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Chapter 11 • Supply Chain Management 323

Assume 10 employees, for 5 hours, at $15.00/hr (overtime), that is, $18,000.00 per year in labor
just to count inventory. Imagine this same scenario except that the store is using RFID combined
with their ERP, that is $ 0.00 in labor, and the inventory is checked constantly with perfect accu-
racy. At the end of every night, every person in the chain of command has an exact count of
inventories. This information will be automatically sent to marketing so they can consider what
items they may want to put on sale. The information will be sent to the supply warehouses and a
reorder will automatically be generated for the shelves. This streamlines the supply chain removing
lag time and human error, all the while accounting for shrinkage. This information will be
automatically generated into reports to be waiting in the inbox of regional managers first thing in
the morning. Employees across the entire company, from the top of the pyramid to the bottom,
can use this information.

RFID Technology
8
“RFID is a very complicated and costly technology” and will thus increase the initial challenge
and cost of a successful ERP implementation. If an organization decides RFID is a technology
they wish to explore, this will help narrow the field of optional vendors in which they begin their
ERP purchase search. Both hardware and software much be considered.
Hardware. Although the technology has been around for over 30 years, there are no
“off the shelf” hardware packages. Each hardware implementation will need to be designed
specifically to meet the needs of purchaser. Choosing a vendor with extensive RFID experience
will be a critical choice to the success of the ERP. Tags range from passive to active, single
unique identifier to writable, and come in sizes in shapes ranging from the tiny and round to the
big and flat. Tag readers can be mounted just about anywhere: in a doorway, to a pallet jack, on
a ceiling, in a shelf, or carried in a hand. Depending on the reader and tag they can read at
distances of up to 300 feet.

Software. Unlike the hardware, software will be much easier to design. There are even
cases where a near vanilla implementation would be sufficient. This would be great cost savings
if possible. RFID, as far as the ERP is concerned, will be just another interface device.

Data Accuracy and Timeliness
As shown in the earlier example of Zara, Inc. a clothing store, data are only as accurate as the
device collecting and entering the data. In most historical cases, a human is part of that device to
collect and enter data. With a human doing the operational steps of collecting and entering data,
you have a minimum of three places an error and/or retardation of the data can occur:
1. Physical counting of the data
2. Writing down of the data collected
3. Typing the data into ERP
Changing any process where these steps occur to automated RFID data collection will eliminate
the possibility of human error. Data can be collected instantaneously and with 100 percent accu-
racy. RFID is so accurate and current; the clothing store would be able to view shrinkage as it is

8 Chuang, M. L. and Shaw, W. H. (2008). An Empirical Study of Enterprise Resource Management Systems
Implementation. Business Process Management Journal, 14 (5), 675, Print.