RFID Based Warehouse Management of Perishable Products

Abstract

The changing global market scenario, high level of competition, and faster obsolescence of perishable products due to short self life and changing customer demand are among the key challenges faced by perishable supply chains. Supply chains need to compete with growing variety of products, short delivery time, higher cycle service level, high quality and lower cost. Perishability imposes an intense pressure on managers as it adds an additional cost of disposal of outdated items, leading to out-of-stock situations and also loss of company faith. These problems are arising mostly due to the lack of information at every stage of the supply chains. The inadequate information about product quality, quantity, demand variability, product availability and lead times creates the bullwhip effect (BWE) at all stages and chains leads to the mismanagement. RFID technologies, with the appropriate IT infrastructure, would help major distributors and manufacturers, as well as health-care system, defence industries, and global supply chains in which products and product shipments must be traced and identified in a non-contact, wireless fashion using a computer network. This paper presents the impact of RFID in warehouse management of perishable products. It provides mathematical framework to asses the benefits of RFID in warehouse management. It helps management in the variety of ways including improvement in receiving and shipping processes, reduction in cycle counting efforts, reduction in stock outs/excess inventory, decreased counterfeiting, decreased returns, and reduction in inventory loss due to shrinkage and obsolescence. A sensitivity analysis has been presented at the end of paper which shows the compound effect of RFID, reduction in lead time and lead time variability. In all scenarios inventory level is reduced by certain percentage by incorporating RFID.