Abstract

This study has been conducting regarding the “Impact of Radio Frequency Identification (RFID)
on efficiency of Warehouse Management (WM)”. Study aims the investigation of Radio
Frequency Identification technology in Warehouse Management. Identifying the benefits, issues
and obstacles of RIFD and explore the challenges and impact on adopting RFID on WM are the
objectives of the study. Literature is conducted as a descriptive and qualitative study while the
study focus on finding literature on referring secondary data on types of books, journals, articles
and web. Finally, study provide the better identification of applications in WM that can be
adopting RFID and efficiency measures of Warehouse Management.

Key words: Radio Frequency Identification (RFID), Warehouse Management (WM), benefits,
issues, obstacles, challenges, impact and efficiency.

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 Table of Contents
Abstract................................................................................................................................................i

Table of Contents................................................................................................................................ii

List of figures.....................................................................................................................................iii

List of abbreviation............................................................................................................................iv

1 INTRODUCTION......................................................................................................................1

1.1 Business problem...............................................................................................................1

1.2 Research questions.............................................................................................................2

1.3 Research aim......................................................................................................................2

1.4 Research objectives............................................................................................................2

1.5 Limitations of the study.....................................................................................................2

2 METHODOLOGY.....................................................................................................................3

3 LITERATURE REVIEW...........................................................................................................4

3.1 Introduction........................................................................................................................4

3.2 Radio Frequency Identification (RFID).............................................................................4

3.3 Warehouse Management (WM).........................................................................................5

3.4 Benefits of RFID on WM...................................................................................................6

3.4.1 Visibility....................................................................................................................7

3.4.2 Authentication............................................................................................................8

3.4.3 Automation................................................................................................................9

3.4.4 Auxiliary features......................................................................................................9

3.4.5 Impact of RFID on efficiency of SCM....................................................................10

3.4.6 Conceptual model for the Study..............................................................................11

4 Conclusion................................................................................................................................12

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5 References.................................................................................................................................13

List of figures

Figure 1: Typical RFID system...........................................................................................................4

Figure 2: Warehouse process..............................................................................................................5

Figure 3: Benefits of FRID adoption..................................................................................................7

Figure 4: Impact of RFIP on WM efficiency....................................................................................11

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 List of abbreviation
RFID - Radio Frequency Identification

WM - Warehouse Management

SCM – Supply Chain Management

iv
v
INTRODUCTION
With the rapid growth and innovations in Information Technology and market demand, new
challenges in warehouse management has been emerged (Guiffrida et al., 2007). Warehousing is a
critical supply chain management tool[ CITATION Ham18 \l 1033 ]. The purpose of warehouse
management is to provide goods in the right vicinity, the right time and the right amount, with
minimal waste of time and expense. Radio Frequency Identification (RFID) is a system that aims
to reduce time, price and growth customer service (Avlijaš et al., 2014). RFID technology can
assist a huge range of groups and individuals at some stage to realize full-size productivity profits
and efficiencies. Since the impact of RFID varies from industry to industry, sector by sector
(Sabbaghi and Vaidyanathan, 2008) this study is going examine the warehouse operations of
MAC consolidation centre, Sri Lanka. MAC engage in an undeniable cargo and coordination
arrangements supplier offering differed administrations from the ocean and airship cargo sending
and solidification, customs financier, esteem included administrations, Multi-Country
Consolidations (MCC) and transhipment, entrepot, street haulage, venture logistics, 4PL
warehousing appropriation, and etc [ CITATION dai17 \l 2057 ]. MAC uses its abundant expertise
to provide personalized approaches to any hurdles and minute requirements that may arise
[ CITATION MAC20 \l 1033 ].

Arranged on a key East-West exchange course and set near Indian Peninsular and the main
markets in Asia-Pacific and African locales, Sri Lanka has the basic locational bit of leeway to
turn into the key coordinations center in South Asia. MAC Supply Chain Solutions (Pvt.) Ltd, as a
sussidiary of MAC Holdings (MACholdings, 2020), lounched its activities by getting this
advantage.

Business problem

FIGURE 1: BASIC WAREHOUSE PROCESS OF MAC

MAC uses internal LIMA system in warehouse processes. LIMA system has major issues such as
long time lenghts, empty storage position not in real time, poor accuracy of inventory, human

1
Re-Export Country Import Country
Export Country
(MAC Warehouse) (UK)
errors and system breakdowns. Performance in warehouse operations must be increased and error
rates reduced to maintain effectiveness of the process. Following process describe how RFID
technology uses in the warehouse process. Therefore, It is important to study the impact of RFID
on warehouse operations of MAC consolidation centre.

