Finding Benefits of Utilizing RFID Technology


Published on

In this paper, we discuss benefits of RFID
technology that Skanska Maskin AB at Linnarhult
Gothenburg in Sweden has planed to utilize in the
future. We used case study methodology in this
research to find benefits of RFID at Skanska Maskin
AB. We gathered qualitative data from the present
system by using mediating tools such as observation
and interviews. We compared present barcode system
with proposed future RFID system to see the benefits
and effects of the RFID technology. The store
environment of Skanska Maskin AB is more complex
and difficult to manage. We used Soft System
Methodology (SSM) to analyze and identify both
present barcode and future RFID systems in such a
complex and messy situation. SSM uses “systems
thinking” in learning and reflection to help understand
the various perceptions come from minds of different
people who involved in the problem situation. The SSM
considers the importance of cultural, social and
political attributes in the present system. We discussed
the results of system comparison illustrating the benefit
of future RFID system.

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Finding Benefits of Utilizing RFID Technology

  1. 1. Software Engineering and Management Bachelor Thesis IT University of Gothenburg, Spring 2008 REPORT NO. 2008:076 ISSN: 1651-4769 Department of Applied Information Technology Finding Benefits of Utilizing RFID Technology in Skanska Maskin AB MALLAWARACHCHIGE DON SISIRA KUMARA NIHAL SIRIWARDANAGEA IT University of Göteborg Chalmers University of Technology and University of Gothenburg Göteborg, Sweden 2008
  2. 2. Finding Benefits of Utilizing RFID Technology in Skanska Maskin AB Software Engineering and Management Bachelor Thesis IT University of Gothenburg, Spring 2008 Sisira Kumara Mallawarachchige Don Nihal Siriwardanagea IT University of Gothenburg IT University of Gothenburg Sweden Sweden e-mail:; e-mail:; technology based item identification system at Abstract: In this paper, we discuss benefits of RFID their warehouse and they want to change the technology that Skanska Maskin AB at Linnarhult Gothenburg in Sweden has planed to utilize in the existing system with Radio Frequency future. We used case study methodology in this Identification (RFID) technology. They have research to find benefits of RFID at Skanska Maskin uncertainty which benefits they can achieve by AB. We gathered qualitative data from the present using this RFID technology at their premises. Our system by using mediating tools such as observation research goal is to find out possible benefits of and interviews. We compared present barcode system future RFID system at Skanska Maskin AB over with proposed future RFID system to see the benefits the present barcode system. RFID technology and effects of the RFID technology. The store allows in supply chain management to identify environment of Skanska Maskin AB is more complex store items with an item reader which is similar to and difficult to manage. We used Soft System the barcode item identification. The present Methodology (SSM) to analyze and identify both present barcode and future RFID systems in such a barcode system at Skanska Maskin AB allows the complex and messy situation. SSM uses “systems barcode reader to communicate with the renting thinking” in learning and reflection to help understand item’s barcode once both are in the visual contact the various perceptions come from minds of different range. This system works fine except some people who involved in the problem situation. The SSM physical limitations such as the durability and considers the importance of cultural, social and visibility of the barcode tag once the items return political attributes in the present system. We discussed back from the customer. the results of system comparison illustrating the benefit of future RFID system. Our goal was to find benefit of RFID technology Key words: RFID Technology; Benefits of RFID; Soft by comparing the present existing barcode system System Methodology (SSM); Use Case Modeling and the possible future RFID system. In order to (UML); Warehouse Management; Skanska Maskin AB, identify these two systems we have considered the Bar code, Organizational Change. factors such as system-interactions, technological 1. Introduction implementations cultural and political changes in the present and future systems in Skanska Maskin Skanska Maskin AB is a leading company selling AB. The main actor involve in this research was and renting construction items all over Sweden. Skanska Maskin AB as the manufacturer, seller They manufacture and repair items as well as and renter of construction items. Customers are recycle unusable items. They used barcode
  3. 3. results from the data analysis from future RFID the typical construction companies and the system at Skanska Maskin AB. Further more it individuals who rent the item from Skanska has been discussed the previous studies, why they Maskin AB. We have classified the benefits from are important, the relationship to other researches implementation of the RFID technology such as and suggestions for the future RFID system. The using RFID tag, tag readers, automated data/item research procedure did not calculate any cost of handling and network connections. In the RFID implementation. The analysis of future following chapters of this article we have RFID system was totally based on the other discussed in detail how we have identified the research have being done on this field and existing system and the future RFID implemented published. The research has concluded with system at Skanska Maskin AB. We have used generalizing and recapitulating the research work. “Case Study” as the research method and we used it for careful study of the contents and 2. Related Research longitudinal examination of item handling at Skanska Maskin AB. The mediating tools In our research, it has been found in many interview, field visits, observation and Soft literatures that Radio Frequency Identification System Methodology (SSM) used to identify the (RFID) technology (in section 2.1.) and Soft present system and the future system with RFID System Methodology (SSM) (in section 2.2.) have in a systematic way. applied in different organizational context. The literatures have based on online resources, The data gathering with regards to items renting, industry web sites, whitepapers, journals and press returning, and repairing function have been done releases. using above mentioned mediating tools. 2.1. RFID Technology According to the gathered data we have identified the present and the future system. We have used Radio Frequency IDentification (RFID) is a SSM to create “rich picture”, root definition and technology that uses radio waves to uniquely the “conceptual model” of the existing system. identify items. RFID interrogator (reader) The system documentations domain model, use generates electromagnetic waves and activates the cases, system interaction diagrams created in RFID tag. The interrogator converts the radio using Unified Modeling Language (UML). The waves into digital information and sends to results of systems identification led to the middle ware computer (Controller) to analyze the comparisons of system functions renting, selling, data [1]. There are two types of RFID tags which repairing and recycling. The results of these are active and passive [1 p80-100]. RFID offers a comparisons created the benefits of the future possible alternative to auto-ID technologies system. The research question is, Skanska Maskin include bar codes, optical character readers and AB wants to implement RFID technology at there biometric identification [2]. warehouse. They want to know that are there It was perceived that the RFID technology were benefits from RFID technology over the present commonly used not only in Supply Chain barcode system? Management (SCM) and other organizational This article has organized with literature review environment such as libraries, retail shops, airline which has included facts from related RFID services, personal identifications, hotel industry, implementation studies. The Method section mobile asset management in office. SCM is the discusses the way we have conducted our research “management and control of all materials and and what methodology we have used, why and information in the logistics process from how it has used. The discussion section analyses acquisition of raw materials to delivery to the end
