operations. Naturally the passive tags are cheaper than
the active tags.
The term RFID tag is used as a general term for tags, labels and cards. Passive tags can use three
types of frequencies: UHF (ultra high frequency), HF (high frequency) and LF (low frequency). When
Wal-Mart mandated their suppliers to use RFID, they required UHF passive tags to be used. Their range
is typically 20–30 ft. They are faster, but use more power. The HF tags have ranges less than 3 ft and
154 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167

work better on objects made of metal. The LF tags use less power and can penetrate non-metal objects
better but have range only about a foot.
RFID technology is still evolving. Development of new RFID technology has been reported in a
number of research papers. Mazurek (2009) studies the active RFID system with spread-spectrum
transmission. Yang et al. (2007) propose to use inkjet-printing technology to make RFID tags and RF
structures on a paper substrate. It is also likely that the limiting issues of RFID, namely, technical,
privacy, security and standard issues, will be resolved with time, experience, and investment. Thus, it
is unclear what the effective use of RFID would be when RFID applications becomes universally
feasible (Zipkin, 2006).

Tag cost vs. tag value

The cost of RFID tags was about a dollar each in 2000. Many researchers believed that extensive use
of RFID would not be possible unless tag unit cost reduces drastically. There is a widespread view in
the industry that the tag cost would have to come down to 5 cents each before the RFID industry could
really take off because ‘‘companies cannot afford more than five cents’ worth of added cost’’
(Carrender, 2009). The five cent tag is not yet a reality, even though the price is decreasing continually.
It came down to 12.9 cents in 2005 (O’Connor, 2005) and currently the UHF tags sell for about 10 cents
each. So, would that mean RFID use is doomed? To answer this question, we believe that companies
should view the use of RFID from a different point of view. Instead of looking at the ‘‘added cost’’,
companies should see how much ‘‘added value’’ the tag brings to them. If there is no added value, then
even a two-cent tag will not be attractive. The added value would come from the effective use of all the
information that can be collected from the tags with no additional labor cost. The data can be used to
improve on-shelf availability, tracking life-saving items or parts movement. All these have tangible
value that can be quantified. If this value, for a given company, is higher than the tag cost (whatever it
is), then RFID is a viable implementation.
In this paper we focus on RFID applications rather than the technical issues. In the next section we
will discuss several general concerns and management issues related to RFID application.

Management issues in RFID applications

In supply chain applications, RFID adoption efforts were initially limited to the case/pallet level and
were used for improving backroom inventory-management practices. RFID uses are being extended to
other areas. A recent study by Eurostat (the statistical office of the EU) published in their newsletter
(accessed through RFID news (2010)) showed that only 3% of the EU companies used RFID technology.
The majority of the use was for Personal Id and access control (56%), then supply chain and inventory
tracking (29%), motorway tolls (25%), theft control (24%), production control (21%) and asset
management (15%). With further development of RFID technology, more attention is being paid to
item level RFID usage. Several management issues have consequently arisen. These include RFID
investment return expectations, business value, adoption process and people’s attitude, and benefit
and risk to the organizations. We carried out a literature survey to identify the research in each of the
management issues. These are shown below.

Research in management issues

RFID deployment and return expectations: a number of key determinants exist for the effective
implementation of a successful information system. A new validated construct measures is presented by
Dong et al. (2008). They test their model using a survey of 209 employees in seven organizations. The
determinants uncovered by their results include innovation-values fit, and implementation climate.
Whitaker et al. (2007) propose a theoretical framework for RFID adoption and benefits, and test the
framework using data on U.S. firms. They find that an appropriate IT (Information Technology) structure
is a pre-requisite for RFID implementation. The reason is that most benefit of RFID data comes from the
suitable use of the gathered information. They also find that the firms, who implemented RFID
technology reluctantly being forced by a dominant channel partner, actually expect early return from
 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167 155

