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University Researchers Say RFID's Worth Is Proven When Deployed Enterprise-wide

An academic group reports that companies deploying RFID across an entire supply chain or business enterprise realize substantial gains, though a "wall of silence" keeps them from sharing their success stories.
By Claire Swedberg
Nov 23, 2009A study written by four university professors finds that radio frequency identification offers a significant benefit to companies that fully deploy the technology across their entire business operations or supply chain. However, the study also finds that while RFID is gaining momentum when it comes to automating businesses' operational and management functions, few firms have reached the "transformational" stage at which RFID is deployed across multiple operations and departments within a company, as well as across its partners. Only when businesses fully employ the technology across their own operations and those of their partners, the study's authors maintain, can RFID provide them with a true competitive advantage.

The study, entitled "Empirical Evidence of RFID Impacts of Supply Chain Performance," is based on a review of published news articles and scientific papers focused on RFID deployments, particularly in the supply chain. The articles and papers had originally appeared in a range of publications and Web sites over the past 10 years, including RFID Journal, The Wall Street Journal, the International Journal of Retail & Distribution Management and the Journal of Information Systems. Authored by professors at Bryant University, the University of Houston and Baylor University, the study is slated to appear in the latest issue of the International Journal of Operations and Production Management.

The essential "transformational" phase identified in the study has not yet arrived among most deployments researched for the study, the authors indicate. However, says John Visich, the study's lead author and an associate professor of management at Bryant University, many such deployments may be in place, but hidden behind a "wall of silence" in which companies choose to keep the technology and their use of it to themselves. Despite that obstacle, Pedro Reyes, a Baylor University associate professor of operations management who co-wrote the study, predicts that within five to eight years, RFID technology will have reached that transformational phase at many businesses, such as hospitals, logistics providers and retailers.

In the meantime, says study co-author Suhong Li, a Bryant University associate professor of computer information systems, RFID users and vendors need to think about the big picture. Instead of focusing on small deployments that address issues like retailer mandates, companies—and the vendors that provide them with RFID technology—need to consider the entire business process, and examine how an RFID system could be used to improve it.

The study originated from conversations between Visich and Reyes, regarding a lack of evidence as to the amount of RFID being used in business, and about how well the technology performs. The two professors "had been working in parallel for several years," Reyes says, and decided to create a study that would not only collect data but convert it into useful information about deployments and how successful they had been.

Over the course of two years, Visich and Reyes, along with Li and Basheer M. Khumawala, of the University of Houston, analyzed dozens of RFID-related articles and papers, examining the operational and management sides of businesses, and defining deployments by the automational, informational and transformational effects RFID technology use had within these two categories. The researchers cite the limitations of their research, including the use of secondary sources and a lack of consistency in performance-measurement definitions, but they believe their findings are important nonetheless.

In the case of operations, the research team found that of the 55 RFID deployments described in these articles and papers, all were examples in which RFID provided operational business value, and 47 resulted in automational effects—meaning that formerly manual activities (such as inventory checks) were automated through the use of RFID. Five of the 55 deployments saw information effects—that is, the deploying companies were analyzing and utilizing data culled from RFID technology to make better decisions, such as when inventory needed to be ordered, while only three had reached a transformational stage at which they saw an effect across multiple processes—such as sharing information with other divisions of a company, or with other members of a supply chain.

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