Abstract
This chapter analyzes the effects, as well as the potential return on
investment (ROI) of moving from traditional bar-code to radio frequency
identification (RFID) systems. It focuses on a true supply chain situation
between Procter & Gamble (manufacturer) and Wal-Mart (retailer). Supply
chain flowcharts, inventory turns, and throughput and other analyses were
completed to show and explain the effects of RFID. Findings showed that
moving to RFID systems provides a substantial ROI benefit in the analyzed
scenario. Benefits accrue in the form of inventory reduction, labor reduction, shrinkage reduction, and increase in sales due to reducing out-ofstocks and getting real-time demand information. Most of the costs are
from IT, tags, hardware, and services.