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322 Chapter 11 • Supply Chain Management

Benefits of Enterprise Application Integration
EAI provides advantages through uniting disparate applications, reducing redundant data entry,
merging diverse data sets, and reducing transaction costs. EAI proves beneficial to businesses for
a number of reasons:
• Increased efficiency: The ability to automate business processes across the enterprise and
across existing boundaries.
• Value of information: Redundant databases are aligned, eliminating duplicate data.
• Lower costs: The EAI strategy is to create one interface per application. This lowers the
cost of upgrades or modifications/additions to applications.
• Increased productivity: Results from business process automation and access to real-time
information.
• Improved customer service: Customer service employees have improved real-time access
to give accurate information to customers.
• Enhanced access: EAI increases the ability to extend applications to more users from
anywhere and anytime over the virtual private networks.
The integration of applications is compelled by the Internet and the need to connect interorga-
nizational systems with customers, suppliers, collaborators, and partners of all sorts within the
supply chain.

RFID

Radio Frequency IDentification, or RFID, has been around since the 1950s. RFID is a small
microchip (or tag as it is commonly referred to) that sends/receives data via radio waves sent on
specific frequencies. Current RFID tags are less than half the size of a tictac. RFID has capabili-
ties to speed updated information from a sales floor inventory to a CEO’s reports in a matter of
seconds. From detecting product shrinkage in real time to restocking shelves, the possibilities for
this technology are almost endless. Many companies have already begun to implement RFID
into their corporate structure; however, with the technology still being in its developmental
infancy stage, the end result possibilities are yet to be imagined. Even though the technology is
50+ years old, it has never recognized its potential until recent years. We will discuss how RFID
relates to ERP implementation, data accuracy, data timeliness, supply chain management, report
structuring, and business process reengineering. One of the world’s leading users of RFID tech-
nology is Wal-Mart. Wal-Mart’s CIO Rollin Ford has been quoted as describing their stance on
RFID as “bullish” (“Wal-Mart CIO Still ‘Bullish’ on RFID”). Wal-Mart is a primary reason why
this technology is beginning to realize its real value.

RFID is Catching on

RFID is not the magical “do anything” technology many have made it out to be. RFID is an enabling
technology that gives and ERP the means to communicate with itself. This allows for real-time
automation of many data collection functions originally conducted by paid employees. The labor
savings, which we will discuss first, is only a small portion of the savings realized via RFID.
Imagine you are a manager for a popular chain clothing store located in a mall. It is the last
day of the month, and it is time to take an inventory. Inventory is taken only twice per month. The
store closes and 10 employees begin working, counting every single article of clothing inside
the store. It may take these 10 employees 5 hours or more to count every item in the store.