  4. 4. adoption of new technology. The traditional user” [4]. K. Michael and L. McCathie at system design approach is UML is envisioned and University of Wollongong has found data from it does not consider the social, political and numerous resources that many benefits had gained cultural aspects of the problem situation in the different organizations by using RFID technology organization. The SSM is considered the various such that non-line-of-sight item, labor reduction, percepts come from minds of all actors who enhance visibility, asset tracking, accuracy of item involve in the organization process when solving level tracking and tracing, reliability, improved the problem. Considering the above facts we inventory management and security. chose Soft System Methodology to analysis the METRO Group, the world’s third-largest retailer, present and future system changers at Skanska attracted a lot of attention when it announced Machine AB with RFID. Chapter 3 has provided plans to use RFID throughout its supply chain and more detail description of particular methodology for numerous applications at its famous Future in practical use for RFID system in Skanska Store in Rheinberg, Germany [5]. Since then, it Maskin AB. has gotten something much more beneficial from its RFID efforts: results. Helped by the Within systems thinking there are two performance of RFID readers from Intermec complementary traditions such as “Hard system” Technologies Corp., METRO Group is reaping and “Soft system”. Influenced by control and information theory, hard systems are involving the time savings, labor reductions and inventory simulations, often using computers and the benefits it hoped for when it began testing RFID. techniques of operations research. Soft systems Encouraged by its system performance and real- represent a reaction to the inability of hard world benefits, the retailer has gone beyond pilot systems to adequately respond to real world phase and has gone live with RFID in its own problems [8]. Malaysian Public Institution of daily supply chain operations [5]. US Air Force Higher Education has formulated knowledge Research Laboratory has done research project of management system using SSM. They used RFID in their supply chain management. Final combination of technical (Hard) and non-technical project report result has illuminated that (Soft) issues business process and they considered utilization of RFID was experienced the benefits human activities within the organization to of improvement inventory management, improve formulate system [17]. Soft systems methodology labor productivity, eliminate duplicate order, is in the analysis of complex situations where replaces manual procedures, automate receipt and there are divergent views about the definition of acceptance, improve shipment visibility the problem – “Soft problem”[8]. In other way management, improve asset tracking, reduce SSM is an approach to organizational process shrinkage and enhance business process [6]. modeling and it can be used both for general United Parcel Services inc., the world leading problem solving and in the organizational change fright forwarder had proved that perceived [8]. SSM has seven stages process (several benefits of RFID had gained over barcode after iterations are needed, see Figure 1). implementation of RFID technology [7]. World Stage 1: Investigate unstructured problem leading retailer Wall Mart is the first successive situation - within the real-world frame of customer gain benefit from RFID technology in thinking. A significant amount of information supply chain management on above mention area. needs to be collected (e.g., organizational history, culture, structure, types and number of 2.2. Soft System Methodology stakeholders, their perspectives and assumptions) There are number of methodologies exist to [9]. In the case study of Manchester Metropolitan investigate the organizational changers due to
  5. 5. the system to be modeled. Root definitions often University (MMU) accommodation problem was follow the form: A system to do P, by (means of) done by Jeremy Rose [12] gathered data from Q, in order to R telling us what the system will various actors to analyze the problem situation. The actors were student, accommodation office do, how it is to be done, and why it is being done staff, landlords and IT staff. (its longer-term goals) [11], [12]. There are six components that make well formulated root definition which call CATWOE (Table 1x). Referring to Jeremy Rose [12] root definition described MMU a system that produced qualified candidates for potential employers. Qualified candidates (X), by means of suitable assessment (Y) in order to demonstrate the capabilities of candidates to potential employers (Z). Table 1: Six components of root definition [12] Component Meaning The beneficiaries or victims of a Customer Figure 1: Soft System Methodology Seven Stage [13]. system The agents who carry out, or Actor Stage 2: Express the problem situation – This cause to be carried out, the main rich picture describes the structure and processes activities of the system of the organization and the environment in which Transformation The process by which defined it operates. The structure of rich picture is consist inputs are transformed into with physical layout, hierarchy, reporting defined outputs structure, and the patterns of communication, A viewpoint, framework, image Worldview formal and informal. By process is meant the or purpose, which makes a particular root definition organization’s basic activities (i.e., resource meaningful allocation, deployment, monitoring, and control). Those who own a system (have Owner The relation between structure and process should the power to close it down) illustrate the problems, tasks, and elements of the Influences external to a system Environment environment in a way that is easy to understand. It that affect its operation should identify relevant themes, develop a shared understanding of different perspectives, and be a The transformation process is the core of the root basis for further discussion [10]. Referring to definition, which transforms inputs into outputs. Jeremy Rose [12] accommodation problem, the The transformation process is evaluated by three rich picture shows different communication of (Es) criteria [11]. These criteria’s are: accommodation office with full of paper works, E1-Efficacy or checking that the output is competition over beds and perception of students produced; and landlords. E2-Efficiency or checking that the minimum and necessary resources being used to obtain it; Step 3: Root definition of relevant system - At E3-Effectiveness or checking that the this point change from “Real world thinking” to transformation process is worth doing to attain the “Systems thinking”. Root definitions are written longer-term goals related to the outputs; these as sentences that elaborate transformation. It is a three criteria can be extended as: short textual definition of the aims and means of