their investment. A subsidy from the dominant partner would benefit the overall supply chain. The lack
of industry wide standards, on the other hand, is associated with expectation of delayed return.
Allocating RFID cost and cooperation among supply chain partners: the role of trust and contracts
are closely intertwined in technology-intensive global firms. Blomqvist et al. (2008) point out that
supply chain partners need to work cooperatively for successful RFID implementation. Gaukler et al.
(2007) tackle this issue and show how the cost of item-level RFID should be allocated among supply
chain partners so that supply chain profit is optimized. They find that for a dominant manufacturer,
sharing the tag cost does not change the overall profit. But when the retailer is dominant, tag cost
allocation changes the profit distribution. They also derive the expression to find a breakeven tag price
below which tag use will be beneficial.
Business value from RFID technology: investments in information technology (IT) are now a major
part of corporate investment. Measuring the IT investment effectiveness and its return on business
performance are being extensively researched. Michael (2007) uses the information processing theory
and the theory of corporate strategy to examine how IT can complement diversification strategy. His
results suggest that spending on computer technology significantly complements a strategy of
unrelated diversification. Roth et al. (2008) conduct a survey to 667 manufacturing business units in
the U.S. to examine the role of commitment to supply chain management and information technology
in the achievement of global competence. They conclude that the experience with IT does not drive
return on assets (ROA) directly, but indirectly through global competence and sales.
This issue is also studied by Dutta et al. (2007). They examine three dimensions of the value
proposition of RFID. First of these dimensions involve the RFID implementation architecture and the
resulting value drivers. The second dimension concerns with the quantification of value and its
measurement. The issue of incentives for achieving the information flow is addressed by the third
dimension. Hardgrave et al. (2009) showed that RFID creates business value by improving in-stock
position and improved inventory accuracy. They compare the inventory accuracy of a single category
of product (air fresheners) between eight stores equipped with a new RFID-based perpetual inventory
adjustment tool and eight matching control stores (without RFID) for 23 weeks. Their analysis shows
that RFID does reduce inventory inaccuracy in the presence of normal business processes for on-hand
adjustments.
Mandated RFID adoption and institutional responses: Barratt and Choi (2007) explore through a
case study the responses of four decentralized business units of a large defense contractor to
institutional pressure for adopting RFID. In their case study, the institutional pressure comes from the
US Department of Defense for its suppliers to adopt RFID. They find that different business units
responded differently to the pressure. For example, the responses varied from full compliance to
completely ignoring the mandate. The responses are influenced by factors like perceived uncertainty,
technical realization and degree of internal coupling.

Risks and limitations of RFID applications

Even though RFID technology is now being increasingly used very successfully with enormous
benefits, its implementation is not without impediments. These impediments include technical
problems, customer privacy issues, and lack of common RFID standards. Cannon et al. (2008) discuss
the risks that accompany RFID adoption.
Technical problems: a study by Piramuthu (2008) highlights the technical problems of RFID tags
reading collision. Two main types of problem are RFID reader collision and RFID tag collision.
Reader collision occurs when the coverage area of one RFID reader overlaps with another reader.
This could result in signal interference and multiple reads of the same tag. Leong et al. (2006),
Engels and Sarma (2002), Carbunar et al. (2005) and other research propose several solutions to
solve the RFID reader collision problem. RFID tag collision happens when large numbers of items
with RFID tags are energized by an RFID reader at the same time, transmitting their signals back to
the reader simultaneously. The tag collision could confuse the reader, preventing it from scanning
the tag or differentiating the signals from different items. Yang et al. (2009) propose several tag
collision avoidance algorithms and report comparison of performance analysis of proposed
algorithms.
156 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167

Signal interference problem: a practical concern about the use of RFID arises in environments
where radio waves of some devices can interfere with the transmission of RFID radio signals and vice
versa. Van der Togt et al. (2008) study electromagnetic interference (EMI) by RFID on medical devices.
They suggest that implementation of RFID in the critical care environment should require on-site EMI
tests and updates of international standards.
Privacy concern: concern about customer privacy is another big impediment to RFID
implementation. One concern is that RFID tags can be scanned by anyone with an RFID scanner,
which could conceivably access data encoded on an RFID tag. A large number of studies have been
conducted on the consumer privacy issues related to RFID including Juels et al. (2003), Weis et al.
(2004), Garfinkel et al. (2005), Ohkubo et al. (2005), Sackmann et al. (2006), Solanas et al. (2007), and
Chen and Pfleuger (2008). The customer privacy issue is managed under national legislation and
guidelines of good practice. For example, Gillette and the MIT Auto-ID Center are working together to
protect consumer privacy. The Auto-ID Center’s technical specifications call for retailers to be able to
disable the tags after purchase at checkout counters. Wal-Mart has the option to disable the
microchips in Gillette products before they leave the store. Other papers dealing with the security
issues are Kang and Gandhi (2003), Knospe and Pohl (2004), Phillips et al. (2005), Chien and Chen
(2007), Piramuthu (2007), and Jabbar et al. (2008).
A great concern about privacy was reported by Schneier (2006). The risk is that passport
information might be read by someone to track the person’s movements, by a criminal trying to steal
identity or by someone just curious. State Department has implemented some security features to
counter these possibilities. These include a shielded cover to make the chip much harder to read,
encryption mechanism and ‘‘anti-skimming’’ technology to reduce the chance of the signal being
intercepted between the passport and the electronic reader.

Functionality of RFID

As mentioned earlier, RFID technology demonstrates great potential for reducing shrinkage,
preventing stockouts and excess stocks, improving data accuracy, and increasing information
visibility of supply chain. All these would generally improve the overall performance of supply chain.
Below we consider each of the points in detail.

