Improving Supply Chain Management effectiveness using RFID

This paper employs a simulation model of a Supply Chain Management (SCM) system. The main objective of this model is to compare two systems, one using Radio Frequency Identification (RFID), versus the existing system of barcodes. A quantitative analysis based on a simulation model is developed and a comparison between the two systems is discussed. The model runs for both systems using ARENA simulation software. The model is tested using real data. Two scenarios have been developed using the simulation model in order to analyze: 1 Total inventory cost of all chains in the SCM both with and without RFID. 2 Customer satisfaction and customers lost for all chains in the SCM with and without RFID. The cost of RFID installation is going down over time. By combining the lower cost of RFID installation with fast scanning, the use of RFID technology in SCM promises to reduce annual total inventory cost and the number of lost customers. As a result, this research has shown that RFID technology could be used to improve the effectiveness and performance of the entire supply chain system.