  6. 6. using SSM. The SSM has been well-liked with E4-Ethicality or checking that transformation is many organizations to address their different type morally ethical; of contextual organizational problem. This E5-Elegance or checking that transformation is an document has referenced number of research aesthetically pleasing; documents and white papers on such real world Stage 4: Building conceptual model(s) - case studies. Jeremy Rose, Department of BIT, the Conceptual models demonstrate potential Manchester Metropolitan University, UK has activities and their logical dependencies. It is addressed issues of university accommodation of based on the agreed root definitions in stage 3 of students by using SSM (accommodation office the desired system and is measured against the has meshed with paperwork and solution was three Es criteria mentioned in stage 3 [9]. computerization) as well as improve the efficacy, efficiency and effectiveness of the university Stage 5: Comparing the conceptual model(s) education system [12]. with the real world problem situation - The conceptual model identifies which activities need 3. Methodology to be included in that particular real world In this chapter in section 3.1 discusses in details situation. It is not concerned with how these who and what stakeholders, what people are and activities will be carried out. The conceptual technology use by them. In the section 3.2 model will be compared with the real world to provides information how we elicits user highlight possible changes in the real world [9]. requirements and data gathering. In section 3.3 At this stage it is easy to trace activities which are presents that practical usage of SSM for future inadequately done or not done at all, and make RFID system in Skanska Maskin AB warehouse. recommendations for improvements [12]. This comparison will direct to proposals for real-world 3.1. Case Description improvements based on the logic of the This section briefly describes about what is conceptual model. Skanska AB, Skanska IT Solution AB and the Skanska Maskin AB. Further more it expresses Stage 6: Determining desirable and feasible people and their roles and responsibilities and changes - The activities in the conceptual model current technology they use. do not exist in the real world. This would then be a recommendation for change. The aim of this 3.1.1 Skanska AB stage is to identify and to explore change that is In 1887 Skanska AB was founded. It is systemically desirable and culturally feasible [9]. internationally well recognized world leading construction and project Development Company. Stage 7: Action to improve the problem It is one of the world’s ten largest construction situation - Changers of real world problem companies. Skanska AB is a fortune 500 company situation will be implemented. After and a member of the UN Global Compact. Their implementation taken place the problem situation business role is constructing and developing will be changed. The iterative process cycle offices, homes, roads and public-private reduces the remaining statics (problems) [9]. partnership projects all over the world from small scale to massive complex once. Skanska AB is not In our literature study, we have found many only aim for company profit but also they wants research papers which has addressed many issues to be a leader in quality, green construction, work of different type of organizational contextual by safety and business ethics. There are 60,000
  7. 7. It is challenging to Skanska Maskin AB staff to employees actively working in Europe, USA, and keep track and store large quantity of many Latin America in their project sites and offices. different type of items in their warehouse. Skanska AB is the mother company and it has sister companies; Skanska IT-Solutions and Skanska Maskin AB. 3.1.2. Technology Skanska IT-Solutions is a sister company of Skanska IT-Solutions AB is fully responsible for Skanska AB. It is offering services and providing and suggesting IT solutions for their own subsidiary companies. Technical Director1 is technology-intensive functions in the field of IT to companies in the Skanska group. Skanska IT- one of key personal in Skanska IT-Solutions holds Solutions mission is to provide high-quality, cost- major role in data communication and data effective IT services to support Skanska’s warehousing of Skanska AB. He addresses many business objectives and operations. issues of information technology related such as data security and adopting new technology to Skanska Maskin AB is also sister company of subsidiary company of Skanska AB. Senior Skanska AB and locates in three different System Analyst2, Specialist Working with geographical location Stockholm, Malmo and Business System (CapMan) is one of key Gothenburg in Sweden. Skanska Maskin AB hierarchy of Skanska International AB holds enrolled with business of major role in developing system applications to subsidiary company of Skanska AB. IT-Data -selling and renting building and construction Manager3 is head of the department and holds item, accessories and consumable items major role in IT-Department in Skanska Maskin When customer requires rent or buying AB. He has taken control all IT related matters construction items, he/she comes to sales such as project planning, implementation and counter at Skanska Maskin AB or contact change management. There are number of sales representative or contact through employees working under him, among them, telephone after referring catalogs. Sales System Analyst/Programmer 4,5 is one of key representative check the item availability and category who holds total responsibilities of prepare an order then sends it to issuing staff Inventory Registry Information System (IRIS) and at warehouse. Customer collects ordered innovate new methods and techniques to improve items from the warehouse or Skanska Maskin warehouse application system. Skanska Maskin AB delivers the order items to the respective AB warehouse operational functions have taken customer. control by IRIS application. The IRIS system has - repairing and recycling defected items especially designed and developed for Skanska Once rented item returning to warehouse it is Maskin AB for the purpose of data warehousing accepted and checked working condition by of rent and sale items, stock and finance receiving staff. If the item is not usable and controlling, auditing and generate reports, repairable sends to repair. If the item is not receiving and storing items from local and foreign usable and not repairable then it sends to recycling. - manufacturing construction items 1 Conny Roll: If item needs to be manufactured demand of 2 Lars Gustafsson: customer requirement or a new requirement r_April_2008.pdf comes from customer then new items 3 Lars-Erik Johansson: manufacture. 4 Per Fagerberg: 5 Kristian Thisted:
  8. 8. selling, renting, repairing, manufacturing and vendors and tagging bar code to items for easy recycling happen of Skanska Maskin AB identification. After bar coding locate items in warehouse. right place in the warehouse. When items sale or rent that has recorded in IRIS system. The first day of field visit we gathered data from Recently warehouse staffs use hand held computer observation and interviews. The interview has as a mobile device for material issuance and been responded by IT Manager and two System inventory updates. The hand held computer Analyst/Programmers. They explained us IT behaves as bar code reader as well as mobile involvement of typical store functions. The computer. Still they have unsolved problems barcode functionalities had limitations depending when issuing item like Scaffolding, concrete on the type, amount, and way of storing. The bar mixers, repaired items which unable to attached code system worked fine with them for selected barcode on them. Scaffolding and concrete mixers item. They manufactured the bar codes on hard can not be tagged barcodes because which may plastic which was durable for field use. They used easily get damaged on filed use. And also the two different colored bar codes for easily identify same bar code can not use for item which is to be defect and repaired item. They presented and repaired and repaired done. explained tracking the item history and report 3.2. Data Sources generating. It was demonstrated that how