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Current State-of-the-Art Benefits and Challenges of RFID Deployment in Global Supply Chains
 

Current State-of-the-Art Benefits and Challenges of RFID Deployment in Global Supply Chains

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Points out the actual extend of RFID Deployment in Global Suppy Chains concerning associated Opportunities, Challenges and Risks.

Points out the actual extend of RFID Deployment in Global Suppy Chains concerning associated Opportunities, Challenges and Risks.

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    Current State-of-the-Art Benefits and Challenges of RFID Deployment in Global Supply Chains Current State-of-the-Art Benefits and Challenges of RFID Deployment in Global Supply Chains Presentation Transcript

    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Master of Business Administration (MBA) Master Thesis Defence on the Topic Supervisor : Prof. Dr. Soumit Sain Referee : Prof. Dr. Matthias Klumpp Student: : Volker Girrulat Student ID-No.: 174770 Essen, 08.05.2009
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. I. Objectives of the Thesis and Introduction of the Topic
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Radio Frequency Identification (RFID)
      • Transponder (Tag) / Reader Device and Chip-based Combination
      • Automated Locating and Identifying data-carrying Objects remotely without any Line of Sight
      • Auto-ID Ifrastructure Approach
      • Ubiquitous Computing as the Main Objective
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No.
      • The Integration of physical Objects from the real World with IT Systems
      • by RFID leads to:
      • Enhanced Visibility
      • Improved Information Sharing
      • Sound Order Processing and Replenishment Strategies
      • Enhanced Process Coordination in Logistics
      • Counterfeit and Grey Market Detection and Shrinkage Avoidance
      • throughout the Supply Chain.......................................
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No.
      • Objectives Of the Thesis:
      • Get a better Understanding about what RFID is capable for
      • Investigate the current State of the Art Practice of RFID Deployment
      • and associated Risks and Challenges
      • Work out the contemporary Diffusion Extend of RFID in Global Supply Chains
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. II. Supply Chain Management on a Global Scale
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No.
      • Today´s Supply Chain Challenges
      • Global Supply Chain with long Lead Times
      • Uncertain Demand and Supply
      • Increase in Logistics Costs
      • Complex Product Offering
      • Component and Assets Availability
      • System Variation over Time
      • Global Supply Chain Fragmentation
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Purchasing Production Logistics Controlling Information Technology Supplier Second Tier Supllier First Tier Own Company in the Global Supply Chain Network Customer First Tier Customer Second Tier
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No.
      • Best Practices to face the Challenges
      • Customer Segmentation
      • Customized Logistics Network
      • Product Mass Customization
      • Change from Push to Pull Supply Chains
      • Strategic Sourcing
      • Supply Chain-Wide Technology Strategy
      • Appropriate Key Performance Indicators (KPI´s)
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Low Low High High Costs Service Level Source: Boston Consulting Group Trade-off between Service and Costs
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Supply Chain Dynamics Customer Demand Retailer Orders Distributor Orders Production Plan
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No.
      • Supply Chain Prerequisites for Uncertainty Mitigation
      • 1) Sustainability
      • Transparency
      • Communication
      • Collaboration
      • 2) Visibility
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Supply Chain Visibility Supplier Collaboration Supply Chain Costing International Transportation Management Trade Compliance Customer Collaboration Risk Management Source: Aberdeen Group, 2006 % of Respondents Supply Chain Investment Areas
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No.
      • Key Inventory Strategies
      • Vendor Managed Inventory
      • Merge-in-Transit
      • Postponement
