Supply chain management and inventory control system

Abstract: Previously organizations had problems with inaccurate inventory control system. This research aims to investigate RFID techniques to solve inventory control problems. The Securitization of literature review related to importance of RFID in inventory control, highlights basic principle of RFID technology and emphasis on improvement of inventory control management.

Keyword: RFID, Supply Chain management, Inventory Control System, organizational challenges, Proof of Concept

Introduction

RFID (Radio Frequency Identification) is “the next emerging technology”. RFID is used to locate misplace entity through tags and readers, tags that transmit the information using radio waves and reader used to collect the information. Tagged inventory becomes mobile and communicating entity to the whole organization, that entity is processed to send information to system server through radio waves, here the objective of the system is to identify, monitor, authenticate and alert by using information sharing form tagged item to server (basically called Just in Time System).

Previously, organization used to spend in barcode systems, in which tagged items have to come in direct physical contact with the reader. RFID brings up new advantages in SCM that were missing in barcode systems. RFID is the recent development in automatic identification and data capture (AIDC) that enables organizations to remotely access the information of the tagged entity.

Inventory Control

It is almost impossible to find an organization that does not use, transform, distribute or sell materials in one form or another. Inventory control is relevant to all organizations from any sector of the economy. Inventory control dates back to the dawn of time where the earliest humans used to stockpile food and stone tools. Presently inventory control is an essential part of organizations that is correlated to corporate success and failure. Inventory is defined as material held by an organization awaiting sale, use or transformation. Organizations hold inventory for a range of reasons including a lack of predictability or fluctuations in demand, unreliability in supply, to receive quantity discounts, to lower ordering costs, and to be subject to price protection through buying products at the right time. Purchasing holding and possessing inventory subject an organization to operational costs. According to Muller the cost of holding inventory refers to financial, space, labor, deterioration, damage and theft aspects. Inventory control techniques can be employed by organizations in order to minimize the burden of ongoing expenses. Inventory control can be defined as “the activity that organizes the availability of items to the customers by, coordinating the purchasing and manufacturing and distribution functions to meet marketing needs”.

The aim of inventory control is to maximize customer service, profit and efficiency of purchasing and production, whilst at the same time minimizing inventory investment. Not all organizations have the same inventory requirements. Organization that are classified as being retails, wholesale/ distribution and manufacturing have differing needs and inventory issues.

RFID Technology

RFID Basic

Radio frequency identification technology which uses radio frequency waves, with the help of wave’s data is transferred from reader to movable item. The purpose of RFID is to tracking, identifying, categorizing and monitoring the products. This system includes tags, readers, antennas and software. Tags are placed on products, Communication is done through antennas, and readers can read and write and carry the data to the software. Software manages the RFID system.

There are three main features of RFID applications.

  1. Identification of the product
  2. Identification of the product location
  3. Provides the information of product on just-in-time
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Advantages of RFID

The characteristics of RFID technology described previously differentiate them from other automatic identification technologies. One of the main physical advantages of RFID technology is that tags, unlike barcodes do not require line of sight to be read and multiple tags can be read simultaneously.

RFID systems are unaffected by dust, moisture, oils, coolants, cuttings, gases. In addition to this RFID tags can operate in extreme temperatures and last for longer periods, in some cases longer than the items they are attached to. RFID tags and systems are also characterized by having a greater data density and data quantity than traditional automatic identification technologies in the form of barcodes. This allows RFID tags to carry unique serial numbers more easily than a barcode, which would require a long symbol or a two-dimensional variant, which is difficult to scan and fit into available space. A final major advantage of RFID systems is that they capture data in real time. Capturing data in real time allows organizations to improve data quality, as the information captured is more timely and accurate.

Challenges of RFID

Studies and literature reveal that due to RFID’s novelty in commercial and manufacturing applications, a number of challenges have created concerns about the feasibility of its implementation. The majority of problems that have been encountered when implementing RFID relate to technical and hardware issues. Issues have been raised such as the reliability of RFID tag reads. It has been discovered that when a tag is oriented perpendicular to a reader it is difficult to read it. Radio waves can be hidden, distorted or reflected by metal and the noise from electric motors and that fluorescent lights can also interfere with RFID communications.

