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The weaknesses of food industry which happened in the last decade, in terms of the poor quality had dropped the sales of food intensely, and gave an ultimate impact on food industry. To deal with this issue, the European Union has come out with rules and regulations to control the food quality, which is depending on physical traceability throughout the supply chain. Radio frequency identification (RFID) is one of the evolving technologies in which it gives most companies a deal of chances in designing their own traceability structure efficiently. Useful programmed data and information can be captured at lower costs with simple business procedures. Dupuy et al. (2004) believing that small and medium enterprises (SMEs) will be benefited from these effective information infrastructure, which allowing traceability at lower costs.
RFID is a small electronic device that comprises a microchip which is attached to an antenna. It is also considered as a wireless system that uses frequency electromagnetic fields in order to track and identify items automatically. It is the technology similar to bar code identification. By interpreting the radio waves, transmitting the figures to a processing device and storing a serial number on a small chip that is attached to an antenna, identification can be done efficiently. This is somewhat called as RFID tag.
RFID system has been used expansively about everywhere. The applications for these control system are now ranging from clothing industries to foods industries; and from inventory and production management systems to airfield luggage conduct systems. In addition, widely used of RFID system can be seen in certain areas, especially in supply, event and delivery execution. Currently, there is also an enhancement in the aspect of automated payment systems and theft-prevention systems as well. This indicates that the emergence of RFID technology has work beyond the other traditional technology approaches such as barcodes which is adept by most of the users before, as it can sufficiently support the elements which are essential to sustain the traceability in the supply chain.
Food traceability is the ability to chronologically identify a product throughout all stages in the supply chain, such as completes the information about every step from production to harvest and then proceed to packing, storing, disseminating and sales. Food traceability may encompass information pertaining to the product life cycle, depending on the alteration process for the food products. Product traceability can be divided into two types: forward traceability and backward traceability. Moe (1998) mentioned the former is the ability to trace the movement of a product at every single point of the supply chain. Meanwhile, Jansen-Vullers et al. (2003) and Dupuy et al. (2004) explained the latter as the capability to find the basis and characteristics of a product at every single point of the supply chain.
As mentioned earlier, RFID technology offers an efficient way for data capturing than the traditional barcodes, as the application of those traditional technology approaches require all partners within the supply chain to coordinate their data and information, which result in substantial labor costs in return. With RFID, hundreds or even thousands of RFID tags can be traced and read in just a second by using frequency electromagnetic fields, or so-called radio waves, with no synchronization of data for every partner. RFID system had contributed in meeting the traceability requirements. In terms of product identification, RFID technology provides tracing accurateness by setting each product a unique code. Besides, RFID system aids in transforming a sequence of activities, starting from listing of raw materials into end product by automatically detecting all these events using wireless identification. In the facet of operation recording, RFID helps in controlling the manufacturing processes. Furthermore, the exact route, the capacity and the conditions of a product can be identified easily across the supply chain with reduced labor costs.
The initial investment in an effort for implementing RFID technology is considered high at the beginning, so most of the companies are not dare to carry out this infrastructure as it may include risks that could not be fine-tuned. However, return on investment (ROI) may derive in short-term as the company saves costs and risks in coordinating their own tracking systems from unconnected process. In a competitive supply chain environment, there is a need to exchange information among all partners. This is due to information integration is one of the critical key issues in assuring and supporting supply chain operations.
By deploying RFID system, every partner within the supply chain can access into the information system center by using computer and web browser (Gupta and Herath, 2005). This central information system provides a web-services interface, which allows the readers to submit their useful information regarding to the internal company procedures and observation data to the system. Data stored in the central information system are then clarified and well-organized in a good manner in order to generate useful information to support the business processes. So, every partner within the supply chain can access and get the information they need through the http protocol.
Full traceability in RFID system can be achieved with minor investment, by installing the RFID reader equipment to a personal computer and then connect it with centralized information system, without changes in internal business processes so that partners within supply chain system can both exchange, link and share traceability information. Once food crisis happens, the execution of RFID technology will enable companies to target the product lots correctly, which in turn reduce product order costs as well as other related costs such as product clearance and damages. Useful information can be easily captured from centralized information system as all the data are well-organized automatically. As a result, it raises customersâ€™ perception and customersâ€™ trustworthiness towards a company, in which it is crucial in building a competitive advantage in order to compete with competitors.
Last but not least, traceability and utilization of RFID technology in supply chain management requires the full commitment and contribution of all partners. Same theory is applied in food industry as well. RFID technology is able to capture product information nearly at zero labor costs, which result in cost reduction from both initial investment and management of business logics.