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Pull-Call-off-to-order Pull-Call-off-to-order (Component Level) Pull-Assemble-to-order Pull-Customize-to-order Push/Pull-Make-to-Stock Push-Make and Ship-to-Stock COP 1 COP 2 COP 4 COP 5 COP 6 COP 3 Postponement Local Stock Component Warehouse Tier Ones Finished Products Stock Abroad Source : Bliss and Haddock, 2008 COP = Cross-over Point
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Traditional On Demand Source: IBM Institute for Business Value, 2004 Static Supply Chain Functional Optimization Horizontal Process Integration and Automation External Collaboration, Optimization, Flexibilization Demand-Driven Supply Chain Demand-Driven Supply Chain Development
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. III. RFID Technology and Architecture
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. RFID-Reader Reader Antenna Transponder Tag Tag Antenna Air Interface Source: Balkovich, Bikson et al., 2005 to Information Systems
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Passive RFID Tag Active RFID Tag
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Electric Waves Radio Waves Infra-Red Visibke Light Ultra Violet X-Rays Gamma Rays Cosmic Rays Radio Spectrum 9kHz 30 kHz 300kHz 3000kHz 30Mhz 300Mhz 3000MHz 30GHz 300GHz 3000GHz VLF LF MF HF VHF UHF SHF EHF Not designated 125-134 kHz 13.56 MHz 860-930 MHz 2.4 & 5.8 GHz Electromagnetic Spectrum Source: Zheng, 2008
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Common Frequency Bands of RFID
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. EPC Network as a Global Auto-ID Infrastructure Approach
      • Member-driven organization of leading firms and industries
      • First launched by MIT in 1999
      • Implement the Global Item Number(GTIN) to track RFID tagged items
      • seperatly from others
      • Implementation of a global data synchronization network (GDSN)
      • Enhanced data sharing among the supply chain partners
      • Improved order fullfillment, visibility, replenishment and logistical processes
      • Lowered process costs concerning sales order and invoice payment
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. RFID-Tag RFID-Reader Savant (Middleware) EPC Information Service External Software Applications Object Naming Service (ONS) Domain Name Service(DNS) Protocol PML PML PML Source: Flörkemeier, 2005 EPC Network Architecture Data Capturing Filtering Transmitting to other Systems Product-related Data Disemination troughout the EPC Network Points out the adequate Adress of the Data Source
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. IV. Benefits and Challenges of RFID in the Global Value Chain
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Information available Latest Information Information demand Subjective Information Reqirements Objective Information Reqirements Source: Picot et al. , 1998, p.82 Information Demand and Supply
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No.
      • Integration of IT Systems into Corporate Business Processes
      • and Data Processing helps to avoid Media Disruptions.
      • Implications of Media Disruptions
      • Delays
      • Information Loss
      • Failures
      • It is important that that all Players in the Supply Chain apply
      • the same IT Infrastructure Approach
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Marginal Costs for Data Capturing Data captured manually Text Recognition Barcode Scanning RFID Integrated IT Systems Manual Tasks necessairy Full Automation Integation Extend
      • Digital World
      • Internal and collaborative
      • Application Systems (ERP, E-Business Systems)
      • IT-Infrasructure e.g. Internet
      • Real World
      • Human Beings
      • Products
      • Production Infrastructure
      Source: Fleisch, 2001
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Costs Coordination Intensity Total Costs Autonomy Costs Coordination Costs K 1 K 1 : Piont of optimal Coordination Intensity Costs Source: Frese, 1995, p. 101
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Abstract View on Privacy Risks in The EPC Network Source: Adapted from Garfunkel et al. , 2006 Privacy Concerns:
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Technology Acceptance Model (Davis, 1986) Public Acceptance:
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Security Issues: Summary of Security Evaluation
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Environmental Issues:
      • Used RFID components are discarded electronic gadgets
      • Transponders contain:
      • Copper