One of the simulations revealed that items with overlapping RFID tags wrapped around them could not be detected by the reader when they passed through the entry/exit. It was also found that concealing items had an effect on whether they would read or not with a single concealed product being identified, as compared to the three tagged items which were identified when passing through the entry/exit in plain sight. Moreover, RFID experienced poor to average read rates when implemented for loss prevention. It is perceived that if RFID was applied in the small-to-medium retailer for loss prevention purposes, theft may be reduced but the reliability of the technology could not be guaranteed, unless orientation issues were resolved and the read rates improved.

The final challenge of RFID relates to privacy concerns. As RFID is used to track items, privacy activists are concerned about the use of technology on retails items such as clothes which could allow retailers to send and receive information after items have been purchased.

Literature Review on RFID Technology

In literature review we are following secondary data such as some published researched paper from various conferences and journals.

“RFID-enabled inventory control optimization: a proof of concept in a small-to-medium retailer.” this conference paper was originally published as Dane H., Michael K. and Wamba S. F., in 43 Hawaii International Conferences on System Sciences (HICSS), Organizational Systems and Technology, Implementation and Usage of Radio Frequency Identification (RFID), 2010. From this research paper we will review the impact of RFID technology on the inventory control on an organization by using proof of concept (PoC) approach and lost prevention mechanism.

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“RFID Technology: A Review of its Applications” this paper is published by Arun N. Nambiar, and published in the journal the World Congress on Engineering and Computer Science, 2009. From this research paper we will review about RFID, framework, organizational challenges and their applications. This paper will help us in improving RFID technology in inventory system.

“Improving Inventory Control in a small-to-medium Retailer Using RFID,” was published by Hamilton D., in International Symposium on Communications and Information Technologies, 2007. From this research we will know what the issues with inventory control system are.

“B-to-B e-Commerce: Assessing the Impacts of RFID Technology in a Five Layer Supply Chain,” was researched by Ygal Bendavid, Elisabeth Lefebvre, Louis A. Lefebvre, Samuel Fosso Wamba, and published in 40th Annual Hawaii International Conference on System Sciences, 2007. From this research paper we will be finding outs some performance improvements of RFID in supply chain management.

“Understanding the Impact of Emerging Technologies on Process Optimization: The Case of RFID Technology;” is researched by Fosso Wamba S. and Bendavid Y., in 13th Asian-Pacific Decision Sciences Conference, 2008. From this research paper we will review the attempts to improve the understanding of the impact of RFID technology on inventory control system.

“New Understanding of RFID Adoption and Infusion in Retail Supply Chain” researched by Xiaoran Wu and Chandrasekar Subramaniam. It is Hawaii International Conference paper and was presented in 2009. It Uses the Technology-Organization-Environment (TOE) framework to develop a theoretical model for RFID adoption and infusion.

Research Methodology

The research study documented in this paper involves examining of inventory enabled with RFID, its impact and investigation of contemporary events gathered from inventory enabled SCM, Small-to-Medium Retailer, Distribution Chain and Consumer goods supply chain. Using deductive method to address RFID impact and scrutinize identified techniques used for RFID (Proof of Concept, Traceability in Process, Business Integration Model and Quantitative Model). Draw conclusion based on techniques studied and improve technique to address problems in above mentioned techniques.

Research Design

As the main objective of the overall study is to determine the technique of RFID in inventory system, the research design corresponds to an exploratory research initiative. A research was conducted in four distinctive phases, over a period of three months.

Phase 1: Make concepts by reviewing past researches:

“RFID-enabled Inventory Control Optimization: A Proof of Concept in a Small-to-Medium Retailer”( Hamilton Dane, Katina Michael, Samuel Fosso Wamba)

“Using RFID to improve traceability in process industry Experiments in a distribution chain for iron ore pellets”( Bjorn Kvarnstrom, Erik Vanhatalo)

“Business Integration Model with Due-date Re-negotiations”(Mokmin Park, Dongmyung Lee, Kitae Shin)
research project.

