Skip to main content
Log in

Evaluation of RFID applications for logistics: a framework for identifying, forecasting and assessing benefits

  • Article
  • Published:
European Journal of Information Systems

Abstract

As with all information technologies, there is a necessity to determine the profitability of investments in Radio Frequency Identification (RFID) ex ante. A particularly important aspect is the challenging task of evaluating the multi-faceted benefits of RFID deployments. While a large body of research on RFID benefits exists, our literature review indicates the absence of a comprehensive approach. We introduce a framework that combines the benefit evaluation steps of identification, forecasting and assessment. Based on insights gained in a 3-year research project with case studies in logistics, we refine a process-based IT-benefits classification and subsequently derive six types of RFID benefits that support the systematic identification of benefits, as well as the selection of forecast and assessment methods. We discuss how our framework can facilitate and enhance RFID investment decisions and guide future research activities.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1

Similar content being viewed by others

References

  • Agarwal V (2001) Assessing the benefits of auto-ID technology in the consumer goods industry. Auto-ID Center White Paper, Cambridge (UK).

  • Alexander K, Gilliam T, Gramling K, Kindy M, Moogimane D, Schultz M and Woods M (2002) Focus on the supply chain: applying auto-ID within the distribution center. Auto-ID Center White Paper, Cambridge (USA).

  • Anthony RN (1965) Planning and Control Systems: a Framework for Analysis. Division of Research, Harvard University, Boston.

  • Baars H and Sun X (2009) Multidimensional analysis of RFID data in logistics (2009). In Proceedings of the 42th Hawaii International Conference on System Sciences (HICSS 2009). (SPRAGUE Jr., RH, Ed), IEEE Computer Society, Washington DC (USA).

    Google Scholar 

  • Baars H, Kemper H-G, Lasi H and Siegel M (2008a) Combining RFID technology and business intelligence for supply chain optimization – scenarios for retail logistics. In Proceedings of the 41th Hawaii International Conference on System Sciences (HICSS 2008). (SPRAGUE Jr., RH, Ed), IEEE Computer Society, Washington DC (USA).

    Google Scholar 

  • Baars H, Sun X and Reiter A (2008b) RFID for the internal logistics of foods manufacturers – a case-based exploration of business potential, challenges, and trends. In Proceedings of the 4th European Workshop on RFID Systems and Technologies. (STRÜKER J, Ed), ITG-Fachbericht, Vol. 209. VDE Verlag, Berlin.

    Google Scholar 

  • Bardaki C, Karagiannaki A, Pramatari KC and Mourtos I (2006) RFID technology: simulating the impact on supply chain and demand in retail industry. In Proceedings of the 21st European Conference on Operations Research (EURO XXI 2006). (KINNUNEN T and ÓLAFSSON, S., Eds), ICORS – Icelandic Operations Research Society, Reykjavik (Island) and EURO – The Association of European Or Societies, Bruxelles. Reykjavik, Iceland.

    Google Scholar 

  • Becker J, Vilkov L, Weiss B and Winkelmann A (2008) Calculating the process driven business value of RFID investments – a causal model for the measurement of RFID technologies in supply chain logistics. In Proceedings of the 14th Americas Conference on Information Systems (AMCIS 2008). (PARSONS J., YUAN Y., BENBASAT I. and MONTAZEMI A., Eds), Omnipress, Madison (USA) 2008.

    Google Scholar 

  • Bendavid Y, Lefebvre E, Lefebvre LA and Wamba SF (2007) B-to-B e-commerce: assessing the impacts of RFID technology in a five layer supply chain. In Proceedings of the 40th Hawaii International Conference on System Sciences (HICSS 2007). (SPRAGUE Jr., RH, Ed), IEEE Computer Society, Washington DC (USA).

    Google Scholar 

  • Boeck G, Lefebvre L and Lefebvre E (2008) Technological requirements and derived benefits from RFID enabled receiving in a supply chain. In RFID Handbook (AHSON SA and ILYIAS M, Eds), pp 296–310, CRC Press, Boca Raton (FL, USA).