data IT responsible personal of Skanska IT-Solutions transmitted from barcode reader or hand held and Maskin AB want to look forward to computer to IRIS system. System Analysts implement RFID technology in their warehouse discussed with us and explained that various and they want to know that does it creates attempt to improve the bar code item handling benefits? We contacted Skanska IT-Solution and system with hand held computers. There were few we got this requirement. After receiving the handheld computers which enable to gather and requirement document from stakeholder, we process bar code data. prepared project scope for finding benefits of future RFID system. We used Case-study as the We observed that the management of Skanska research methodology which facilitates us to Maskin AB had an uncertainty of achieving gather, analyze and conclude the data. We did benefits of RFID technology over existing interviews with the Skanska Maskin AB barcode system. There were many other issues management and gathered data. We observed all that they wanted to solve such that consuming the store functions, how it happen who engage much time for item issuing, receiving, stock with each action, how technology involve in taking and high labor cost with current bar code gathering the item transaction data that we used to system. When issuing and receiving item like identify the systems. Scaffolding and concrete mixers had complex One month later we had a meeting with the situation. They had difficulties of identifying stakeholder upon our request. Our aim was to item/machinery between defected and repaired. investigate the context of Skanska Maskin AB Stock differences appeared between system and warehouse therefore we followed number of steps physical stock (item gone missing). Impossible of to gather qualitative and quantitative data. We did tracking and tracing rented items (lost and theft). two semi-structured interview with key personal They wanted to address on above issues from like IT Manager and System Analyst/ RFID and also expecting quality, accuracy, Programmers. After interviewing we visited efficiency, effective services from RFID warehouse and observed, how the store function technology. We created domain model, Use case
  9. 9. suitability shows that SSM is a best methodology scenarios and high level sequence diagrams for to use in this research. typical stores functions based on empirical data which we gathered. We created use case scenarios Stage 1: Unstructured Problem Situation: Skanska Maskin AB wants to adapt for new auto- for customer’s order item, rent item, sale item, ID technology to overcome limitations of barcode manufacture item, repair item and return item. technology. They have doubt about the benefits of RFID technology over existing barcode system. 3.3. Proposing RFID system using SSM Not only that there are many issues to address Referring to literature [17], the SSM can address such as consuming much time for issuing, many issues of change management. Due to the receiving, stock taking items and high labor cost present system transformation to the future system for item handling with current bar code system. at Skanska Maskin AB there exist number of When issuing and receiving item like Scaffolding organizational changers such as change the and concrete mixers there exist complex operation structure, reduce labor involvement, and situations. Having difficulties of identifying item handling automation. Using the SSM is the item/machinery between defected and repaired best way to handle them. Hence we have used once. Stock differences have appeared between SSM to find out benefits of RFID system in system and physical stock (item gone missing). Skanska Maskin AB. The SSM have addressed Impossible of tracking and tracing rented items considering the real world context to create the (lost and theft). solution avoid the envisioned UML approach [13] [20]. The process of achieving the research Stage 2: Express the problem situation - Then goal has been identified two systems of Skanska we analyze and express the problem situation by Maskin AB which are present Barcode system and drawing a rich picture (See Appendix B) which is future RFID system. Stage 1 and 2 of SSM has a kind of diagrammatic representation of Skanska addressed in detail the present system and stage 4 Maskin AB warehouse operations. The picture of SSM has addressed Conceptual model address capturing much information relating to problem the future system. The present to future system situation and also show boundaries, structure, transformation has been effectively addressed by information flows and communication channel Root definition of CATWOE in stage 3. The which related to human activity in Skanska system transformation at Skanska Maskin AB Maskin AB. It is way of presenting problem creates social, political and environment changers which affect on the company. The 7th stage of situation which differs from traditional Unified Modeling Language (UML) sequential diagrams SSM discusses how to handle such organization or class diagrams. issues until it reach to stable solutions. All above
  10. 10. Figure 01: Rich picture of problem situation of existing system in Skanska Maskin AB. This rich picture has expressed present problem Step 3: Root definition of relevant system - By existing system. The view from the Skanska using this rich picture, we define the root Maskin AB IT manager expects a profit from the definition for Skanska warehouse. The Skanska overall business. There exist company boundary Maskin AB warehouse is owned and operated by to separate the company and its external actors. Auto-ID system to rent and sell item to customer The external actors are security, burglary, (RS) by means of RFID Technology (RT) in order counterfeiting, and supply. Inside the company to gain benefits (B). This is not everything boundary pictures has showed that the company Skanska warehouse does; this is a part of wider functions and their flows. In the core boundary the system. There is other issue base root definitions problem situation exists. It has existed items that like the Skanska warehouse owned and operated can not handle with the limitation of Barcode system to implement a quality service (QS), by technology. Stock taking has consumed more time devising and operating procedures to delight its and resources within the present system. The customers (OP), in order to improve warehouse solution is the RFID technology for future system. services(I).
  11. 11. common in Skanska Maskin AB and their logical The existing auto-ID (barcode) system changes dependencies are prepare (register) order, rent or into the future RFID system call transformation sell to customer, turn-in recycle or accept for process that is heart of conceptual system of repair, rent or sell to customer, need repairing or Skanska Maskin AB. This transformation process take into stock, adjust inventory differences, etc. and Skanska warehouse worldview together create On above six potential activities and their logical very powerful concept which defines the belief dependencies were common in Skanska Maskin that make transformation reasonable. From the Skanska Maskin IT-Administrative view point, following component has identified from Issue item Request item the root definition. Rent or sell to Prepare Component Meaning of Skanska customer (register) order warehouse perspective AB. Customers who rent and buy Customer items from Skanska Maskin AB Skanska Maskin AB staffs who Actor wish to exercise a technology As shown in this picture, each activity may join Transformation Unmanaged Auto-ID system by arrow and arrow head indicates that an activity transform to managed Auto-ID depend upon other. That type of number of (RFID technology) system [17] activities make understandable model. The belief that technology Worldview transformation to RFID is a Figure 3 shows that logical expansion of the root good way of