The growing recognition that excellent supply chain performance has strategic

The growing recognition that excellent supply chain

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The growing recognition that excellent supply chain performance has strategic value that could lead to (Attaran and Attaran, 2004): . rapid financial payback, often within months; . improvements in productivity and profits; . improvements in customer positioning and product quality; and . enhancements in long-term relationships with suppliers. Many companies have benefited from implementing RFID technology in their organizations. Supply chain cost that includes receiving, inventory, shrinkage, distribution, logistics delays, and out-of-stock merchandise is often cited as a major factor influencing RFID adoption. In addition, RFID has the ability to provide far more information than bar coding. This information can be used to improve inventory management at the retail store and along the supply chain. The result of more accurate and timely information is a much smoother and synchronized allocation of inventory to orders. Shelves stay stocked without increasing inventory levels or safety stock. Information is crucial to supply chain performance because it provides the basis upon which supply chain managers make decisions. The RFID technology enables management in a supply chain to capture and deliver information necessary to make a good decision. According to a recent worldwide study of causes of retail out-of stocks, on average retailers lose nearly 4 percent of sales to out-of-stocks. The out-of-stock impact is 50-100 percent higher for high-velocity items. Additionally, 55 percent of out-of-stocks last one to three or more days. The primary cause is a lack of visibility. The supply chain is all about matching inventory to orders. The RFID infrastructure provides better access to real-time data and enables in-store execution and visibility. This increased visibility can be used to create actionable requests for store personnel (Gruen et al. , 2005). Organizations who take the time to understand the technology’s capabilities and limitations can increase their revenue growth, lower costs, reduce inventory, better utilize fixed assets, and gain favor with retailers. Some of the most important benefits that businesses are able to gain by embracing RFID technology include: . enhanced visibility into customer needs; . enhanced visibility along the supply chain; . accurate and timely asset tracking; . smart product recycling; . streamlined or better managed business processes within the company; . improved productivity by generating the fastest and lowest cost method of acquiring the data; . improved velocity by responding to demand signals faster; . better utilization of fixed assets, resulting in lowered capital asset requirements; . reliable and accurate order forecasts; . reduction in inventory costs including stock-out and holding costs; . improved technology return on investment; .
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