    Google Scholar 

  • Boer PF (1999) The Valuation of Technology: Business and Financial Issues in R&D. Wiley, New York.

    Google Scholar 

  • Bottani E and Rizzi A (2008) Economical assessment of the impact of RFID technology and EPC system on the fast-moving consumer goods supply chain. International Journal of Production Economics 112 (2), 548–569.

    Article  Google Scholar 

  • Boushka M, Ginsburg L, Haberstroh J, Haffey T, Richard J and Tobolski J (2002) Auto-ID on the move: the value of auto-ID technology in freight transportation. Auto-ID Center White Paper, Cambridge (USA).

  • Brown A (1994) Appraising intangible benefits from information technology investment. In Proceedings of the First European Conference on IT Investment Evaluation. (BROWN A. and REMENYI D. Eds), Henley 13–14 September, Operational Research Society, Birmingham, Thames, UK.

    Google Scholar 

  • Brynjolfsson E and Hitt L (1998) Beyond the productivity paradox. Communications of the ACM 41 (8), 49–55, S. 51.

  • Cooper R and Kaplan RS (1988) Measure costs right: make the right decisions. Harvard Business Review 66 (5), 96–103.

    Google Scholar 

  • Copeland T and Antikarov V (2001) Real Options – A Practioner's Guide. Texere, New York; London.

    Google Scholar 

  • Curtin JP, Gaffney RL and Riggins FJ (2009) The RFID e-valuation framework – determining the business value from radio frequency identification. In Proceedings of the 42nd Hawaii International Conference on System Sciences (HICSS 2009). (SPRAGUE Jr., RH, Ed), IEEE Computer Society, Washington DC (USA).

    Google Scholar 

  • De Kok AG, Van Donselaar KH and Van Woensel T (2008) A break-even analysis of RFID technology for inventory sensitive to shrinkage. International Journal of Production Economics 112 (2), 521–531.

    Article  Google Scholar 

  • Decker C, Berchtold M, Chaves LWF, Beigl M, Roehr D, Riedel T, Beuster M, Herzog T and Herzig D (2008) Cost-benefit model for smart items in the supply chain. In Proceedings of the First International Conference ‘The Internet of Things’ (IOT 2008) (FLOERKEMEIER C, LANGHEINRICH M, FLEISCH E, MATTERN F and SARMA, S, Eds), pp 155–172, Springer, Berlin; Heidelberg.

    Google Scholar 

  • Dedrick J, Gurbaxani V and Kraemer KL (2003) Information technology and economic performance: a critical review of the empirical evidence. ACM Computing Surveys 35 (1), 1–28.

    Article  Google Scholar 

  • Dighero C and Kellso J et al. (2005) The real and integrated story. Intel Technology Journal 9 (3), 247–257.

    Article  Google Scholar 

  • Dimakopoulou A and Pramatari K (2008) Investment evaluation of RFID technology applications: an evolution perspective. ELTRUN Paper No. 53, Athens University of Economics and Business (Greece).

  • Dittmann L (2006) Der angemessene Grad an Visibilität in Logistik-Netzwerken – Die Auswirkungen von RFID (in German), Ph.D. thesis, University of St. Gallen (Switzerland).

  • Doerr KH, Gates WR and Mutty JE (2006) A hybrid approach to the valuation of RFID/MEMS technology applied to ordnance inventory. International Journal of Production Economics 103 (2), 726–741.

    Article  Google Scholar 

  • dos Santos BL (1991) Justifying investments in new information technologies. Journal of Management Information Systems 7 (4), 71–90.

    Article  Google Scholar 

  • Dutta A and Roy R (2004) A process-oriented framework for justifying information technology projects. e-Business Environments. International Journal of Electronic Commerce 9 (1), 49–68.

    Google Scholar 

  • Dutta A, Lee HL and Whang S (2007) RFID and operations management: technology, value, and incentives. Production and Operations Management 16 (5), 646–655.