demonstrating the definition mention above creates a conceptual qualities and gain benefits to model of new RFID system at Skanska Maskin customer as well as Skanska. IT Management of Skanska AB Owner AB. This type of detailed model (in Figure 3) RFID technical standards and Environment represents an interaction of human activity Skanska warehouse policies (warehouse staff) that can be used to create a Table 1: Component of Root Definition CATWOE This transformation process can be evaluated by Design Automated monitor and control of three Es criteria such as: Receive and store RFID system items Efficacy: Does the RFID system fully function in Skanska warehouse. Efficiency: Does the RFID system worthwhile and Rent/Sell/Manufacture Allocate resources used minimum resources. /Repair items Effectiveness: Does Skanska Maskin achieve benefits from RFID system over barcode [18]. Earn profit by providing Apply RFID technology Stage 4: Building conceptual model - Base on effective and efficient and carry out business service root definition, conceptual model (see Appendix B: Domain model of Skanska Maskin warehouse) well-structured evaluation of the state of the real demonstrate potential activities and their logical situation at the Skanska Maskin warehouse. dependencies. The potential activities such as request item, issue item, repair item, manufacture item, return item, make inventory, etc. are
  12. 12. After developing the conceptual model for future Figure 3: Components of the RFID system model system (RFID) of Skanska Maskin, we have and communication relationship compared those two systems by using interaction Taking into account of major activities in the sub diagrams of each system. It has been confirmed model (rent/ sell/ manufacture/ repair items) in the that each problem situations has been answered conceptual model, the high level Use-cases have from RFID system. been created (see Appendix C) to describe the At once number of items can pass through the system behavior in details of each activities. RFID interrogator which takes less time for doing Using the use cases, sequence diagrams (see transaction of issuing and receiving. System can Appendix D) have been generated to compare monitor and record defected item and repaired benefits of future system (RFID) over existing item. System is round the clock active and items Auto-ID system (Bar code) at Skanska Maskin can not go missing due to auto metical data saving AB warehouse. To check performance measures when items are leaving from warehouse. Zero for new system, monitor and control criteria have stock differs between physical stock and system to be added into conceptual model. stock. Easily Items can track and trace. Stage 6: Determining desirable and feasible changes – RFID system is really a technical Design Automated Receive and improvement for Skanska Maskin AB. It has RFID system store items exactly fitted ethically and culturally to the Skanska Maskin AB. Unless RFID system has not taken place in Skanska Maskin AB that may not Rent/Sell/Manufacture Allocate resources /Repair items gain profitable benefits from RFID over Bar code. Due to RFID system taking over the bar code system, changers can be happened within the Earn profit by providing Apply RFID Skanska Maskin AB organization structure, effective and efficient technology and carry service procedures and attitudes of employees [19]. out business Stage 7: Action to improve the problem situation - Changing an organization of Skanska Take control action Maskin AB with new system means that there are Monitor for efficacy, efficiency new problems will arise. Then all newly created and effectiveness problems should be investigated and debated. This is iterative process which has to be iterated Efficacy: warehouse transaction continue with number of time until final static remove. When all uninterruptable and accurately. problems resolved then RFID system can be possible to implement. Efficiency: it takes less time and less labor for many transactions. 4. Discussion We started our research by establishing Effectiveness: Skanska Maskin AB get full benefit communication with IT Managers at Skanska IT- in useful way from RFID. Solution AB. We received thesis requirement from them and held communication through Stage 5: Comparing the conceptual model(s) emails and telephone. We were invited for a field with the real world problem situation –
  13. 13. system. Stage five made more accurate the future visit at Skanska Maskin AB in Linnarhult system and stage seven created final future Gothenburg. The aim of our field visit was to system. The second step of our approach was to collect qualitative data regarding the research compare the created to systems to reach our problem. We used semi structured interview and research goal. observation as a mediating tools. Skanska Maskin AB presented their present system and it We assumed that the domain model of Skanska operational functions to us. We conducted Maskin AB was same as the present and future interviews to gather data for each specific store systems. We identified and analyzed the Skanska function. The store staffs such as IT manager and Maskin AB domain (See Appendix B). The System Analysts answered the interviews with domain consisted with following components; their views of present store functions and future customer request, payment, store, items, system. Through the interviews and observation accounting, sale, rental, return, repair, we revealed how the technology and human manufacture, recycling. These components recourses utilize to perform store functions such interconnected with each other to perform better as renting items, selling items and repairing items. work flow. We did not consider interaction We observed present barcode operation in between human activities and components in the different store functions in different situations. present bar code system shows in Figure 4. The Barcodes were prepared by store staff when a new interaction diagrams (See Appendix D, E) filtered item arrives to store and the information of the out number of process happen when items issue item stored in the barcode. This barcode read and (rent or sell), return, repair, manufacture, recycle, collected data, once an item rent out, sell, receive customer request, accounts update, etc. back after rent and recycle. All these observations were counted for the generation of the empirical Bar code auto-identification system used for daily data in the end of the research. Skanska Maskin store operations such as renting out, selling, AB recently introduced handheld barcode readers returning, recycling and manufacturing items. The instead of usual stationed barcode readers at their inventory control, stock taking and item storing counters to reduce for item handling. They said used bar code identification. There was a unique that they were interested to change present system identification number for each item which store in to RFID with improving handheld barcode a barcode tag. The bar code tag attached to the readers. They wanted to see the benefits of RFID item. This identification number was read by a tag system. A beneficial and successful future RFID reader. The tag reader read the tag only it was on system at Skanska Maskin AB can influence to line-of-sight and visual contact. The bar code implement RFID system to the other branches of reader read a tag at a time. Once a customer order Skanska Maskin AB in Scandinavia. was received by Skanska Maskin AB, store staff collected the items from shelf in store to dispatch Our approach to find benefit was based on two the items for customer. On this process store staff major steps. In the first step, we gathered data by used hand held or stationed bar code reader to observation and interviews on the present system. register item for issuing. Depending on the type of The gathered data was utilized with SSM to create item and item condition, the store staff updated and identify both present and future system. The the item status in the system or by manually illustration of rich picture of Soft System attaching sticker. The bar code reader gathered all Methodology helps to identify the present system information of items and sent it to warehouse which contained the complex situation. The stage three and stage four of SSM created future