“A quantitative model for the introduction of RFID in the fast moving consumer goods supply chain Are there any profits?”( Giovanni Miragliotta, Alessandro Perego, Angela Tumino)

“RFID Technology: A Review of its Applications”( Arun N. Nambiar)

Phase 2: Scrutinize and compare techniques

  • Proof of Concept
  • Traceability in Process
  • Business Integration Model
  • Quantitative Model

Phase 3: Draw conclusions from techniques

Phase 4: Improvise MF-RFID (Mansoor Farhan -Radio Frequency Identification) technique.

Present RFID Concepts and Techniques

Proof of Concept

“In “RFID-enabled Inventory Control Optimization: A Proof of Concept in a Small-to-Medium Retailer” a proof of concept approach is used for the mode of operation using quasi-experimental design. Results indicate that in a small-to-medium retail environment, RFID technology could act as a loss prevention mechanism, an enabler for locating misplaced stock, and make a significant contribution to the overall improvement of the delivery process.”

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Using RFID to Improve Traceability

This technique focuses on tracking the iron ore pallets using RFID, by conducting experiments it was found that RFID tracking fails when place in Heat exposure and when track the product in distributed system. When RFID is placed in container the safety from damage is achieved, container was made from 75 percent dolomite and 25 percent polyester. When special container is used, the highest signal strength is achieved [7]. But how much signal strength is achieved, it is question that is left open. Considering proof of concept approach in loss prevention simulation, when RFID enabled product was canceled, system did not detect the product. In this case to achieve the highest signal strength penetrable carrier (Ultra violet) can be used.

Quantitative Model

MF-RFID Technique

Future Steps in the Research

The previous sections of this paper have identified some of the limitations of literature focused on RFID and inventory control. The current research project will attempt to address these limitions of the literature by carrying out a case study on a small-to-medium retailer, which will provide deductive evidence in relation to the benefits provided by RFID. Once the inventory control practices are identified, simulations will be developed that align the RFID technology with the business processes of the retailer. The simulations will demonstrate how RFID can be used in a retailer setting for aspects such as replenishment, loss prevention, locating stock and checking orders and deliveries. The simulations will form the basis of a proof of concept focusing on the technical and operational feasibility of RFID in a small-to-medium retailer, examining issues such as tag read rates and the impact of environmental factors. A qualitative report will be develpoed to document the benefits dem by the proof of concept approach and the impact of RFID on the small-to-medium retailer.

Conclusions

References

  1. Ygal Bendavid, Elisabeth Lefebvre, Louis A. Lefebvre, Samuel Fosso Wamba, B-to-B e-Commerce: Assessing the Impacts of RFID Technology in a Five Layer Supply Chain, the 40th Annual Hawaii International Conference on System Sciences (HICSS’07) 0-7695-2755-8/07, 2007.
  2. Hamilton D., Improving Inventory Control in a small-to-medium Retailer Using RFID, International Symposium on Communications and Information Technologies ISCIT 2007, 17-19 Oct, 1349-1354.
  3. H. Dane, K. Michael and S. F. Wamba, RFID-enabled inventory control optimization : a proof of concept in a small-to-medium retailer, 43 Hawaii International Conferences on System Sciences (HICSS), Organizational Systems and Technology, Implementation and Usage of Radio Frequency Identification (RFID), Koloa, Kauai, Hawaii, 5-10 January 2010
  4. Fosso Wamba S. and Bendavid Y., Understanding the Impact of Emerging Technologies on Process Optimization: The Case of RFID Technology. 13th Asian-Pacific Decision Sciences Conference, 2-5 July, Brisbane, Queensland, Australia, 2008
  5. Xiaoran Wu and Chandrasekar Subramaniam, New Understanding of RFID Adoption and Infusion in Retail Supply Chain, Proceedings of the 42nd Hawaii International Conference on System Sciences – 2009.
  6. Arun N. Nambiar, RFID Technology: A Review of its Applications. the World Congress on Engineering and Computer Science 2009 Vol II WCECS 2009, October 20-22, 2009, San Francisco, USA
  7. Bjo¨rn Kvarnstro¨m and Erik Vanhatalo, Using RFID to improve traceability in process industry Experiments in a distribution chain for iron ore pellet Emerald Group Publishing Limited, Journal of Manufacturing Technology Management, Vol. 21 No. 1, 2010
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