    Article  Google Scholar 

  • Eisenhardt K (1989) Building theories from case studies. Academy of Management Review 14 (4), 532–550.

    Google Scholar 

  • Faupel T, Strüker J and Gille D (2008) Performance improvements based on RFID – empirical findings from a cross-sectoral study. Proceedings of the Americas Conference on Information Systems (AMCIS ‘08). Omnipress, Madison (USA), 2008.

    Google Scholar 

  • Gaukler G and Hausman W (2008) RFID in mixed-model automotive assembly operations: process and quality cost savings. IIE Transactions 40 (11), 1083–1096.

    Article  Google Scholar 

  • Gaukler G, Seifert RW and Hausman WH (2007) Item-level RFID in the retail supply chain. Production and Operations Management 16 (1), 65–76.

    Article  Google Scholar 

  • Gille D and Strüker J (2008) Into the unknown – measuring the business performance of RFID applications. In Proceedings of the 16th European Conference on Information Systems (ECIS 2008) (GOLDEN W, ACTON T, CONBOY K, VANDER HEIJDEN H and TUUNAINEN V, Eds), 9–11 June, National University of Ireland, Galway (Ireland).

    Google Scholar 

  • Gillert F and Hansen WR (2007) RFID für die Optimierung von Geschäftsprozessen (in German), Hanser, München (Germany).

    Google Scholar 

  • GS1 GERMANY (2005) Der RFID-Kalkulator im Überblick. (in German), GS1 White Paper, Köln (Germany), http://www-05.ibm.com/de/solutions/rfid/downloads/ROI_RFID_Kalkulator.pdf.

  • Guenther O, Kletti W and Kubach U (2008) RFID in Manufacturing. Springer, Berlin.

    Google Scholar 

  • Hamilton S and Chervany NL (1981) Evaluating system effectiveness – part I: comparing evaluation approaches. MIS Quarterly 5 (3), 55–69.

    Article  Google Scholar 

  • Hardgrave BC, Waller M and Miller R (2005) Does RFID reduce out of stocks? A preliminary analysis. Working Paper, Information Technology Research Institute, University of Arkansas, Fayetteville.

  • Heese HS (2007) Inventory record inaccuracy, double marginalization, and RFID adoption. Production and Operations Management 16 (5), 542–553.

    Article  Google Scholar 

  • Hozak K and Collier DA (2008) RFID as an enabler of improved manufacturing performance. Decision Sciences 39 (4), 859–881.

    Article  Google Scholar 

  • Ivantysynova L, Ziekow H and Günther O (2007) A guide to assess costs and benefits for RFID investments in manufacturing. In Proceedings of ICIS 2007 Workshop on E-Business. (RIVARD S and WEBSTER J, Eds), Association for Information Systems, Atlanta, GA, USA.

    Google Scholar 

  • Juran JM (1979) Quality Control Handbook, 3rd edn, Mcgraw-Hill, New York.

    Google Scholar 

  • Karaer Ö and Lee HL (2007) Managing the reverse channel with RFID-enabled negative demand information. Production and Operations Management 16 (5), 625–645.

    Article  Google Scholar 

  • Karagiannaki A, Mourtos I and Pramatari K (2007) Simulating the impact of RFID technology on warehousing operations. ELTRUN Paper No. 44, Athens University of Economics and Business (Greece).

  • Kemper HG, Baars H and Koch M (2008) BI-Analysen von RFID-Daten in der Produktionslogistik – Exemplarisch dargestellt am Beispiel interner Produktionsprozesse und des Ladungsträgermanagements. Research Paper, University of Stuttgart, http://www.bwi.unistuttgart.de/index.php?id=56.

  • Koch M and Baars H (2009) Analyzing RFID data for the management of reusable packaging. In Proceedings of the 4th Mediterranean Conference on Information Systems (MCIS). (POULYMENAKOU A, POULOUDI N and PRAMATARI K, Eds), 25–27 September, University of Economics & Business: Athens.