  14. 14. created the following benefits. Reduced Cost, management system. The system updated item Operational Efficacy, Improved Visibility and status in the database. Improved Customer Services are the major According to future system analysis, the item benefits we found in the research. These benefits identification does without line-of-sight and visual can be discuss as the ability to generate an contact between the item and the reader. The item accurate picture of the store item inventory which has to be in the premises of item reading range of reduces the inventory cost and the data in the the RFID interrogator. The time takes to read system will be up-to-date. Once the items rented many items are not depended on their quantity. out the item inventory updates real time so there is Once item has ordered from the store, the store no time delays in all the system functions consider staff collects items and passes through the RFID to the present exciting system. The automated interrogator to issuing counter. The RFID item moving hardware can identify the items and interrogator reads all RFID tags at once and sends move them to the respective location. These the data to RFID controller to update the database. processes intern have saved the time and human Once an item return to store after using by the resources to the company. Same way the cost for customer, the item receiving staff receive the item item production handling can be automated and pass through the RFID interrogator. If depending on the type of the production items. customer returns many items the RFID The real-time item inventory pictures can track interrogator read all at once which eliminate of the and monitor loses and misplaces items in the line-of-sight and reduces time to read items. The future system easily. store staff checks the working condition of the 4.1. Reduce Cost item and updates the item status such as “ready to Referring to the present system interaction rent”, “not usable and repairable” and “not usable diagrams [ref. Figure 4 & 5 sequence diagram], and not repairable”. Once an item status is the present system’s time consumption for item updated as “not usable and repairable” the item handling relies on the quantity of the items. automatically moves to repairing section. The Barcode reading system read an item at a time repair staffs receive the item and do the necessary until all items registered to the system. The time repairers. After the item repairing the store staff consumption increases accordingly with number update the item status and item moves of items in the order. This problem gets automatically to correct storing location. Once the complicates and consumes more time to identify item status is as “not usable and not repairable” items depending on the type of them. Time removes the item from the inventory and updates consumption varies where the position of the tag the stock and sends it automatically to recycle on the item attached and the line of sight between location. Once the item status change there is an reader and the tag. As an example, once an item is effect on item quantity, if the item quantity “out of rented out visibility of the bar code decrease: a stock” or “reached order point” then system concrete mixers bar code is beyond readable due automatically trigger and generate manufacturing to damage of its surface. In such occasion the order or purchasing order. This eliminates receiving staff needs to do manual identification shrinkage of items in the Skanska Maskin AB using item inventory number. It is major time warehouse. consuming task and extra resources allocation to We compared on above two systems in order to the company. Base on above facts more resources identify the benefits by using interaction diagrams such as labor and technology have to be allocated to handle items accordingly. which belongs to each system. This comparison
  15. 15. capable of always available of all items at Skanska Maskin AB. These results have In the future system, RFID reader is capable to eliminated item out-of-stock situation and read all the items at once. That means the future shrinkage in the future system. system eliminate line of sight and other environmental limitations such as bad visibility, The RFID technology is facilitating to the store working environment of item handling. It saves management to automate the item handling resources which involves handle items [ref. Figure depending on the item environment. All above 4 & 5 sequence diagram]. Above mention system functionalities save time and reduced distribution benefits can be derived from number of item labor costs in the future RFID system due to this interactions with the system such as items selling, time saving less work load assign to a single staff. renting, receiving, manufacturing and repairing. These results make organizational changers such The human resource involvement for item as reduce staff or assigned for other roles and handling decreases in the future RFID system the responsibilities. way of item reading as mention on above. By considering these facts we identified that future 4.3. Improved Visibility system reduced cost for item handing compare to The present barcode system in Skanska Maskin the present system. The scaffolding and concrete AB uses two different colored barcode tags to mixers which have attached RFID tags can identify the defect items (pink) and repaired maneuver with minimum labor and time compare (yellow) items. The visibility of the barcode tag is to present system. limited and depends on physical factors such as 4.2. Operational Efficiency item located environment and size of item. According to the benefits describe in section 4.2 Referring to the reduce cost benefits in section 4.1 RFID system creates item visibility. This item the future system is capable of handling more visibility makes a clear picture of store items items in less time. The RFID technology allows availability that considers warehouse management updating real time data and improves the item to take managerial decisions effectively. The item visibility to the company management. The visibility provides by the future RFID system does present system takes days to update inventory. not depend on above mentioned physical factors Stock taking is done by manually with warehouse and it is visible through intranet at Skanska AB. personal by item wise counting. The future RFID The future RFID system is better than the present system capable to do that within hours due to barcode system at Skanska Maskin AB which is RFID technology enable shelf which capable of capable of doing item tracking and tracing. frequently update items on the shelf [21]. These RFID shelves act as RFID interrogator and send There are some restriction and difficulties to apply information to controller to update store database the barcode technology to some items such as accordingly. This reduces more labor involvement concrete mixers and scaffolding. The barcode can in stock taking and delays of inventory. not use in such items due to the operational environment. Most of the time barcode get The present system at Skanska Maskin AB is damaged and disappeared. With the future RFID vulnerable of item counterfeiting, loss and theft. system this can be eliminated by having This happens due to the item status delay to embedded RFID tags which does not required any update in the database with barcode system. In the line-of-sight to read. future system, there exists an exact item status for all items and no any delay. The RFID system is
