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RFID Provides Competitive Advantage when Deployed Enterprise-Wide

RFID Provides Competitive Advantage when Deployed Enterprise-Wide

27 Nov 2009

radio frequency identification

A study by four US university professors has found that companies deploying radio frequency identification (RFID) across an entire supply chain provides substantial competitive benefits, although a “wall of silence” prevents companies from sharing their success stories.

The study, Empirical Evidence of RFID Impacts on Supply Chain Performance, said that while businesses are embracing RFID to automate operational and management functions, few companies have reached the “transformational” stage where RFID is used across multiple operations and departments, both within the company, and across is partners.

The authors maintain that it is only when firms fully employ RFID technology across their own operations and those of their partners, can they gain a competitive advantage.

The research did mention that many such deployments may be in place, however, companies are choosing to keep their use of the technology to themselves, creating a “wall of silence” culture.

“When you reach the transformational level, it’s a competitive advantage,” said Professor John Visich, the study’s lead author and Associate Professor of Management at Bryant University.

The study also found that most companies had installed RFID systems to address a specific activity such as tagging cartons, and as a result, had not seen considerable benefits.

On the other hand, companies that had reached the transformational stage saw substantial improvement in a diverse range of areas such as retail promotions coordination, reconciliation, decision-making effectiveness and quality, resource usage and production control.

“Vendors should not make a business case for RFID to improve one process,” said Professor Visich.
“It’s not going to look like a favourable investment. RFID can be deployed across multiple processes.”

Despite this reluctance to share information, it is predicted that many sectors including hospitals, logistics providers and retailers will reach the transformational phase of RFID technology within five to eight years.

Study co-author Professor Suhong Li from Bryant University says that in the meantime, RFID users and vendors need to focus on the big picture. Instead of focusing on small deployments that address issues such as retailer mandates, companies need to consider the entire business process and examine how an RFID system could be used to improve it.

Learn more about RFID technologies at CeBIT's Retail Tech Exhibition.

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