Inventory shrinkage problem

Shrinkage is defined as the loss of a product through damage, misplacement or theft anywhere in
the supply chain from manufacturer to retailer. Inventory shrinkages can be substantially avoided
using RFID technology as items are continuously monitored. In Australia, for example, value of retail
shrinkage reached US$1.8 billion or 1.39% of sales in 2007. AMR research found that inventory
shrinkage is a US$30 billion problem in the US (Garf and Langdoc, 2004). de Kok et al. (2008) found that
both manufacturers and retailers use RFID tag to eliminate shrinkage. They compared operations with
and without RFID and derived an analytical expression for the break-even prices of an RFID tag. They
found that the breakeven price is dependent on the value of the items and the shrinkage fraction. A
study by RFID research center at the University of Arkansas demonstrated the effectiveness of RFID
tags to detect theft (O’Connor, 2008a).

Accuracy of inventory records

The discrepancies between warehouse quantities recorded in the system and stocks truly available
to customers are one of the biggest problems retailers face. RFID technology can be successfully used
to remedy the problem. Heese (2007) studied inventory record inaccuracy in a supply chain. In his
paper, a Stackelberg manufacturer sets the wholesale price and a retailer follows by determining the
stock level. Heese (2007) measure the inventory record inaccuracy in a decentralized supply chain and
in an integrated supply chain. He assumes RFID technology can be used to eliminate the problem of
inventory record inaccuracy. He determines the cost thresholds at which RFID adoption becomes
profitable. He also shows that a decentralized supply chain benefits more from RFID technology. Rekik
 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167 157

et al. (2008) studied a retail store where operating errors contribute to inventory inaccuracies. They
use a Newsvendor model that captures this issue in a simple way: for a given quantity of products
ordered from the supplier, only a random fraction is available for sales. They compare three
approaches: the retailer is unaware of errors in the store; the retailer is aware of errors and optimizes
its operations by taking into account this issue; and the retailer deploys RFID system to eliminate
errors. They discuss the benefit of implementing the RFID system where the RFID tag cost is also
considered.
A newer study conducted in 2009 by RFID Research Center demonstrated that use of RFID improved
inventory accuracy in Bloomingdale’s by more than 27% in a 13 week period. A study by Wal-Mart, as
reported by Hardgrave et al. (2009) proved that RFID does reduce inventory inaccuracy in the presence
of normal business processes.

Increased information visibility

RFID technology can be used to create end-to-end supply chain information visibility by
enabling supplier, manufacturers, logistics providers and retailers to track and trace item-level
information through the entire supply chain at any time and at any location. Information visibility
is critical to quick response systems so as to respond quickly to market changes and cut the
fulfillment lead times. Delen et al. (2007) show, through a case study, that information collected by
RFID can be valuable to both the retailer and the supplier. They also show that the logistical
performance can be improved by RFID usage at a micro supply chain level, e.g., between a
distribution center and retail store. Karaer et al. (2007) study RFID application in the reverse
channel, where a manufacturer has ample production capacity and also uses returned products to
satisfy customer demand. The authors first develop an analytical model of the inventory decision
for the manufacturer. Then they quantify the benefits of RFID system in the reverse channel through
information flow and visibility in several cases. They conclude that RFID could be a candidate
enabler technology in the reverse channel. Ngai et al. (2007) present a case study of the R&D
(research and development) of an RFID-based traceability system used for supporting the tracking
and tracing of repairable items in a Hong Kong aircraft engineering company. The authors identify
eight critical success factors for the successful implementation of RFID systems, including create
strong internal and external motivation for improvement, stir up desire to keep abreast of the latest
technology for global competitiveness, strive for cross organizational implementation, avoid major
process changes/limit process changes, start with a small RFID project scope, facilitate equipment
vendor’s investment, use cost-effectiveness reusable tags, and transfer RFID skills and knowledge
from university to industry. They also summarize 13 lessons learned from strategic level,
management level and operational level.
In this section we studied the functionalities of RFID. In next section, major applications of RFID are
discussed.

Major applications of RFID

In this section, we will discuss various uses and applications of RFID. We will first give an
introduction of general RFID usage. Next, we will consider a number of different fields and industries.
For each field, we will explain RFID application usage followed by some real world examples. We will
also include relevant academic research in each field.
The information gathering, storing and transmitting capability of the RFID tag makes a
variety of usage possible. For a passive RFID tag, the common usage is in product tracking, building
access control, airline baggage tracking, and so on. Companies like Wal-Mart, GAP, Old Navy, JC
Penney and P&G use passive RFID tags in the management of their supply chain. A very common
usage is the EZ- Pass highway toll lanes, where commuters use RFID technology even though
they may not know it. The US Department of Defense has successfully used active tags to
reduce search and loss in logistics and to improve supply chain visibility. For an active RFID tag,
the list of application is even longer. One application for educators is where the students in a class
are given a clicker device each where they punch in their responses to a teacher’s question. The
158 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167

responses are then transmitted to a computer and the frequency distribution is instantly
displayed.