  16. 16. With the future RFID system the labor 4.4. Improved Customer Service involvement getting decreased and reduced Referring to all above benefits of the future RFID human errors. The error free environments attract system, items are highly available and no in- more customers to the Skanska Maskin AB. between status with real time information. Reduction of labor cost gain profit for the Skanska Customers are having more chances to access Maskin AB and benefit for the customers offering many items at Skanska Maskin AB. The a better price for an item. All type of transactions customers can know the availability of the items and documentations in the future system happens immediately through the internet using the online effectively and efficiently due to real time web services; the web access can be easily information. connected to the real time store information. Figure 4: Interaction diagram of issuing items by using Bar code system
  17. 17. Figure 5: Interaction diagram of issuing items by using RFID system correct location at warehouse in Skanska Maskin 5. Conclusion AB. The future RFID system is a better solution to unpredictable demand condition, operational The potential benefits of future RFID system are activities analysis and forecasting [22]. (c) Reduce Cost, Operational Efficiency, Improved Improved Visibility: The future RFID system is Visibility, and Improved Customer Service. (a) ability to share information and improving Reduce Cost: Comparing the both system it is inventory control, real-time inventory, reduce significant that there exist and overall cost shrinkage, visibility of order which in turn reduction in the future RFID system. It happens maximizes business profit for Skanska Maskin due to time saving on item reading, automation AB. The speed of demand for item selling, item handling and reduction of manpower, renting, manufacturing, customer data handling, removing the item reading limitations of barcode and customer order assortment are intermediate system. (b) Operational Efficiency: In the future function in improving real-time inventory within RFID system item reading time comparison to the future RFID system. (d) Improved Customer barcode is dramatically reduce. The RFID reader Service: Considering all above facts future RFID can read many items at once comparison to the system can provide better customer service in area barcode reader which reads one item at a time. of renting, selling, manufacturing items, handling This makes efficient operations at Skanska accounts and transactions. Maskin AB. The labor involvements to handle items are reduced comparison to barcode system. The future RFID system creates organizational In the future system RFID system can identify changers at Skanska Maskin AB. In the items and automatically moves items into the
  18. 18. training staff. It takes time to adapt and produce a warehouse environment following changers are cost effective output from the future RFID system. taken place such as way of item receiving, selling, This reduces profit to Skanska Maskin AB when renting, moving, storing, repairing, manufacturing the system changers happen but in the long run and recycling. The other changers are hardware RFID system creates profits. The future RFID changers, warehouse and office layout, business system will continue to mature with process, appropriate data collection methods and organizational and system changers. Costs will locations changers. The structural changers of need to continue to fall to levels comparable to warehouse and employee role and responsibilities current technology formats used today such as change with the future RFID system. It may result barcode identification. The security and privacy termination of over staff and remains very few concerns, item management and item tagging is well experienced staff at the Skanska Maskin AB. not likely to become a significant issue. Tag costs The new technology involvement in the business are the major variable cost component for RFID process results the labor reduction. It is global technology, and also Software, systems problem which face the modern society. The integration, process redesign and organizational solutions for this labor reduction and impacts will be significant to consider when the unemployment increase have to handle globally. system design. If the Skanska Maskin AB does not adhere to this new technological changers such as RFID Acknowledgment implantation which make a draw back to company itself. This happens due to other competitor This paper is a bachelor thesis report in Software companies are adapting to the new technology and Engineering and Management, written for IT University of Gothenburg being part of Chalmers University and create cheap and better quality products and Gothenburg University. The Bachelor Thesis was carried out services. The iterative SSM is a one solution to by Mallawarachchige Don Sisira Kumara and Nihal handle the labor reduction problem at Skanska Siriwardanagea at IT University in Lindholmen from January Maskin AB. The side effect of future RFID 2008 to May 2008. system, excess labor is a new problem situation This thesis is base on project of RFID implementation at which created within the organization. This has to Skanska Maskin AB in Linnerhult. The purpose of this project be analyzed with new rich picture, new root was to investigate benefits of RFID implementation. The definition and new conceptual model in order to benefits have been derived by investigating existing system and the future system with RFID based on research which create new solution. academically published. In the future RFID system eliminate number of We would like to thank our supervisor Phu Phung at warehouse assistant who may involve with item Chalmers University given us right guide lines to make success of this project and teachers Björn Olsson, William E. issuing, receiving, storing, and stock counting. Sullivan, Helena Holmström Olsson at IT University The managerial tasks change with real-time providing feed back and keeping us on right track. Our accurate information. The information alignment special thanks for Lars Gustafsson and Conny Roll IT of store item helps the managers to take correct Managers at Skanska International AB and Lars-Erik decisions and prediction for future business Jahansson, Per Fagerberg and Kristian Thisted at Skanska Maskin AB who were given utmost support and encouraging issues. The item status changers update real-time us as well as facilitating to gather data. situation therefore information alignment Sisira Kumara Mallawarachchige Don occurred. There will be extra financial e-mail:; expenditure and recourses to spend in the begging Nihal Siriwardanagea of future RFID system installation. This can be e-mail:; utilized on installation of hardware, software, Gothenburg, Sweden, May 2008
