An application of RFID in supply chain management to reduce inventory estimation error

Radio-frequency identification (RFID) is the wireless non-contact implementation of radio-frequency electromagnetic fields to transfer necessary data to identify and to track tags attached to objects, automatically. RFID has been successfully used for supply chain management (SCM) problems in order to reduce errors associated with inventory. This paper uses RFID technique in five different scenarios of labeling, errors in stolen parts, waste, wrong replacement and delivery. The study uses simulation technique based on Enterprise Dynamics to analyze three parts in an auto industry. The study considers different criteria including inventory error estimation, profitability, profitability, customer satisfaction and SCM performance. The preliminary results indicate that the proposed method is capable of optimizing most objectives, significantly.