Research question
RFID technology promises to increase process accuracy, productivity and speed, reduce storage,
manage and distribution costs and boost sales by reducing stock-outs (Avlijaš et al., 2014). In this
context research question arise as “What is the impact of RFID on warehouse operations
efficiency of MAC?”

Research aim
Arranged on a key East-West exchange course and set near Indian Peninsular and the main
markets in Asia-Pacific and African locales, Sri Lanka has the basic locational bit of leeway to
turn into the key coordinations center in South Asia. MAC Supply Chain Solutions (Pvt.) Ltd, as a
sussidiary of MAC Holdings (MACholdings, 2020), lounched its activities by getting this
advantage.

This study aims to explore the impact of Radio Frequency Identification (RFID) on Warehouse
operations of MAC. While having this competitive advantage it is important to improve efficiency
of warehouse operations. RFID could help MAC to reduce the process handling time, increase the
accuracy by reading barcodes, proper unloding and uploding of inventory and clear documentary
process of warehouse.

Research objectives
1. To evaluate the impact of RFID technology on effectiveness of Warehouse Operations of
MAC consolidation center.
2. To access the benefits of RFID enabled warehouse management system.
3. To formulate recommendations to MAC warehouse management to increase the process
efficiency in terms of RFID technology.

Research rational
The fundamental reason for conducting the study is the major issues and challenges arise with the
current warehose management system which cause the low productivity and efficiency of the
process. This required a advanced technological application to address these challenges. If the
company unable to take another step to reduce time took for thefprocess, track the store space on
time and lack accuracy in information regarding inventory will make them to loss their best
opportunities to grow in the industry. To gain the competitive advantage more from the warehouse
2
location and current re-export leadership it is necessary to go with developed technology of RFID,
which support to minimize time consumption and human errors. Most importantly system is
visible and accurate in every activity. This gives warehouse to be efficient and productive in their
operations.

METHODOLOGY
This study conducted as a descriptive qualitative study. To undertake the study of “The impact of
Radio Frequency Identification (RFID) on Warehouse Operations” efficiency, the study refers the
secondary data such as books, journals, articles conference papers and web articles published in
latest years. Research objectives of the study are to identify the benefits of RFID enabled WM,
potential obstacles, challenges in adopting and implementing RFID technology and to estimate the
level of impact of RFID technology on Warehouse Management. The extended literature will
provide the necessary detail on RFID and WM. Through the literature it is expected to find factors
corporate with RFID on Warehouse Management and identify the effectiveness of Warehouse
operations while adopting RFID.

LITERATURE REVIEW
Introduction
This chapter will present a review of the literature relevant to the variables included in the study. It
will focus on the definitions, theories and concepts those are relevant to the impact of Radio
Frequency Identification (RFID) on Warehouse Management (WM). This chapter provides base
for the establishment of conceptual framework in the following chapter.

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Radio Frequency Identification (RFID)
Radio Frequency Identification (RFID) is a technology that transmit the identity of an object using
radio waves (Guiffrida et al., 2007). Radio Frequency Identification Cation (RFID) is an
automated identification technology consisting of three elements: a linked tag (chip) attached to
the product; a reader that transmits radio signals and receives tag answers in return; and a program
that links RFID hardware and business applications (Avlijaš et al., 2014). Radio Frequency
Identification (RFID) is an automatic identification and data seize era which consists of 3 factors:
a tag shaped by means of a chip connected with an antenna; a reader that emits radio indicators
and gets in return answers from tags, and eventually a middleware that bridges RFID hardware
and business enterprise applications (Masum et al., 2013). RFID is an rising technology that has
been more and more utilized in logistics and Supply Chain Management (SCM) in recent years
(Masum et al., 2013).

Eventhough, RFID technology patented in 1973, only recently has its importance on improving
supply chain management performances been recognized and increasingly act upon (Guiffrida et
al., 2007). This technology can identify, categorize, and manage the drift of goods and information
throughout a supply chain. It offers the potential to significantly improve supply chain
performance because of its ability to provide wealthy and well timed information that will increase
visibility and control over the supply chain (Masum et al., 2013).

Source: (Harun et al., 2008)

FIGURE 2: TYPICAL RFID SYSTEM

Warehouse Management (WM)

Warehouse management is the one significant action of Supply Chain Management (SCM),
(Sooksaksun and Sudsertsin, 2014). The fundamental reason for the warehouse is to store items in
a single spot and move them forward to organization clients. (Žunić et al., 2018). Contingent upon
the sort of the organization, those items can be requested and dispatched from producers or made

4
in-house. The total dissemination process comprises of various littler ones and they should be
appropriately checked.

