Using System Dynamics to assess the impact of RFID technology on retail operations

Alberto De Marco, Anna C. Cagliano, Mauro L. Nervo and Carlo Rafele

International Journal of Production Economics, 2012, vol. 135, issue 1, 333-344

Abstract: The application of item-level radio frequency identification (RFID) technology in retail supply chains creates cost savings and promises large potential benefits from revenue growth. However, the economic assessment of the impact on improved store operations, labor utilization, and increased sales is still not fully explored. We propose to use System Dynamics as a structural modeling and simulation approach to integrate conventional return on investment evaluations. Building on previous research about RFID technology in retail supply chains, we developed a model based on the case exploration of a leading Italian apparel retailer. Simulations show that RFID implementations are profitable whenever they contribute to increase sales, especially when a fashion retailer is focused on clerk-assisted sales strategies. Sales growth results from the dynamic and integrated impacts of RFID technology on better inventory control, faster inventory turnover, and longer time available for store personnel to assist consumers as an effect of more efficient backroom operations.

Keywords: Radio frequency identification; Supply chain management; Retail operations; Fashion industry (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:135:y:2012:i:1:p:333-344

DOI: 10.1016/j.ijpe.2011.08.009

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