Search
RFID Case
click here for the RFID case questions .
This case is due on March 11, 2014.
Supply Chains – at Internet Speed
RFID at the Metro Group – Steven Ferraiolo, Nicholas Horn, Jason Morris, Thanh Tran
1. List any three advantages of RFID over bar-code scanning?
RFID tags can be tied to individual products, whereas bar-codes can only be tied to the product category. This is because barcodes have a limited number of combinations (13 bars).
RFID tags can be read from a distance and do not require the item being scanned to be positioned directly in front of the reader. This allows RFID tags to be read in bulk while passing through a reader, while barcodes need to be scanned one by one with the barcode horizontal to the scanner.
RFID tags reduces labor costs because items no longer need to be scanned manually. Traditionally, warehouse would unload pallets and a human would need to physically unload and scan each pallet and case into inventory. With RFID, products can be automatically read as they are unloaded and added to inventory with no human involvement. This also reduces the potential for inventory errors due to miss-scanning.
2. One of the important decisions that companies make in RFID is what level should the tagging be done. Tagging can be done at the pallet level or at the case level or even at the individual product level (see figure below for the difference between pallets and cases)[1]. Metro Group (which is the retailer) is debating whether to implement the tags at the pallet level or the case level. Perform a cost benefit analysis to make your recommendation to the company. Each pallet has 70 cases and every week, a single retail store processes 30 pallets. Assume that Metro Group has 436 stores. Each RFID tag costs 17 €-cents.
Hint: perform a quantitative analysis using the information in Exhibit 9
Cost/Benefit Analysis for the Manufacturer and Retailer:
Weekly Cost of Case Level Tagging: 436*30*70*0.17cents = $155,652
Weekly Benefit of Case Level Tagging: 436*30*70*.159 = $145,580.4
Weekly Net Benefit of Case Level Tagging: 155652-145580.4 = -10,071.6
net benefit =15.9-17=-1.1
Result: The total cost outweighs the benefit, so it is not profitable to tag at the case level.
Weekly Cost of Pallet Level Tagging: 436*30*0.17cents = $2,223.60
Weekly Benefit of Pallet Level Tagging: 436*30*.657 = $8,593.56
Weekly Net Benefit of Pallet Level Tagging: 8593.56-2223.6 = $6369.96
Result: The total benefit outweighs the cost, so it will be profitable to tag at the pallet level.
3. What were the challenges faced by Metro during the RFID rollout?
The first challenge faced was the cost of the rollout. It was very costly and only a few suppliers participated in the initial rollout. Next, problems arose from the placement or quality of the tags. Suppliers would put tags on the wrong spots or sometimes forget to place them at all, which led to the RFID readers not being able to read them. Additionally, sometimes the wrong frequencies were used, which led to errors in reading the tags. Finally, there were technological problems such as the inability to read tag information through metal and water or connection issues between the readers and servers.
4. Look at Metro DC’s process flow in Exhibit 8. List 3 ways in which the retailer can benefit from using RFID.
Reduced labor costs and improved efficiency – RFID eliminates the manual barcode scanning. RFID would automatically scan the pallets, so there is no need to pay employees to do it.
Reduced picker errors – The picker would not need to manually enter the number of cases picked because RFID automatically records it. Resulting in saved time and increased accuracy of shipments.
Improved in-stock rate – The RFID reader between the backroom and selling floor keeps track of what products are in the backroom. Instead of relying on memory, employees now have a definite record of what is the backroom and can keep the shelves continually stocked.
5. What IT infrastructure would Metro Group need to put in place for adopting RFID?
RFID tags – Metro’s suppliers would have to purchase RFID tags and print EPC
RFID printer – Costs between €1,270 and €3,400 and prints EPC on tags
RFID portal with RFID readers and antennae – Costs about €8,500 and had to be installed in the incoming and outgoing good areas
Edge server – Computer terminals used to send the shipment data to the servers at headquarters
Middleware – Processed the data collected by the RFID readers and integrated it into existing systems
Data storage – Needed to be change to distinguish between backroom and selling floor inventory