Retailing industry – CPG (consumer packaged goods)

A very popular inventory control and replenishment system widely used in retail industry is the
quick response system. Effective implementation of the quick response system requires an efficient
inventory management system and depends on consolidation, integration, and analysis of data
collected from different supply chain players such as, supplier, manufacturer, distributor, wholesaler,
shipper and retailer. Traditionally, the methods of stocking shelves and managing inventory were
used, but these are labor intensive, time consuming, and error-prone. RFID can be of immense help in
this operation. A product with an RFID tag could be tracked immediately after it is delivered to the
store. Using this information, backroom inventory can be minimized and at the same time shelves can
be kept full. This will also improve store security and analysis of sales data. RFID Journal (2003)
reported that Wal-Mart required its top 100 U.S. suppliers to attach RFID tag on all pallets and cases of
all products by the end of 2005. Songini (2007) reported that Procter & Gamble, one of Wal-Mart’s top
providers of consumer goods, had followed the RFID requirements of Wal-Mart and saw substantial
improvement. Weier (2008) reports that Sam’s Club suppliers were required to have pallet-level RFID
by October 2009 and item-level RFID by 2010, or face a fee.

Smart shelf operations

Another important RFID application in the related industry is the implementation of the ‘‘smart
shelf’’. Smart shelves can detect RFID tags affixed to individual items. These can then be transmitted
to the information system which can place or replenishment order either from the stock room to the
shelf or from the manufacturer to the retailer for a new shipment. Manufacturers benefit by
increased sales because smart shelves enable them to keep the shelves always stocked with their
products. They can monitor actual customer demand for products and replenish orders to prevent
an out-of-stock situation. This high level of inventory monitoring possible by RFID can especially
benefit the CPG (consumer packaged goods) industry by converting it into FMCG (fast moving
consumer goods). When a shipping container or a pallet moves from plant to warehouse, an
attached RFID tag will enable not only monitoring of its location, but also its efficient routing. Wal-
Mart tested Gillette products using RFID in 2003 to build smart shelf in a store located in Brockton,
Mass (Gilbert, 2003).
Bottani and Rizzi (2008) use quantitative methods to assess the impact of RFID technology and
electronic product code (EPC) system on the main processes of a CPG supply chain. They collected
quantitative and qualitative data related to the logistics processes of a three-echelon supply chain,
composed of manufacturers, distributors and retailers. They conclude that RFID adoption with pallet-
level tagging provides positive revenues for all supply-chain players. A case-level tagging, on the other
hand, gives negative economical results due to substantial costs for the manufacturer. Outcomes of
this study provide an economical justification for RFID and EPC implementation in the CPG supply
chain. This result of course is predicated to the current cost of RFID. The economies would change as
the price drops. With further reduction of the RFID tag price, we believe that the RFID usage will
become more and more popular and economical in CPG field in the near future.

Retailing industry-apparel

A number of US apparel companies, notable among them being GAP, Old Navy, Ann Taylor, Calvin
Klein, American Apparel use RFID with point of sales (POS) to improve supply chain performance. They
use RFID in smart shelf, and on the items resulting in reduced inventory shrinkage as described earlier.
Besides these, RFID show other applications in the apparel industry.

RFID used with POS

Use of RFID technology at the POS level can be used to generate demand trends and build a
probabilistic demand pattern. This application is invaluable in apparel industry with high levels
 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167 159

demand uncertainty. A company, for example, can use RFID to record goods received, deduct goods
sold by recording them at POS, and count inventory in the back room and retail floor. Usually, RFID tags
are removed at the POS when products are sold.
Zander Livingston, an R&D strategist at American Apparel, a leading Los Angeles-based brand with
global presence in wholesale and retail is quoted in Gaudin (2008) that American Apparel counts
complete in-store inventories twice per week in order to ensure product availability. They then
restock and reorder as necessary. The inventory process typically needs four employees for 8 h. At the
RFID-enabled Columbia University-area store, it takes only two employees just 2 h to count inventory.
Livingston said as many as 10% of items that should be on the sales floor could be generally missing at
any given time. Sales generally increase by 15% to 25% when all items are available on the floor. The
RFID system has made 99% of sales-floor inventory available to customers, according to him. This is
one example where substantial benefit accrued from the use of RFID.

