The Impacts of RFID Implementation on Reducing Inventory Inaccuracy in a Multi-Stage Supply Chain

27 Pages Posted: 16 Apr 2009 Last revised: 2 Jul 2014

See all articles by Hongyan Dai

Hongyan Dai

Central University of Finance and Economics

Mitchell M. Tseng

Hong Kong University of Science & Technology (HKUST)

Date Written: Nov 16, 2011

Abstract

Mismatch of inventory information between the reality and what is on the record of in-formation systems has been generally accepted as inventory inaccuracy. Its financial impacts go beyond the cost of direct inventory loss at each stage of the supply chain. The discrepancy also results in increasing holding and shortage cost because information distortion propagates along the supply chain. With the growing emphasis on responsiveness and cost of inventory, inventory inaccuracy has become a critical hurdle to achieve high performance supply chains. The emergence of RFID technology offers a possible solution to alleviate the growing cost of inventory inaccuracy. However, differs from tangible justification based on shrinkage reduc-tion, adoption of RFID technology has to be justified with improvement in intangible infor-mation flow. The objective of this paper is to present a systematic approach with analytical models to quantify the extent of saving from timely information as well as reduction in in-formation distortion and its amplification. With the increasing dynamic and complexity of global supply chain, this paper may shed some new light on framing the discussion of invest-ing in RFID technology.

Keywords: inventory inaccuracy, RFID justification, information distortion

Suggested Citation

Dai, Hongyan and Tseng, Mitchell M., The Impacts of RFID Implementation on Reducing Inventory Inaccuracy in a Multi-Stage Supply Chain (Nov 16, 2011). Available at SSRN: https://ssrn.com/abstract=1387024 or http://dx.doi.org/10.2139/ssrn.1387024

Hongyan Dai (Contact Author)

Central University of Finance and Economics ( email )

No 39. Xueyuan South Road
Haidai District
Beijing, 100081
China

Mitchell M. Tseng

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
305
Abstract Views
1,560
rank
138,741
PlumX Metrics