FIGURE 3: WAREHOUSE PROCESS

Radio Frequency Identification (RFID) may, in this context, be an enabling technology to develop
a more efficient Warehouse Management System (WMS), (Zhong et al., 2015). A technology that
allows for greater speed, performance, precision and real-time sharing of information is needed to
achieve a more sensitive control system for the Warehouse management. Such a system would be
able to achieve fulfillment of custom-made orders, fulfillment of customer commitments, timely
delivery, rapid response to customer demands and desires, improved adaptability and quicker
response to external changes [ CITATION Chu17 \l 1033 ]. Vladimír, (2010), explains RFID tags
can be perused in a wide assortment of conditions, where standardized tags or other optically read
advances are pointless and it is created for gathering and labeling information will help overseeing
warehouse information all the more viably.

Benefits of RFID on WM
While the improved data exactness through RFID organization will permit organizations to
considerably lessen out-of-stocks and rainchecks, they are likewise liable to wind up with higher
generally speaking normal stock. RFID benefits in warehousing while it providing Tracebility,
Visibility and Automation in operations by better identification, loss prevention, reducing wasted

5
time, data accuracy and faster updates. It tracking lifecycle, increase capacity and reliability and
leads whole operational efficiency of warehouse operations (Ferrer and Apte, 2014).

RFID proposes a surprising improvement opportunity, to be specific that organizations can

conceivably lessen reorder amounts and target stock levels without harming client support levels.
This chance to lessen stock and simultaneously, improve client assistance levels can be applied
not just over different levels in the production network, yet in addition inside a solitary store.
There are significant impact in warehouses to increment operational efficiencies using RFID,
bringing about higher throughput, diminished stock rates, expanded perceivability of approaching
transfers and upgraded request development, among a few different advantages (Badole et al.,
2013).

supplychain lead time

Reduced lead
time
Bullwhip effect

decrease stock out

increased
revenue decrease counterfeiting

decreased returns
Benefits of
RIFD on WM lower OH cost reduction in charges back

reduced reduced level of acces inventory

inventory
capital cost reduction in shrinkage

improved receiving process

lower
operating cost improved shipping process
reduced cycle counting

FIGURE 4: BENEFITS OF FRID ADOPTION

Many RFID vendors and organizations see RFID technology as a solution to product shrinkage in
the retail industry. Visibility, Authentication, Automation, Auxiliary features are the range of
techniques and applications that allow this technology to reduce product contraction across the
warehouse operations[CITATION kat17 \l 1033 ].

Visibility
Visibility is defined as the ability of an company to reliably track and monitor product movements
across the warehouse (Ferrer and Apte, 2014). Visibility allows to gather accurate information to
support decision-making. Additionally, product visibility in the cycle improves the probability of a

6
product meeting its destination; the consumer. If a store has the ability to locate and recognize the
exact position of its items, it can actually minimize: Warehouse discrimination, theft and
misplaced and lost [ CITATION Rek08 \l 1033 ].

Warehouse discrimination: As suggested by Pisello, by validating the accuracy of deliveries and

shipments, RFID can help the process of successful responses to consumer demand with
efficiency. Inaccuracies found in a retail supply chain are usually referred to as discrimination.
Using RFID, a supplier has the ability to reduce warehouse discrepancies by accurately checking
the load of a delivery vehicle. Reducing errors in the planning and delivery of supplies from the
fulfillment center to the retail outlet is anticipated to result in a decrease in total product shrinkage
rates[CITATION kat17 \l 1033 ].

Theft: Using RFID to counter shrinkage sources warehouse management have the ability to keep
track of products in and out of the store. Using RFID to actively control products at a retail outlet
can potentially help deter theft [CITATION Pis \l 1033 ]. Employees will be notified using a
warning system to watch the person who removed the items and ensure that the goods are paid for
before the shopper leaves the store.

Misplaced and lost: Items that were 'shifted' were usually shifted to a misallocated portion of a
warehouse or retail outlet. If a product is not found within a given timeline, however, its status is
said to be 'lost' or undercounted for. Usually, unrecovered products are believed to be lost and are
thus added to the gross shrinkage of missing items. RFID has the ability to mark and trace a
specific product at item level during the entire WM[CITATION kat17 \l 1033 ].

Authentication
RFID may also give value by reducing shrinkage of the product through its ability to easily
authenticate a labeled item. It helps leverage this function by scrutinizing branded items at any
point in the warehouse. Authentication may be used to locate faulty goods, detect potential acts of
fraud and identify counterfeit items during recalls (Mall and Mishra, 2015).

Recalls: Products must follow certain safety requirements. The ability to authenticate a product
using RFID will mitigate the overall effect of product recalls and attempts to extort the product.
Employees can reliably identify a desired product using an RFID scanning tool, and decide if it is
subject to recall[CITATION kat17 \l 1033 ].