RFID used in fitting room

A very interesting use of RFID enabled retailing was narrated by Piquepaille (2007), ‘‘A German
department store, the Galeria Kaufhof in Essen, part of the Metro retailing group, is using RFID
technology in a new way. . . . Men buying clothes in this store will get automatic suggestions. For
example, when you go to a dressing room to try a suit, a ‘smart mirror’ will tell you what kind of shirt or
tie you need to buy with it. . . . . . An RFID reader on a ‘smart mirror’ in the change room determines
which clothing has been brought into the room from the RFID tag attached to the apparel, then
displays complementary clothing choices or accessories. The system is used in combination with
‘smart shelves’, which can read what merchandise is currently in stock, so that customers can be
shown choices in sizes that are available, and in various styles and colors’’.
The above uses suggest a great potential of RFID application in various retailing markets, including
CPG and apparel industry. IDtechEx (2005) gives a summary of the payback factors for item level RFID
identified in various rollouts, trials and studies. It shows that GAP, the US apparel company, increased
sales by 2% by using RFID to reduce stockouts. J Crew, another well-known US apparel company,
increased the speed of inventory counting five to eight times. Szmerekovsky and Zhang. (2008) study
the effect of attaching item level RFID tags on manufacturers and retailers in a vendor managed
inventory (VMI) system. They compare inventory control in RFID and non-RFID systems. They derive
optimal inventory policies in both centralized and decentralized systems and show that the sharing of
the tag price can be used to coordinate the supply chain and that it can be exploited in a manufacturer
or a retailer dominated systems.

Food and restaurant industry

In this industry, the inventory generally is perishable with limited useful life. If not handled
properly while transporting, it may get spoilt and its useful life reduces. This has a number of
repercussions. First, the saleable life is reduced thereby reducing the revenue generating window
of the product. Second, an outdated (or expired) product can be delivered to a customer with
disastrous results. The US Food and Drug Administration has assessed that ‘‘Up to 20% of foods are
discarded due to spoilage in the supply chain’’. RFID enabled product identification can reduce
such spoilage substantially. RFID system can track the items in real time without product
movement, scanning or human involvement. Active RFID tags can dynamically update information
on the product.
RFID can also be used to integrate agricultural firms into the food chain and reduce product recall
costs. Mennecke and Townsend (2005) report about a project to examine the feasibility of extensive
RFID tagging to determine product provenance in the meat production industry. Both existing
technologies and emerging technologies in RFID tagging were examined to assess the potential of RFID
technologies for provenance assurance. Ngai et al. (2008b) first describe the design and development
of RFID system in a conveyor-belt sushi restaurant. The RFID system is designed to achieve better
inventory control, responsive replenishment, and food safety control, and to improve its quality of
service. The research indentifies several benefits of using RFID technology to enhance operational
efficiency. The authors conclude their study by discussing the limitations of the study and future
160 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167

research directions. The above two researches, Mennecke and Townsend (2005) and Ngai et al.
(2008b), both show the significance and benefits of using RFID technology specifically in the food
industry.
Academic research into radio frequency identification (RFID) has proliferated significantly over the
last few years, to the point where journals (Production and Operations Management, International
Journal of Production Economics, IEEE Systems Journal, and IEEE Transactions on Automation Science
and Engineering) are producing special issues on the topic. In this paper, we present a literature review
of 85 academic journal papers that were published on the subject between 1995 and 2005. We
organize these studies into four main categories: technological issues, applications areas, policy and
security issues, and other issues. All of the papers in the review are allocated to the main and sub-
categories based on their main focus. Our analysis of these papers provides useful insights on the
anatomy of the RFID literature, and should aid the creation and accumulation of knowledge in this
domain. A comprehensive list of references is also presented. It is hoped that the review will be a good
resource for anyone who is interested in RFID research, and will help to stimulate further interest in
this area. The implications for RFID researchers and practitioners and suggestions for future research
areas are discussed.

RFID in health care industry

A number of applications of RFID technology are already found in the health care industry. They
use it to improve patient monitoring and safety, increase asset utilization with real-time tracking,
to reduce medical errors by tracking medical devices, and to enhance supply-chain efficiencies.
Tzeng et al. (2008) propose a framework for evaluating the business value of RFID technology in
the healthcare industry. Business value can be delivered through refining business processes and
expanding the business model. They draw on the experience of five early adopters from the
Taiwan healthcare industry to illustrate these concepts. Their framework consists of a set of
propositions based on relevant literature. IDtechEx (2006) states that the market for RFID tags and
systems in healthcare will grow rapidly from $90 million in 2006 to $2.1 billion in 2016. This
growth will primarily be due to item level tagging of drugs and real time locating systems (RTLS)
for staff, patients and assets. This will, in turn, improve efficiency, safety and availability and
reduce losses. The same report summarizes the main purposes RFID application in healthcare.
Currently, RFID is being used in healthcare industry in error prevention of product, patient tagging,
locating staff and assets. Objectives are to obtain speedy, accurate stocktaking, theft prevention,
and cost control. In future, RFID applications in healthcare industry will include functions like
locating visitors, behavioral studies to optimize operations, and tracking and tracing of medicines,
consumables and assets.
Amini et al. (2007) present a simulation study conducted at a regional hospital. Data related to
trauma patient movement were collected using an RFID-based system. They find that this data serve
as the basis for successful simulation modeling. In addition, RFID technology may address several
data-related challenges previously identified in the simulation literature.