    Google Scholar 

  • Langer N, Forman C, Kekre S and Scheller-Wolf A (2006) Assessing the impact of RFID on return center logistics. Working Paper, Carnegie Mellon University, Pittsburgh (USA). Available at SSRN: http://ssrn.com/abstract=927931.

  • Laubacher R, Kothari SP, Malone TW and Subirana B (2006) What is RFID worth to your company? MIT Sloan School Paper #224, Cambridge (USA).

  • Lee A (1989) A scientific methodology for MIS case studies. MIS Quarterly 13 (1), 33–50.

    Article  Google Scholar 

  • Lee H and Özer Ö (2007) Unlocking the value of RFID. Production and Operations Management 16 (1), 40–64.

    Article  Google Scholar 

  • Lee H, Peleg B, Rajwat PJ, Sarma S, Schoonmaker M and Subirana B (2005) RFID/EPC benefits calculator. [WWW document] http://ocw.mit.edu/NR/rdonlyres/Engineering-Systems-Division/ESD-290Spring-2005/F5E3F19A-7773-4CC7-A4C0-90ACFBD08075/0/EPCRFIDCalculatorMarch2005.xls.

  • Lee YM, Cheng F and Leung YT (2004) Exploring the impact of RFID on supply chain dynamics. In Proceedings of the 2004 Winter Simulation Conference (WSC ‘04) (INGALLS RG, ROSSETTI MD, SMITH JS and PETERS BA, Eds), pp 1145-1152, IEEE Computer Society, Washington DC (USA).

    Google Scholar 

  • Loebbecke C (2007) Piloting RFID along the supply chain: a case analysis. Electronic Markets 17 (1), 30–37.

    Article  Google Scholar 

  • Mannel A (2006) Prozessorientiertes Modell zur Bewertung der ökonomischen Auswirkungen des RFID-Einsatzes in der Logistik (in German), Ph.D. Thesis, University of Dortmund (Germany).

  • Mooney J, Gurbaxani V and Kraemer K (1996) A process oriented framework for assessing the business value of information technology. The DATA Base for Advances in Information Systems 27 (2), 68–81.

    Article  Google Scholar 

  • Melville N (2004) Information technology and organizational performance: an integrative model of IT business value. MIS Quarterly 28 (2), 283–322.

    Google Scholar 

  • Moran HJ, Ayub S and Mcfarlane D (2003) Auto-ID use case: improving inventory visibility in a retail company – impact on existing procedures and information systems. Auto-ID Center White Paper, Cambridge (UK).

  • Rekik Y, Sahin E and Dallery Y (2008) Analysis of the impact of the RFID technology on reducing product misplacement errors at retail stores. International Journal of Production Economics 112 (1), 264–278.

    Article  Google Scholar 

  • Schuster EW, Allen SJ and Brock DL (2007) Global RFID: The Value of the EPCglobal Network for Supply Chain Management. Springer, Berlin.

    Google Scholar 

  • Seiter M, Isensee J and Rosentritt C (2008) Evaluation of RFID investments – the extended performance analysis (EPA) approach. In Proceedings of the 4th European Workshop on RFID Systems and Technologies (RFID SysTech 2008), (STRÜKER J, Ed), 10–11 June, ITG-Fachbericht Vol. 209, VDE Verlag, Berlin.

  • Shang S and Seddon B (2002) Assessing and managing the benefits of enterprise systems: the business manager's perspective. Information Systems Journal 12 (4), 271–299.

    Article  Google Scholar 

  • Smithson S and Hirschheim R (1998) Analysing information systems evaluation: another look at an old problem. European Journal of Information Systems 7 (3), 158–174.

    Article  Google Scholar 

  • Standish Group (1995) Chaos (Application Project Failure and Success). The Standish Group International, Boston, MA, USA.

  • Strassner M (2005) RFID im Supply Chain Management – Auswirkungen und Handlungsempfehlungen am Beispiel der Automobilindustrie (in German), Ph.D. Thesis, Wiesbaden (Germany).

