The case involves in a study of comparison between the two technologies that are being used Barcode Technology and RFID Technology. The highlights of company’s sales and cost that it has incurred is been given by its CEO Mr. Jack Bracket
The company has grown its sales to $78 million
The cost of goods sold is $61 million
The inventory level of the company is about $14 million
The company has three factories each at Ohio, Kentucky, South Carolina
Company has “Service First” has its most important competitive priority.
The company does mostly pre-production services and also post production services.
The company currently uses Barcode technology for scanning all the components moving out of its inventory and for shipping too.
BI scans about 8, 850 items per day in all the 3 factories
A average BI employee works for about 2000 hours and he has annual pay of $55, 000 inclusive of benefits
These are some of the highlights that have been provided for us. Now that Mr. Jack Bracket is considering changing the Barcode technology to RFID technology. The RFID vendor provided the company the following inputs:
Barcode takes 10 seconds to scan one item (this includes all the allowances and the time taken for the employee to go to the item and scan the item).
The time taken to replace a defective barcode is about 5 minutes.
The amount the company has to spend on installing the RFID technology is about $620,000 and $480, 000 for all training and consulting services.
The time for RFID to scan a item is 2/100th of a second or instantaneous.
The % of error for a bar code technology is 2% over the year for total reads and that for RFID is .2%
The average money spent on a misread items was guessed to be approximately about $4
The other benefits of the system such as inventory control and reduce misplacements and reduce in theft were not quantified.
Summarize the advantages and disadvantages of RFID systems. How does RFID compare to bar-coding? Did you find any RFID applications for services?
Advantages of RFID Technology:
The RFID technology does not need line of sight as in the case of the barcodes thereby reducing the amount of space dedicated for it
There are various types of RFID and can store lots of data in it.
Reduce in the labor force.
Decrease in the inventory
Good inventory control
Reduces the theft and misplacements and increases the security of the product as it can be tracked wireless.
Measurement of the inventory level is accurate now due to RFID.
Disadvantages of RFID technology
The RFID technology is too expensive when compared to the bar-code technology.
The passive RFID which is the cheap form of RFID needs a power source to transmit the information to the system.
Interference from other equipments in the factory may disturb the transmission of the information to the system.
The transmitting of the radio frequency in a pallet containing steel or liquid may be difficult some times.
The RFID tags if worn out or removed from the item it may create a confusion.
(These data and the information were collected from the websites of various supply chain companies and wireless guides such as: www.ups-scs.com; www.wireless-tracking-advisor.com)
Comparison between the two technologies:
Not much manpower required
Labor required higher than RFID
Amount of Data that can be stored
Maximum amount of data can be stored
Not much data can be stored
2/100th of second
10 seconds for one item
There is read write options in RFID
There is no such options they are generally read only
Applications of RFID Technologies:
The RFID technology has various applications in various fields. The RFID has been extensively used in the supply chain management in any manufacturing industry and it has got other applications in the inventory control of the factory. The RFID in the inventory control provides more profit for managing the inventory.
The RFID has also got applications in the hospital industries and other industries which needs tracking of its products.
What is the payback for this possible RFID adoption?
The RFID technology can scan a single item instantaneously or in 2/100th of a second when compared to 10 seconds for a single item for a Bar-code technology. This shows that there is an increase in the productivity of the product for the reason that it can scan more items than the barcode technology thereby decreasing the cycle time and increasing the production rate
The RFID needs less manpower compared to the barcode technology. This shows the amount of money spent on the manpower is reduced. The amount of money spent on the technology can be recovered by this.
More data can be stored in the RFID than in the barcode technology and these influences in many factors which provide more profit to the factory such as:
Less inventory control
Less inventory audits and inventory checking
What do you recommend Mr. Bracket do in the short and long terms? Explain your reasoning.
Radio frequency identification (RFID) is the technology which is here to stay so, I would recommend to implement the RFID technology to his factories
Even after going through all the profits because of implementing the RFID technology he has doubts about the technology, then I would recommend him to initially implement the technology in any one of his plants.
This is because, now he can see the profit that are caused due to implementation of the new technology. This will also provide his employees to get used to the new technology and they can be comfortable working in the new technology.
Then after a period of time he can also implement the RFID technology in all the factories of his and can earn a huge amount of profit, due to the increase in the productivity. The main objective of the BI is “service first”, can now not lose any more business that it had lost previously with the Wolf Furniture.
He can also in the future use the RFID technology in inventory control so as to have a control over the inventory and also he can have more security for the items that are manufactured. The implementation of the RFID will also reduce the number of products that were misplaced.
BI can also think of applying the RFID tags to each and every component that is being manufactured in the factory. This will help the BI to keep track of the components that are being produced and also will help in calculating the amount of time it spends in each and every operation.
With this data of time spent on each and every machine, the production planners can improve on the cycle time of the product. And thereby keeping track of the component for which the process was planned is being followed. This will also help in intimating in plant engineer if there is any rejection and where the rejection occurs.
Therefore the RFID can be used in all parts of the industry and it will always yield profit for the company. After all these reasoning I think Mr. Jack Bracket of BI should not have any reservations in implementing the new technology to his company
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