Logistics industry

An important study on the impact of RFID technology and EPC network on mobile B2B ecommerce
was conducted by Fosso Wamba et al. (2008). They used a pilot project to test several scenarios
integrating the RFID–EPC network in interrelated firms of a supply chain. The most interesting results
obtained by them are as follows: (1) the RFID–EPC network can improve the ‘‘shipping,’’ ‘‘receiving,’’
and ‘‘put-away’’ processes; (2) these technologies can cancel, automate, or automatically trigger some
business processes; (3) they foster a higher level of information sharing/synchronization between
supply chain members; and (4) they require to be integrated in a wider strategy.
Thiesse and Fleisch (2008) studied a real-time location system (RTLS) in complex manufacturing
processes. They used a case example of an RFID-based RTLS implementation in a semiconductor fab,
and investigated the value of RTLS information on the locations of physical objects in a production
system. Using a simulation model, they find that the use of RTLS technology provides the opportunity
 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167 161

for new levels of process visibility and control in comparison to conventional material-tracking
systems. The benefits are an overall acceleration of the existing process and an additional efficiency
gain through novel dispatching rules taking into account real-time information on the logistic
processes on the shop floor.
Cost-conscious businesses have traditionally focused on using RFID systems to enhance the
efficiency of their logistics processes (Lee et al., 2008). Their implementation process focuses on
supplier-facing, back-office operations. They studied three cases in the service sector and developed a
complimentary customer-facing model. They found that diffusion of RFID technology originates from
the delivery of the actual service offering. They find that the firm’s RFID strategy on customer-facing
activities can change its basis of competition from an efficiency-oriented strategy to one where RFID
has more strategic implications. These supply chain implications would provide the foundation for
new products or services or provide the infrastructure to enhance customers’ value perceptions so that
customer loyalty is strengthened.
Wang et al. (2008a,b) propose a real-time vehicle management system, including RFID,
geographical information system (GIS), and global positioning system (GPS), to plan and schedule
vehicles’ optimum routings using real-time information in logistics or distribution services. They use
an insertion heuristic method to formulate vehicles’ scheduling and search the relative optimal
solution. They also conduct numerical experiments to show the feasibility of the system.
Kim and Sohn (2009) propose a cost of ownership model to study the RFID logistics system. They
first state that a high initial infrastructure cost is a major challenge for implement RFID system. Then
they propose a cost of ownership (COO) model for RFID logistics system applicable to ubiquitous city
(u-city) in order to support the decision making process of infrastructure construction. They apply the
proposed model to a case of RFID logistics system and evaluate the expected profit for several
scenarios. They state that their model could help companies in selecting the most beneficial and most
profitable RFID logistics system.

Travel and tourism industry

A major application of RFID came into play when the US Government included RFID chips in US
passports in 2006. The US issued 10 million of these new passports in 2005, and an estimated
13 million more in 2006 (Contactlessnews, 2006). The chips store the same information that is printed
within the passport like the information about the traveler, including name, gender, date and place of
birth, and a digital picture of the passport holder. In the future, the chip might store fingerprints or
digital visas from various countries. Passport Canada has announced plans to launch contactless
ePassports with RFID tag by 2012 (Contactlessnews, 2010). Apart from this huge application in
passports, there are many other RFID applications in travel and tourism industry. Interactive RFID-
enhanced museum exhibits at the Exploratorium, a science museum in San Francisco, California, let
visitors continue their scientific exploration beyond the museum walls (Hsi and Fait, 2005). A number
of ski resorts, for example, Alta Ski Area in Utah, have adopted RFID tags to provide skiers hands-free
access to ski lifts. RFID Lift system requires fewer employees to operate and customers enjoy the
convenience (O’Connor, 2008b). Hsu and Liao (2010) propose a RFID and mobile technologies based
tour system. The system is designed to enable visitor to freely select any interested exhibit and
instantly share his/her note or remark about the exhibit with others through the Internet. The visitors
could share their travel experience with other visitors through the Internet or broadcasted their
experience through microblogging. The authors state that this kind of system, mobile RFID-based
system, is also useful in outdoor scenic sites, exhibition shows and even department stores for
information sharing and advertisement.