      • Silicon
      • Polyester
      • Lithium (active Tags)
      Due to falling tag prices and increasing single item tagging of consumer goods, the environment will be significantly polluted with electronic garbage.
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. V. Current Best Practice of RFID Deployment
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. WLAN GPRS UMTS GPS Gallileo RFID Reader Node in Sensor Network Sotware Agent/Gateway RFID Tag Information Systems Source: Laur and Lang, 2005 RFID/Sensor Network
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. VI. Future Outlook
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Integration Depth Integration Range Integration Range Diffusion Direction Single Item Pallet Level Case Level Supplier First Tier Supplier SecondTier Supplier Third Tier Domestic International Global Derived from Fleisch and Strassner, 2005 Pipelines Transportation Level RFID Diffusion in Global Supply Chains
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. VII. Conclusion
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. 2004 2005 ca. 2006 + ca. 2010 + Supply Chain Optimization EPC Trails EPC Mandates Accurate Inventory Counterfeit Detection Shrinkage Avoidance Grey Market Detection Verifiable Secure Supply Chains Case / Pallet Level Item Level Source: HP invent, 2005 RFID Adoption Timeline
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Position of EU Countries in Adopting RFID in 2007
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Current Circumstances preventing or hampering RFID Diffusion in Global Supply Chains:
      • Insufficient Global Frequency Harmonizing
      • Variety of RFID Systems
      • Lack of Acceptance,Trust and Knowledge among the Supply Chain Players
      • Cost Aversion towards RFID Implementation
      • Insufficient Data Security
      • Insufficient Data Storing and Processing Capacity due to huge RFID Datastreams
      • Govermental Regulations concerning certain Frequency Bands
    • Fachhochschule für Ökonomie und Management - University of Applied Siences Slide No. Thank You
    • Aberdeen Group, 2006 Global Supply Chain Benchmark Report: Industry Priorities for Visibility, B2B Collaboration, Trade Compliance, and Risk Management. Aberdeen Group Inc., Boston, MA,2006 www-935.ibm.com/services/us/igs/pdf/aberdeen-benchmark-report.pdf Balkovich, E.; Bickson, T., et al., 2005 Do You Know if Your Boss Knows Where You Are? Santa Monica, CA, RAND Corporation. 2005, pp. 5-9 Bliss, Haddock, 2008 Integrating China into Your Supply Chain: Lessons Learned from Global Supply Chain Integrators. Booz Allen Hamiton, 2008 www.booz.com/media/file/Integrating_China_into_a_Global_Supply_Chain_en.pdf References:
    • Boston Consulting Group Creating The Optimal Supply Chain. Special Report. http://knowledge.wharton.upenn.edu/papers/download/BCGSupplyChainReport.pdf Fleisch, E., 2001 Betriebswirtschafliche Perspektiven des Ubiquitous Computing. In: Buhl, H.U., Huther, A., Reitwiesner, B.(Pub.): Information Age Econmy. Physica-Verlag, Heidelberg, 2001, pp. 177-1991 Flörkemeyer, C., 2005 Die Technolgien des Auto-ID Centers. In: Fleisch, E.; Mattern, F.(Pub.): Dass Internet der Dinge: Ubiquitous Computing und RFID in der Praxis. Visionen, Technologien, Anwendungen, Handlungsanleitungen. Springer, Berlin, 2005 Frese, E., 1995 Grundlagen der Organisation. Konzept – Prinzipien – Strukturen. Gabler, Wiesbaden, 1995
    • HP invent, 2005 RFID and Sensing in the Supply Chain: Challenges and Opportunities. Hewlett- Packard Development Company, 2005 www.hpl.hp.com/techreports/2005/HPL-2005-16.pdf IBM Institute or Business Value, 2004 Charting a new Course. IBM Global Business Services, 2004 http://www-935.ibm.com/services/de/bcs/pdf/2006/charting_new_course.pdf Laur, R.; Lang, W., 2005 Agent-based perception system for sensitive freight. ITG FG 5.2.4 Workshop “Communication Applications for Logistics”. Power Point Presentation. Institut für Theoretische Elektrotechnik und Mikroelektronik (ITEM). Institut für Mikrosensoren, - aktuatoren und -systeme (IMSAS), Universität Bremen, 2005 Mcguffry, T., 1998 Electronic Commerce and Value Chain Management Copyright 2006 D. Sichi-Levy
    • Picot, A. et al., 1998 Die grenzenlose Unternehmung. Vol.3, Gabler, Wiesbaden, 1998 Zheng, L.R., 2008 Wireless Tracking and Sensing. School of Information & Communication Technology, Royal Institute of Technology (KTH), Stockholm, Power Point Presentation Outline, 2008 www.acreo.se/upload/Publications/Events/2008/20081008-Zheng.pdf