Testing the Potential of RFID to Increase Supply-Chain Agility and to Mitigate the Bullwhip Effect
International Journal of Applied Logistics (IJAL), Forthcoming
36 Pages Posted: 1 Sep 2009
Date Written: August 30, 2009
Abstract
This study examines the potential of RFID technology to increase the agility of supply-chain e-commerce systems by mitigating the bullwhip effect. The bullwhip effect is a supply-chain phenomenon that reveals a lack of business agility characterized by the amplification of inventory variance. This study employs an experiment involving a modified Beer Distribution Game to simulate an RFID-enabled supply chain. The results provide empirical evidence that RFID technology can increase a supply chain’s agility and reduce the bullwhip effect by reducing inventory holding costs, stockout costs, and inventory-level variances. The results are all the more important when applied to interorganizational e-commerce systems.
Keywords: RFID, supply-chain agility, bullwhip effect, beer distribution game, e-commerce, interorganizational systems, information systems
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