Radio Frequency (Un)Identification: Results from a Proof-of-Concept Trial of the Use of RFID Technology to Measure Microenterprise Turnover in Sri Lanka

44 Pages Posted: 17 Nov 2014

See all articles by Suresh de Mel

Suresh de Mel

University of Peradeniya

Dammika Herath

Kandy Consulting Group

David J. McKenzie

World Bank - Development Research Group (DECRG); IZA Institute of Labor Economics

Yuvraj Pathak

World Bank

Multiple version iconThere are 2 versions of this paper

Date Written: October 2014

Abstract

Accurate measurement of stock levels, turnover, and profitability in microenterprises in developing countries is difficult due to the fact that the majority of these firms do not keep detailed records. We test the use of RFID tags as a means of objectively measuring stock levels and stock flow in small retail firms in Sri Lanka. In principle this offers the potential to track stock movements accurately. We compare the stock counts obtained from RFID reads to physical stock counts and to survey responses. We have three main findings. First, current RFID-technology is more difficult to use, and more time-consuming to employ, than we envisaged. Second, the technology works reasonably well for paper products, but very poorly for most products sold by microenterprises: on average we were able to read only about one-quarter of the products tagged, and there was considerable day-to-day variation in read-efficiency. Third, a comparison of survey responses and physical stock-takes shows much higher accuracy for survey measures. As a result, we conclude that this technology is currently unsuitable for improving stock measurement in microenterprises, except perhaps for a few products.

Keywords: Microenterprises;, Profit and Sales Measurement, RFID., Survey Methods

JEL Classification: C81, C93, M41, O12, O16

Suggested Citation

de Mel, Suresh and Herath, Dammika and McKenzie, David John and Pathak, Yuvraj, Radio Frequency (Un)Identification: Results from a Proof-of-Concept Trial of the Use of RFID Technology to Measure Microenterprise Turnover in Sri Lanka (October 2014). CEPR Discussion Paper No. DP10225, Available at SSRN: https://ssrn.com/abstract=2526353

Suresh De Mel (Contact Author)

University of Peradeniya ( email )

University of Peradeniya
Dept of Economics & Statistics
Peradeniya
Sri Lanka
+94 81 2392622 (Phone)

Dammika Herath

Kandy Consulting Group

Sri Lanka

David John McKenzie

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Yuvraj Pathak

World Bank

1818 H Street, NW
Washington, DC 20433
United States

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