Exploring the impact of RFID on supply chain dynamics

Radio-frequency identification (RFID) as an emerging technology has generated enormous amount of interest in the supply chain arena. With RFID technology, inventory can be tracked more accurately in real time resulting in reduced processing time and labor. More significantly, the complete visibility of accurate inventory data throughout the entire supply chain, from manufacturer´s shop floor to warehouses to retail stores, brings opportunities for improvement and transformation in various processes of the supply chain. We developed a simulation model to study how RFID can improve supply chain performance by modeling the impact of RFID technology in a manufacturer-retailer supply chain environment. Our study provides a quantitative analysis to demonstrate the potential benefits of RFID in inventory reduction and service level improvement.