A Business Value Modeling Tool Set for Exploring the Value of RFID in a Supply Chain

In recent years, Radio Frequency Identification (RFID) technology has emerged as an important technology to facilitate the management of a supply chain. Because the technology is expensive and time consuming to implement in a large scale, most enterprises require a relatively rigorous business case to be developed to support the decision of whether or when to adopt the technology. To facilitate the development of such business cases, we developed a tool set to show clearly the business value of RFID to different parties in a manufacturing-retail supply chain. The tool set consists of two tools which are linked: a business value model, implemented as an in-house developed application using commercial spreadsheet software, and a business process model, implemented using a commercial discrete-event simulation package. The business process model computes and provides certain supply chain performance metrics to the business value model, which are otherwise very difficult to obtain. Because the potential benefits of RFID are sometimes not straightforward, it is necessary to use two different types of decision support tools (spreadsheets and computer simulation) in a coordinated fashion to capture the full range of potential benefits.

By: Ying Tat Leung; Feng Cheng; Young M. Lee; James J. Hennessy

Published in: RJ10370 in 2006


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