Published 11/19/09

Study points to benefits of RFID on supply chain

SMITHFIELD, R.I.  (Nov. 19, 2009) -- Anecdotally, radio-frequency identification (RFID) has a reputation as a technology that has failed to live up to expectations. But in fact, RFID delivers a strong return on investment in several key areas of supply chain performance.

Those are the findings of two Bryant University professors whose paper, "Empirical Evidence of RFID Impacts on Supply Chain Performance," offers the first extensive review of quantitative data on how RFID technology has improved the performance of a variety of businesses.

The paper, co-written by Bryant University's John K. Visich, associate professor of management, and Suhong Li, associate professor of computer information systems, appears in the latest issue (Vol. 29, Issue 12) of International Journal of Operations and Production Management. Basheer M. Khumawala of the University of Houston and Pedro Reyes of Baylor University also contributed to the article.

Though confidentiality clauses make the collection of empirical evidence difficult, the authors identified a number of areas in business operations and management in which the addition of RFID technology led to a variety of measurable improvements. These include reductions in labor costs, inventory costs and waste, and increases in efficiency, reliability, quality, responsiveness, operational flexibility and throughput.

"This study will be especially useful for organizations proposing to introduce RFID technology into the supply chain," said Visich. "For managers, the empirical evidence presented can help them identify implementation areas where RFID can have the greatest impact. The data can be used to build the business case for RFID and therefore better estimate ROI and the payback period."