Library applications

One of the most important recent RFID applications can be found in Library systems. Libraries are
facing the challenge of managing the growing size of collection and keeping operating budget low.
RFID seems a very promising technology here where books can have an embedded RFID chip with all
relevant information. The advantages of RFID over barcode or magnetic strip systems can be seen from
162 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167

several viewpoints. Since RFID tags can be read through an item, borrowers can check out several
books at one scan. RFID could help staff speed up inventory management process, reduce human
errors and increase the accuracy of inventory records. A whole shelf of materials can be counted within
seconds, reducing time of ‘‘shelf-reading’’ and other inventory activities. Smart Shelves are used to
pinpoint the exact location of books in a library saving thousands of dollars in misplaced and therefore
lost books. Yen and Shiu (2009) report that the largest RFID implementation in academic library is in
the University of Hong Kong Libraries which have over 1.2 million library items containing RFID tags.
The largest implementation in a public institution is installed in the Seattle Public Library system in
the US.

Other applications of RFID

A substantial amount of RFID applications can be found in the military. A cost-benefit analysis of
RFID/MicroElectroMechanical System (RFID/MEMS) technology for the management of ordnance
inventory is reported in Doerr et al. (2006). They propose a factorial model to study the costs and
benefits of using RFID/MEMS system to manage the ordnance inventory. Their valuation approach
combines a multi-criteria tool for the valuation of qualitative factors with a Monte-Carlo simulation of
anticipated financial factors. They address that qualitative factors are count for the major of the
anticipated benefits.
The passive UHF RFID application in paper industry was studied by Lehto et al. (2009). They
first point out the major challenges in the paper industry are development of globally operable tag
antenna designs and integration of reader units and reader antennas to paper handling machinery.
Then they propose their solution of novel tag antenna designs for paper and board reel
identification and also propose solutions for reader and reader antenna integration to paper
handling machinery. They conduct test of proposed passive UHF RFID system. They also address
that RFID could be attached to the paper reel core and thereby the identification code of the reel is
restored throughout its life cycle, where the current usage of barcode identification systems could
not do. They conclude the paper by discussing the future usage, benefits and challenges of RFID
system in paper industry.
Wang et al. (2008a,b) analyze the simulated impact of the RFID system on the inventory
replenishment in Taiwan of thin film transistor liquid crystal display (TFT-LCD), a long life cycle
product, and supply chain. The pull-based multi-agents supply chain was accordingly modeled and
simulated with AnyLogic. An automatic inventory replenishment function adopting the (s, S) policy is
enabled with RFID or not. The analysis shows that the RFID-enabled pull-based supply chain can be
effectively achieved with a 6.19% decrease in the total inventory cost, and a 7.60% increase in the
inventory turnover rate.
RFID usage has been seen in diverse industry like a flower auction. Texas Instruments (2001)
repeats an interesting story as given below:
‘‘In the vast halls of the Bloemenveiling Holland flower auction, 6000 growers generate 32,000
transactions, with orders being shipped to 2000 buyers locally and abroad each day – all before
11:00 am. To correctly pack and ship this blossoming cargo, TIRFid tags identify 100,000 trolleys as
part of sophisticated automated logistics and tracking system. As trolleys move along miles of electric
track and orders are picked, TI’s RFID tags are read by antennas in the floor communicating timely data
to logistics software. Personnel can pinpoint the exact location of an order, its contents, and how
quickly it will arrive at the dock door for shipping.’’

Conclusion and future research

As the RFID technology is evolving, a substantial amount of its application has already been found
in many industries. The research in this field has also caught on among academicians. This paper is a
timely research which surveys all the current and potential RFID applications and at the same time
surveys the state-of-art in literature.
Basically, the technology enables tracking of essential information about items as they move
through supply chains. It shows significant value for inventory systems by providing an accurate
 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167 163

knowledge of the current inventory resulting in lower labor cost and simplified business processes.
Information tracked by RFID can be utilized to improve the entire supply chain efficiency and offer
huge competitive advantage to the firms. It has been shown that collaborative relationships among
firms across supply chain will lead to greater global operational capabilities (Roth et al., 2008). RFID
would enable firms to acquire such capability.
Although there are several technical, privacy and security issues, all these likely will be resolved
with time, experience and investment. In the previous sections, the current state-of-the art has been
detailed with appropriate references. In what follows, we will attempt to show several future research
directions in this field that will benefit academicians.

