Nowadays companies are doing business at a global level. The first objective of the
company is to satisfy its customer by delivering quality goods and services on time. The
movement of the product/service starting from the manufacturer to the end-users is called
the supply chain process. Ganeshan and Harrison (1995) defined supply chain as “A
network of facilities and distribution options that perform the functions of procurement
of materials, transformation of these materials into intermediate and finished products,
and the distribution of these finished products to customers.” The supply chain process
is executed through different stages called the levels of supply chain. Moreover, “A supply
chain consists of all the stages involved, directly or indirectly in fulfilling a customer’s
request. The supply chain not only includes the manufacturer and suppliers, but also
transporters, warehouses, retailers and customers themselves” (Chopra and Meindl, 2001).
The efficiency of a supply chain and logistics play a great role in increasing the return
of any business. However, the question is how to achieve an optimum level of operational
efficiency in the supply chain. Currently, the interconnectivity among the various links
in the supply chain and logistics is incomplete and inaccurate owing to the fact that each
link in the chain is an individual entity. This leads to poor product visibility and
transparency in stock in the supply chain. This is especially important when scalability
issues come into picture. The answer to this problem is the implementation of Radio
Frequency Identification (RFID) technology clubbed with information sharing systems.
This combinatory technology will play a vital role in the future of global trade. With
boundaries of trade constantly increasing and becoming more dispersed, it is important
to have a tool that collaborates this type of complex supply chain. However, decision to
implement any new technology is questionable since cost is involved. Most companies are
hesitant to implement such technology because of they are not sure about the ROI from
this implementation.
Vertical segments, such as manufacturers, retailers and distributors, consider Supply
Chain Management (SCM) crucial for their business, and the advent of RFID was found
to enhance the efficiency of the SCM process. RFID technology is also very widely used
by retailers as it helps in minimizing communication gaps between the suppliers and
retailers by transforming the right informant ions at the right time. Growth of electronic
retailing in the form of bar code scanning, Global System for Mobile communications
(GSM), adoption of RFID and other electronic gadgets have expedited the marketing
function of a majority of retail organizations. Moreover, it is possible to gain crucial
information about customers and coordinate the operations through RFID. RFID makes
the supply chain process effective and efficient. RFID manages the entire supply chain
activities like procurement of materials, storing the material, management of inventory,
manufacturing process, logistics and management of customer service.
The paper first provides a review of literature, explains RFID as an advanced tool,
focuses on the applications of RFID and depicts the importance of RFID in enhancing the
supply chain performance. It then explains a conceptual model, defining the problems of
an ineffective supply chain process and also reducing or completely removing these
problems by using RFID technology and describes the challenges to RFID implementation,
before closing with suggestions and conclusion.
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