UTILIZING RFID FOR SUPPLY CHAIN BUSINESS PROCESS:

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UTILIZING RFID FOR SUPPLY CHAIN BUSINESS PROCESS
A Case Study
Authors Asaduzzaman Md. Saifuddin Khalid
(Presenter) Prof. Dr. M. Abdus Sobhan Independent
University, Bangladesh (IUB) September 11, 2009
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Outline

• RFID
• Apparel Industry of Bangladesh
• Motivation
• Scope of Research
• Review of Literature
• Methodology
• Objectives
• Hypothesis Development
• The Model for Case study
• Manufacturing Process of Posh Apparel

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Outline
Contd

• RFID and its scope of saving for Knit Apparel
  Manufacturing Supply Chain
• Data Flow architecture and Servers for RFID
  implementation
• Application Interface
• RIFD based manufacturing supply chain process
• Total Cost of Ownership
• Return on Investment (ROI)
• Results of Case Study
• Discussions
• Conclusion

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RFID

• A key to automating everything
• Invented in 1948 by Harry Stockman
• Initial application was in World War II by US
  army
• Came into commercial use in 1990s
• Basically RFID system composed of a tag
  containing a chip, a reader, its antennas and a
  computer.
• RFID tags and readers have to be tuned to the
  same frequency to communicate.

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Apparel Industry of Bangladesh

• Entered the export market of apparels in 1978
• Currently 2.9 percent share of Global apparel
  market
• sixth largest exporting country in the USA
• fifth largest exporting country in the EU
• Contribution to countrys economy.
• 76 of the countrys total exports
• 4.5 million employments
• 10.5 of the countrys GDP
• 40 of its manufacturing output
• Earning US 14.11 billion in export revenues
• Registered a growth of 15.87 percent compared to
  last year
• Targeted growth 16 billion by this year 25
  billion by 2012

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Motivation

• RFID provides
• persistent, real-time identification with less
  human intervention
• more frequent data collection
• greater information capture
• RFID solution can generate an additional
• 2 to 7 per cent increase in revenue
• improve handling productivity by 20 to 30 percent
  
• reduce operating expenses by 2 to 5 per cent
• reduce days in inventory by 1 to 2 percent
• RFID can take apparel manufacturing supply chain
  process and the industry to the next level.
• Hard economic times encourages companies to spend
  on acquiring the latest supply-chain technology
  for competitive age

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Scope of Research

• Emphasized on following fields relevant to
  research topics.
• RFID
• Supply Chain of Apparel Manufacture process
• Infrastructure for Business Information System
• Research highlights business benefit of RFID
  especially for Apparel Manufacturing Supply
  Chain.
• Supply chain with RFID technology can be
  considered as global network of integrated hubs
  of suppliers and clients that create, track and
  deliver RFID tagged finished products
  manufactured from raw materials and semi-finished
  parts to multiple destinations from multiple
  supply sources.

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Review of Literature

• Literature Review was conducted on outcome of
  various researched on followings
• RFID in Apparel Manufacturing
• RFID Implementation and its ROI

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Objectives

• Primary objective is to forge a link between the
  technology and the application scenarios by using
  the technology to support business processes in
  business and industrial environments.
• To establish financial feasibility and benefit of
  adopting RFID and its facilitating IT
  infrastructure in Apparel Manufacturing Supply
  Chain Business process.
• To encourage enterprises for adopting IT and RFID
  by projecting business case and help them to give
  away fear of Information Technology.
• To achieve its worthiness by providing supply
  chain visibility to Apparel Buyer, Supplier and
  Manufacturer.

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Hypothesis Development

• Hypothesis 1
• RFID with IT will increase transparency between
  parties involve with Apparel Manufacture and
  Exporters
• Hypothesis 2
• RFID will reduce workload for management team,
  increase purchase order from buyer by ensuring
  clear view of Supply Chain and Manufacturing pipe
  line
• Assumptions
• Manufacturing processes are optimized and have
  sufficient manpower to adopt RFID and Application
  
• Business value is counted by time for information
  flow and financial cost associated with
  adaptation of RFID

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The Model for Case Study

• Posh Apparel situated at 897-898 Mohakhali, Dhaka
• Export oriented garment factory
• Marketing office in Dhaka and Toronto, Canada.
• Production capacity of 50,000,000 dozen of
  T-Shirt per year

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Manufacturing Process of Posh Apparel
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RFID and its saving in Knit Apparel Manufacturing
Supply Chain
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Contd
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Data Flow architecture and Servers for RFID
implementation
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Application Interface Application for assign/
reassign RFID tag
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RFID Tag capture Application
Contd
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Over all work-in-progress monitoring applications
Contd
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L/C monitoring Application for Buyer and Exporter
Contd
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RIFD based manufacturing supply chain process
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Contd
RIFD based manufacturing supply chain process
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Cost of Ownership

• Grand Total for Capital Investment
• RFID Device.2,852,500
• Server1,375,000
• Software.1,000,000
• Manpower Training.................................
  .........160,000
• One time setup cost for connectivity278,00
  0
• Grand Total for Capital Investment5,665,500
• (Taka Fifty Six Lacs Sixty Five Thousand and Five
  Hundred) Only

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Return on Investment
Calculation of ROI
In this case to calculate ROI, it is found
Gain from Investment Taka. 3,888,150,000 Cost
of Investment Taka. 5,665,500 ROI
(3,888,150,000-5,665,500)/5,
665,500 ROI
685.29 Financial figure for cost savings are
self-explanatory Additionally Posh will save 49
(Forty Nine) days lead time for data update
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Results of Case Study

• Return on Investment (ROI)
• ROI ratio of 685.29 in first year
• Pilferage reduced to .124 from 7.53 .
• Database will be updated 49 days earlier compare
  to previous
• Transparency among all parties involved.
• RFID for apparel manufacturing supply chain
  process is a worthwhile project for Apparel
  industry.

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Discussions
Technical experts have to come forward to adopt
RFID, prioritizing the most contributing sector
of industry. Manufacturing process of Apparel
industry is a well-practiced process, the
research did focused mostly on IT infrastructure
issues of implementing RFID in its process.
Solution will ensure Transparency among all
parties involved. A Return On Investment (ROI)
ratio of 685.29 is achieved by showing optimum
production capacity utilization of Posh Apparel.
RFID for apparel manufacturing supply chain
process is a motivating solution for Apparel
industry.
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Conclusion

• Study demonstrates
• RFID in key sector of business and industry may
  derive extraordinary scope for business growth
• Scope of work for talented technical expert of
  the nation.
• The research can be motivating to
• increase scope for Information Technology
  deployment
• ensure business growth for Apparel Industry
• increase scope of employment for Technical
  experts and work force
• A win-win situation for the entrepreneur and
  technical experts resulting economic growth for
  the nation.
• An excellent candidates to save money with RFID.