Assessing the Impact of RFID on Return Center Logistics

Abstract

RFID technology is being widely embraced in the supply chain, by manufacturers, retailers, and logistics firms. Although its advocates include retail giants like Wal-Mart, not everyone is enthusiastic about its benefits. It is not clear whether RFID is a boon or a curse to the supply chain: the growing market size of this technology may just be an issue of compliance.

With a view to establishing the real benefits of RFID, we conducted a field study with GENCO, a third party logistics company that deployed RFID at one of its outbound logistics operations with a goal to reducing customer claims. Our analysis found that the RFID implementation had a significant impact on the outbound process: The intensity of claims incidence fell substantially after RFID deployment. After controlling for other factors in our model, we confirm that RFID was a key factor that contributed to the positive outcomes at this return center. The current study underscores the potential of RFID for today's businesses.

Keywords: RFID, business value, process level analysis, reverse logistics, supply chain