Model based RFID research

One problem with the extant industry reports about the benefits and quantified values of RFID
applications is that they are not based on detailed, model-based analysis, but are filled with estimates
and proclamations of the benefits and quantified values of RFID (Lee and Ozer, 2007). They argue that
there is a huge credibility gap of the value of RFID, and that a void exists in showing how the
proclaimed values are arrived at, and how those values can be realized. They recommend that this
credibility gap must be filled with solid model analysis, and therefore presents a great opportunity
for the operations management research community. Readers are referred to their paper for six new
research directions. Our paper reviews some of the ongoing research efforts in this area and
highlights the credibility gap and how to close it, and suggests additional directions for further
strengthening the operations management’s contribution to help the industry realize the full
potentials of RFID.
Another avenue of model based research is to explore how RFID technology can be used to
improve the inventory management performance by reducing forecast error and inventory
discrepancy. As Lee and Ozer (2007) propose, models are needed to be developed to establish a
suitable benchmark for calculating the value of the RFID system to improve the inventory
performance. Better inventory replenishment policy, for example, facilitated by the use of RFID-
enabled systems can be evaluated using such a benchmark. Also, during the next several years, both
RFID-enable inventory systems and systems without RFID will co-exist and will essentially interact
with each other. Research is needed to manage inventory operations in a supply chain where both
systems are working.
For future research, a very important factor would be the assurance of continuing usage of this new
technology. A relevant framework for continuous usage of technology couple with managerial insights
is presented in Cho et al. (2009). Another important future direction in model based research is
developments of models and algorithms that will utilize the enormous amount of data originating
from RFID to optimize supply chain operations. Other model based approaches would be to develop
financial and payback models like an ROI (return on investment) model. These models can be used by
individual firms as well as by a supply chain or even by a network of RFID installations across supply
chains. Developing a model that would objectively measure the value of information would also be of
immense help to practitioners because it will mitigate the current uncertainty about the viability of an
RFID system deployment.

Application based RFID research

Another problem is that RFID research conducted by academic researchers seems to be

somewhat removed from the practice. Many model-based research are not implementable and do
not directly help the practitioner. By application-based research, we mean research that has been
motivated by and has immediate impact on real life applications. A very fruitful and necessary
research direction would be to narrow the gap and make an effective connection between academia
and practice especially in the areas of technology development. Major research contributions in this
area are from the MIT Auto-ID Center which aims to create ‘‘Internet of things’’ using RFID. Their
research is geared towards developing a global numbering system, called the electronic product
code (EPC) that will have widespread practical applications. In future, applications models can be
164 X. Zhu et al. / Journal of Engineering and Technology Management 29 (2012) 152–167

developed, for example, for generating targeted discount coupons delivered to an individual
customer by mobile devices to motivate him or her in real time to make a purchase. Other research
areas in this respect could include design of information system architecture, and devising systems
that can ensure that extensive use of RFID results in significant financial and operational gains for
the supply chain.

Research in privacy issues

A further major research direction that is much overdue is to find ways to mitigate the privacy
issues of RFID implementation. This is one issue that historically tends to get ignored in the early
stages of a new technology as has been seen in the case of PC and computer virus. Widespread
implementation of RFID can be hampered if the privacy issue is not resolved. Many consumers are
paranoid with the privacy issues. For example, stories are circulating how all the private information
about a consumer embedded in the RFID chips in their credit cards or passports can be read even when
they are not taken out and can be used to defraud them. In fact, two high profile cases in 2003,
consumers boycotted products of Benetton (the Italian apparel manufacturer) and Tesco (the giant UK
supermarket chain). Future research should address this very important issue of privacy. Some
notable future directions are as follows. The tags can be equipped with a nullification function called
the ‘‘kill command’’ which would disable the functionality of a tag once the sale is complete. Another
direction would be to design tags to have functionalities like rewritable memory, hash function units
and encryption.

Other research directions

Further to all these research directions, there are a few other probable directions. A significant
effort could be put into reducing the RFID system cost. Research is also needed on models for
successful reuse of RFID chips. Designing better business processes of RFID system, exploring new
RFID application on item level, and using RFID to increase the whole supply chain efficiency, like
reducing bullwhip effect can also be explored. Managerial principles and guidelines for system design,
implementation and evaluation of the system should be important research focus. In this context, a
performance measurement system will need to be established. The framework provided in Chiesa
et al. (2008) for such a system in R&D may be useful. Other major issues to be researched would be the
barriers of RFID adoption and its critical success factors.
We believe that RFID technology has a very bright future. We will see more RFID applications in
industries where they are currently used and also into new industries. We hope that this paper will be
a good resource for those interested in RFID research, including academic researchers and industry
practitioners, and will help stimulate further interest in this area.

Acknowledgements

The authors are deeply indebted to Co-Guest Editor Tsan-Ming Choi for his prompt and
constructive review and suggestions. The authors also thank four anonymous reviewers for suggesting
revisions that have improved the paper significantly.

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