  • Strüker J, Gille D and Faupel T (2008) RFID report 2008 – optimizing business processes in Germany. IIG-Telematik, Albert-Ludwig University of Freiburg, VDI nachrichten, Düsseldorf.

  • Subirana B, Eckes C, Herman G, Sarma S and Barrett M (2003) Measuring the impact of information technology on value and productivity using a process-based approach: the case for RFID technologies. CCS Working Paper No. 223, MIT Sloan School of Management, Cambridge (USA).

  • Tajima M (2007) Strategic value of RFID in supply chain management. Journal of Purchasing and Supply Management 13 (4), 261–273.

    Article  Google Scholar 

  • Tellkamp C (2003) The auto-id calculator: an overview. Auto-ID Center White Paper, St. Gallen (Switzerland).

  • Tellkamp C (2006) The impact of Auto-ID technology on process performance – RFID in the FMCG supply chain. Ph.D. Thesis, University of St. Gallen (Switzerland).

  • Thiesse F, Tellkamp C and Fleisch E (2007) RFID-enabled shelf replenishment with case-level tagging: a simulation study. In Proceedings of the Americas Conference on Information Systems (AMCIS ‘07). (HOXMEIER J, HAYNE S, CHIDAMBARAM L and RAM S, Eds), Omnipress, Madison (USA), 2008.

    Google Scholar 

  • Toraskar K and Joglekar P (1993) Applying cost-benefit analysis (CBA) methodology for information technology investment decisions. In Strategic Information Technology Management: Perspectives on Organisational Growth and Competitive Advantage (BANKER RD, KAUFFMAN RJ and MAHMOOD MA, Eds), Idea Group Publishing, Hershey (Penns., USA).

    Google Scholar 

  • Trigeorgis L (1996) Real Options: Managerial Flexibility and Strategy in Resource Allocation. MIT Press, Cambridge, Mass. (USA); London (UK).

    Google Scholar 

  • Tzeng SF, Chen WH and Pai FY (2008) Evaluating the business value of RFID: evidence from five case studies. International Journal of Production Economics 112 (2), 601–613.

    Article  Google Scholar 

  • Veeramani D, Tang J and Gutierrez A (2008) A framework for assessing the value of RFID implementation by tier-one suppliers to major retailers. Journal of Theoretical and Applied Electronic Commerce Research 3 (1), 55–70.

    Google Scholar 

  • Wang SJ, Liu SF and Wang WL (2008) The simulated impact of RFID-enabled supply chain on pull-based inventory replenishment in TFT-LCD industry. International Journal of Production Economics 112 (2), 570–586.

    Article  Google Scholar 

  • Ward J, Taylor P and Bond P (1996) Evaluation and realisation of IS/IT benefits: an empirical study of current practice. European Journal of Information Systems 4 (4), 214–225.

    Article  Google Scholar 

  • Walsham G (1995) Interpretive case studies in IS research: nature and method. European Journal of Information Systems 4 (1), 74–81.

    Article  Google Scholar 

  • Wen HJ, Yen DC and Lin B (1998) Methods for measuring information technology investment payoff. Human Systems Management 17 (2), 145–153.

    Google Scholar 

  • Yin RK (2003) Case Study Research: Design and Methods, 3rd edn, Sage, Thousand Oaks, CA (USA).

    Google Scholar 

  • Zuboff S (1985) Automate/informate: the two faces of intelligent technology. Organisational Dynamics 14 (2), 5–18.

    Article  Google Scholar 

  • Zuboff S (1988) In the Age of the Smart Machine: The Future Of Work And Power. Heinemann Professional Publishing, Oxford.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Henning Baars.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Baars, H., Gille, D. & Strüker, J. Evaluation of RFID applications for logistics: a framework for identifying, forecasting and assessing benefits. Eur J Inf Syst 18, 578–591 (2009). https://doi.org/10.1057/ejis.2009.32

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/ejis.2009.32

Keywords

Navigation