  19. 19. International Conference on System Sciences – 1999, 0-7695- References 0001-3/99 $10.00 (c) 1999 IEEE [1]. Steven Shepard, RFID: Radio Frequency Identification, [14]. Gulender Gencoglu, Graeme Altmann, Ross Smith and David McGraw-Hill, August 2004, ISBN 0071442995 Mackay. 2002. Using Soft Systems Methodology to Address [2]. What is RFID Technology, Supply Chain Management Problems, School of Management URL Information Systems, Deakin University, Geelong, Victoria, Australia [3]. EPCgobal Tag Data Standards Version 1.3, EPCglobal, [15]. Tayyab Maqsood, Andrew D. Finegan, Derek H.T. Walker. Ratified Specification, March 2006 Five case studies applying Soft Systems Methodology to [4]. K. Michael and L. McCathie. 2005. The Pros and Cons of Knowledge Management, RMIT University, Melbourne, RFID in Supply Chain Management, University of Victoria, Australia Wollongong, Year 2005, Proceedings of the International [16]. JF Francois Weilbach, Herna L Viktor. 1999. A Data Conference on Mobile Business (ICMB’05), 0-7695-2367- Warehouse for Policy Making: A Case Study, Department of 6/05 $20.00 © 2005 IEEE Informatics, University of Pretoria, South Africa, Proceedings URL: of the 32nd Hawaii International Conference on System Sciences, 0-7695-0001-3/99 $10.00 (c) 1999 IEEE xt=infopapers [17]. Nor Hasliza Md Sadd, Prof. Dr. Rose Alinda Alias and Dr. [5]. Intermec Technologies Corporation, Case Studies, Azizah Abdul Rahman, Using Soft System Methodology ULR: (SSM) in Formulating Knowledge Management System (KMS) Strategy for Malaysian Public Institutions of Higher es/cs1709.aspx Education (PIHE) [6]. RFID Solutions Center is a division of Alien Technology, [18]. Luís Miguel Pires Neves, António Gomes Martins, Carlos Project Summery Report: Results of the Bangor RFID Henggeler Antunes, 2002, Using SSM to Rethink the Analysis Evaluation Using Passive RFID Technology: White Paper of Energy Efficiency, Department of Electrical Engineering, URL: University of Coimbra; INESC Coimbra, Portugal [19]. Dell Zhang, Comparative Development Methodologies, For NavyBRE.v3.pdf the BSc IS&M Programme - Lecture 3 SSM etc.,Birkbeck, [7]. UPS Supply Chain Solutions, Demystifying RFID in the University of London Supply Chain an Overview of the Promise and Pitfalls: White [20]. Yongzheng Liang, Jürgen Jähnert, Paul Christ . University of Paper Stuttgart, Stuttgart Telemaco Melia, Amardeo Sarma NEC URL: Network Laboratories Heidelberg, Germany Workshop on Integrated-reliability with Telecommunications and UML [8]. Checkland, P. 1981. Systems Thinking, Systems Practice, Languages, Taming Monsters like Daidalos UML combined John Wiley & Sons, New York with ITU-T languages in large Telecommunication Projects. [9]. Checkland, P. and Scholes, J. 1990. Soft Systems [21]. Jayavel Sounderpandian, Rajendra V. Boppana, Senior Methodology in Action, John Wiley & Sons, New York Member, IEEE, Suresh Chalasani, Senior Member, IEEE,and [10]. Checkland, P. 1981. Systems theory, systems practice, John Asad M. Madni, Fellow, IEEE, Models for Cost-Benefit Wiley and Sons, New York Analysis of RFID Implementations in Retail Stores, IEEE [11]. Peter Checkland. 2000. Soft System Methodology: A Thirty SYSTEMS JOURNAL, VOL. 1, NO. 2, DECEMBER 2007. Year Retrospective, Systems Research and Behavioral [22]. Eun Young Kim, Eunju Ko, HaeJung Kim, Chang E. Koh, Science, Syst. Res. 17, S11–S58 (2000) Comparison of benefits of radio frequency identification: URL: eckland2000-30year.pdf Implications for business strategic performance in the U.S. [12]. Jeremy Rose, Department of BIT, the Manchester and Korean retailers. Metropolitan University URL: ULR: y=B6V69-4S8TRBV-1-7&_cdi=5809&_user=645615&_ 20Picturing_outline %20160408.doc orig=search&_coverDate=04%2F14%2F2008&_sk=9999999 [13]. D.W. Bustard, Z. He and F.G. Wilkie. 1999. Soft Systems and 99&view=c&wchp=dGLbVlb- Use-case Modelling: Mutually Supportive or Mutually zSkWb&md5=a65ec135efa08330dc7ae4f87b2a70c9&ie=/ Exclusive, School of Information and Software Engineering, sdarticle.pdf University of Ulster, UK, Proceedings of the 32nd Hawaii
  20. 20. Appendix A. Figure 6: RFID implemented warehouse management system [18] The Figure 6: shows that the system architecture of the ware house management system. It is organized with two main modules. The front-end module is consisting of two data collection modules. The fixed logistic data collection module is collecting the data from the items by the use of the RFID readers located in the number of places of the warehouse. The collected data read through the Ultra Wide Band technology readers (UWB) which is in the variable logistic data collection module. These data send to the next Back-End module which consists of the Resource Tracking Module. The resource Management Engine is responsible of number of activities; Resource tracking, Resource picking tour optimization, Resource utilization, Resource maintains policy and Resource Operation Efficiency. Back-End processed data save in the Database.
  21. 21. Appendix B Domain Model of Skanska Maskin AB Warehouse 1 Store Register 1 1..* 1 Include-in Recycle Repair 0..1 0..1 * 1 1 Sales Line Item Turn-in Records- current Stocks 1..* 0..1 File-in Can-be Contain-in Record-in 1 1 * * Rental Item Sale Return Item 0..1 1..* 0..1 1 * * Report-as Report-as 0..1 0..1 0..1 * 0..1 0..1 Posible-to Contain-in Contain-in 0..1 Manufacture * * Receives Capture-in Returns Request-on Customer Request 1 1 1 1 Paid-by 1..* 1 Accounting System 1 1 Payment Capture-on
  22. 22. Appendix C. User case diagrams: Skanska Maskin AB warehouse interaction with actors Process Request Issues Order Customer Receive item Manufacture Item Repair item Store Staff Issuing/ receiving/ Recycle item Manufacturing / repairing/ administration Analysis Activities Manage System Security Administrator
  23. 23. Appendix D. EXISTING SYSTEM SENARIO A. Use Cases A.1 Use Case UC1 : Customer Order an Item(s) from Skanska Maskin AB Scope : Order register in material handling system (Inventory Register Information System – IRIS) Level : System goal – receive customer Preconditions : Receiving Order enable by phone, e-mail, fax and post Post-conditions : IRIS system receive the order, order is in progress order Primary Actor : Customer, Store staff Main Success Scenario: 1. Customer makes order by telephone/email/fax/post to Skanska Maskin AB 2. Receptionist/Representative receives the order by telephone/email/fax/post 3. Receptionist/Representative selects the right item/s that customer needs 4. Register the order in IRIS Alternate Flows: 3a. Item is not available to rent/sell 3b. Create new manufacture order
  24. 24. A.2 Use Case UC2 : Skanska Maskin AB Rent an Item(s) Scope : Renting item from IRIS system Level : System goal – Rent Items Primary Actor : IRIS controller, Customer Preconditions : Existing new order for renting is on process Post-conditions : Deliver the item(s) to the right customer Main Success Scenario: 1. Store staff collects the item(s) from location, according to the order 2. Ordered item(s) send to the issuing counter 3. Issuing counter register ordered item(s) in IRIS system (under rental) 4. Issuing staff makes ready ordered item(s) for delivery 5. Customer receive the items with gate-pass and estimated invoice Alternate Flows: 5a. when customer not present to collect item(s), delivers the item(s) to the right location 5b. if service personal is included in the order, send service personal to the customer
  25. 25. A.3 Use Case UC3 : Skanska Maskin AB Sell an Item(s) Scope : Selling item(s) to customer Level : System goal – Sell Items Primary Actor : IRIS controller, Store staff Preconditions : Existing new order for selling item(s) is on process Post-conditions : Deliver the item(s) to the right customer Main Success Scenario : 1. Store staff collects the item(s) from location, according to the order 2. Ordered item(s) send to the issuing counter 3. Issuing counter register ordered item(s) in IRIS system (under sell) 4. Issuing staff makes ready ordered item(s) for delivery 5. Customer receive the items with gate-pass and estimated invoice Alternate Flows: 5a. when customer not present to collect item(s), delivers the item(s) to the right location 5b. if service personal is included in the order, send service personal to the customer
  26. 26. A.4 Use Case UC4 : Skanska Maskin AB Manufacture an Item(s) Scope : Manufacturing Item(s) for Renting and Selling Level : System goal – Manufacture Item(s) Primary Actor : Production staff, IRIS controller Preconditions : Customer makes an order; item(s) does not exist in the stores/inventory Post-conditions : Item(s) available for rent or sell Main Success Scenario : 1. Store staff receives the order 2. Item does not exist in the store or inventory or item(s) is suitable for manufacture 3. Create manufacturing order 4. Production staff receives manufacturing order and manufacture the new item(s) 5. Send new item to store update the IRIS system Alternate Flows: 2a. Item is less quantity reported to be manufacture 2b. Item returned after renting, and it is not usable and recyclable