Masters' Theses A Simulation Study on the Impact of RFID Technology on the Supply Chain Counting Process
2015.07.29 14:02
| year | 2007 |
|---|---|
| author | Jangwon Cho |
| Keyword | RFID technology, Supply Chain, Counting Process, Return On Investment, Simulation |
| Abstract | The RFID technology is expected to bring about various benefits to the players by obtaining the visibility of the supply chain. Unfortunately, there are not enough cases where the RFID technology was successfully implemented to the whole supply chain. This research will first investigate in the reasons why the RFID technology could not yet be applied to the whole supply chain. Then, in order to quantitatively measure the influence of the RFID technology, the impact of the automation of counting process on the supply chain will be further analyzed. In the view of the supply chain, the implementation of the RFID technology is carried out by automatizing the counting, which decreases the lead time and increases the real-time inventory accuracy. The following study will analyze the effect of the automation of counting according to the three categories： supply chain operating cost, inventory management cost and sales profit. First, in the light of supply chain operating cost, labor cost will be changed, facility investment and maintenance cost will be increased. Supposing the reuse of RFID tags, the corresponding cost for attaching and detaching tags maybe occur. Second, in the aspect of inventory management, the inventory holding cost would decrease according to the lead time reduction. And depending on the inventory visibility increase, the cost of inventory shrinkage can be reduced. Third, the sales profit will be augmented by gaining sale opportunities due to lead-time reduction. This research defines the impact of RFID technology as these three categories and build a quantitative model. Utilizing the model, a simulation study will be presented to analyze the effect of RFID technology. The counting process automation by RFID technology brought changes in profit and cost of supply chain. As for operating cost, the labor cost showed a tendency of growth because of added processes corresponding to RFID tags. And tag cost and facility cost occurred. In this process, the tag cost was highly affected by the tag price and reuse rate. As for inventory, the reduction of inventory management cost was observed. However, in the case of low inventory error, the marginal profit was low. At the aspect of sales profit, lead time reduction leads profit growth and finally advanced the break-even point. Specifically, it has been determined that the shorter the life cycle and the steeper the price falling tendency are of products such as high-tech appliances, the higher the effect was of the antedated sales point. If reasons as to why the implementation of the technology is being delayed is understood in utilizing the RFID technology in individual companies or in the supply chain system as a whole, the process of trial and error will significantly decrease. Furthermore, having a good grasp of the possible influence the technology might have on the supply chain beforehand, using the simulation model developed in this study, is expected to facilitate the decision making for the implementation. |
| c | MS |