Use of RFID Technology to Overcome Inefficiencies in the Supply Chain: An Analysis of Renault's Operations in Iran

The adoption of radio frequency identification (RFID) technology has been utilized by a vast number of firms throughout the world. However, there are implications that can limit the universal application of RFID. When and how RFID technology can provide benefits to organizations is a topic of interest to researchers and practitioners alike. We explore the process taken to adopt RFID technology at Renault's Iranian operations. Our work here takes an in-depth approach in analyzing the adoption process of RFID technology within an emergent economy, focusing mainly on the processes behind integrating RFID technology and its impact on organizational inefficiencies. Using a longitudinal approach, data surrounding supply chain inefficiencies within the operating environment was collected before and after the implementation of RFID technology within Renault. The information was gathered from MRP and inventory data interface control systems, allowing for observation of where operating inefficiencies or "waste zones" exist, their impact on the logistical and warehouse operations at Renault, and how the implementation of RFID impacted each particular zone. Our results indicate that RFID technology can increase efficiency within internal warehouse operations and throughout multiple supplier tiers; however, environmental uncertainties can still pose a threat towards inventory management and logistics regardless of the existence of RFID technology. Through this approach, understanding the potential benefits and drawbacks surrounding RFID implementation is made increasingly visible; assisting managers in future RFID adoption practices. Introduction Recent literature has provided supporting evidence on how radio frequency identification (RFID) technology can enhance operational and supply chain performance (Lin and Ho 2009; Oztekin et al. 2010). In a multitude of industrial contexts, implementing RFID technology has shown to improve operations, supply chain and logistical systems by reducing forecasting errors and increasing delivery times (Dutta et al. 2007). Numerous manufacturing plants are adopting RFID technology for product tracking purposes, especially within sectors that move multiple parts through their facilities each day (Chow et al. 2006). The use of RFID technology seems particularly useful within fast moving consumer goods markets, since it allows for real-time visibility of the supply chain (Bottani et al. 2010). Higher material transparency within organizational systems allows for more accurate forecasting, effectively reducing any inefficiencies that may exist within the supply chain (Delen et al. 2007). RFID can also be beneficial in managing supply chains. Relying on an increasingly large number of suppliers can create can make information flow across all parties difficult. RFID tags and the technology behind them allow for rapid automated item identification without the need of a physical operator, increasing inventory allocation efficiencies. Through the provision of real-time data, RFID technology helps in systematically reducing information gaps across the supply chain (Attaran 2007; Gaukler et al. 2007). However, RFID technology does not necessarily guarantee improved processes across all functions of the supply chain (Wu et al. 2006). Just like any technology, RFID carries downsides and risks (Kharif 2005; Taghaboni-Dutta and Velthouse 2006). For starters, there are costs and capital requirements for implementing the physical technology and software needed for RFID (Ustundag and Tanyas 2009). Justifying the startup costs may be a prohibitive barrier for implementing RFID technology. Second, there are cases that suggest how RFID may not be so effective and other cases where the implementation of the system was not successful (Kharif 2005). Additionally, lack of timing and technology coordination between suppliers when implementing RFID practices can create problems across the supply streams (Whang 2010). …