Fraud: Barcode fraud may also occur anywhere in the warehouse. If a product can be detected
and verified as previously owned by warehouse, there is a greater likelihood for the value of the
goods to be maintained by the warehouse and not lost due to fraud. The RFID can help by
authenticating the point of origin of a product (Mall and Mishra, 2015).

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Counterfeit: Serial numbers are a requirement for an effective anti-counterfeit solution. RFID's
use for anti-counterfeiting purposes in the warehouse is more likely to include clothing and other
high-end items. RFID's anti-counterfeiting technology will reduce product shrinkage by reducing
the risk of a company investing unknowingly in counterfeit goods[CITATION kat17 \l 1033 ].

Automation
Checking goods using a barcode system requires scanning the barcode of a product at any point in
the warehouse by hand. The Electronic Product Code (EPC) standard for storing data on an RFID
tag is designed to automatically classify goods in the warehouse. An EPC code identifies the
manufacturer, product category and individual object. The purpose of automated recognition of
these data is to minimize human interference errors (Ferrer and Apte, 2014).

Human errors: RFID allows automated inventory auditing. Taking stock usually involves using
barcode scanners to classify items that are then counted manually by hand. Miscalculated goods
are most likely associated with human errors which then contribute to the overall amount of
product shrinkage. Reducing errors due to human interference, however, is not the only advantage
where RFID can minimize shrinking of the product [ CITATION Rek08 \l 1033 ].

Auxiliary features
Goods are usually spoiled when they are: damaged, broken, unsealed, exposed to incorrect or out
of date temperatures. Goods that have been ruined are usually discarded, and thus lead to vast
amounts of dwindling stock. Using the following auxiliary features RFID will reduce product
shrinkage [CITATION kat17 \l 1033 ].

Damage: When a manufacturer is able to report harm goods they can receive credit through
insurance or other structured arrangements with their suppliers. RFID Vendor transporting goods
using RFID essentially removes the human contact as items are automatically scanned. Minimal
management of stock by staff leads to a further reduction in the risk of unintentionally losing or
mishandling of goods [CITATION kat17 \l 1033 ].

Temperature: A temperature sensor can be mounted on an RFID tag as an additional device,

according to RFID Vendor. Sensors can track the temperature levels either in real time or at
different intervals. Tags may be applied to a shipping container, a vehicle or an individual product
for this reason. Using this type of RFID application, warehouse management as well as customer
can be confident of the temperature of a product during the entire phase [CITATION kat17 \l 1033
].

Expiration date: Monitoring the full inventory list of a expiry dates is a difficult task. RFID can
be used to track the expiry dates. If a seller can tell quickly when a product is about to expire,
goods can be positioned strategically or re-priced for fast sales [CITATION kat17 \l 1033 ].

8
Stock rotation: The expiry date of a product is closely related to stock turnover practice.
Advances in RFID will ensure that warehouse is continuously aware of goods that are approaching
expiry. If the product can be transferred to the front of the shelf, workers should be alerted in real-
time. This simple procedure plays a role in reducing product shrinkage [CITATION kat17 \l
1033 ].

Impact of RFID on efficiency of SCM

Rajamani and Sriskandarajah, (2014) expain, knowing what, where and when inventory assets are
available in real time, and where and how easily they can be delivered provides major
opportunities to increase the efficiency of the WM. It can be accomplished from an internal
business process perspective through reducing inventory through enhancing visibility, monitoring,
replenishment and forecasting; reducing cycle times by enhancing procedures, efficiencies and
removing bottlenecks; improving resource usage by automating, and duplication, raising
efficiency; raising service rates and introducing repeat customer businesses; and improving quality
through more precise inventory allowing more efficient tracking and correction of product faults
(Rajamani and Sriskandarajah, 2014).

Conceptual model for the Study

WM
RFIP Efficiency
Visibility Reduced inventory
Authentication Reduced cycle time
Automation Improve quality
Auxiliary features Improve resource
utilization
Improve service

FIGURE 5: IMPACT OF RFIP ON WM EFFICIENCY

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Conclusion
Warehouse Management (WM) is an essential point in business which connect the supplier,
distributor and the end user - customer. With the ongoing technological world adopting modern,
advance technology for the business activities is gain competitive advantage for the business. In
this context adopting Radio Frequency Identification (RFID) on WM is add an extra advantage,
security and cost efficiency. Literature review identify the RFID plays a role in reducing product
shrinkage, reduce overhead cost, operating cost and generate profits by visibility, authentication,
automation and auxiliary features in Warehouse Management and as a result RFID effectively
reduced inventory, reduced cycle time, improve quality, improve resource utilization, improve
service and improve information share of warehouse.

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