RFID receiving systems at Paramount farms

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Radio Frequency Identification

The RFID concept first emerged as a military technology during the 2nd world war, as a way of identifying friendly aircrafts using radar echo. The technology has developed and gone through substantial refinement. However, it is first in rather recent years that is has been made commercially feasible. RFID as such is of a very broad nature and can be applied to a multitude of contexts, making it a potential technology and an area of possible growth. Recent development has made the so-called RFID tags cheaper, thus enhancing its overall financial feasibility. The technology can be used in order to improve business processes, cost-effectiveness, and to remove waste and loss revenue. In terms of logistics, the technology could be used to more accurately track parcels and packages, thus rationalizing the logistics process. However, in order to understand the feasibility of implementing RFID in the PNL logistics process, it is key to understand the technology, its technical strengths and weaknesses. These constitute a major core issue in this thesis and will be presented further below, as well as in chapter five.

Classifying RFID benefits

In order to sort the different dimensions and the impact RFID may have on organizations, the benefits are divided in the below categories to monitor possible effects and benefits on different levels of the organization and its customers. Parts of this framework is influenced by Shari Shang and Peter B. Seddons ideas on how to develop a framework for “Assessing and Managing the Benefits of Enterprise Systems: The business Manager’s Perspective” (Seddon, Shanks & Willcocks, 2003). This is by no means covering all beneficial aspects or implications that RFID may have on PNL, but will serve as a base for further discussion and analysis in later sections of the thesis. The similarities of impact from ERP systems (Enterprise Resource Planning Systems) and RFID are in many areas the same and the proposed framework dimensions are quite broad and general, hence serving the purpose of a benefit evaluation framework for PNL. The target audience for this thesis is top management at strategic level, managers and “process owners” (Hammer & Champy, 1993) at the managerial level. An RFID implementation in PNL will also affect operations and customers. Process owners refer to middle managers that are responsible for management control and tactical planning issues. In combination with an awareness of, and alignment with, overall business strategy they serve as a link between business strategy and business operations. Another important aspect before suggesting a framework is the time frame employed. PNL is looking at RFID from both a long term and a short term perspective. Customers and competitors actions also play a significant role when evaluating value creation from RFID. Of that reason, a broad frame for benefit evaluation is used and may serve both the longterm and the shorterm perspective.

Managing risk

The authors realize that this study will portray RFID in a predominantly positive way. This is inevident due to the nature of the technology and how it has performed in the past. RFID offers a number of promising advantages, both in terms of potential for cost savings and added value. Furthermore, RFID has come to serve others industries and has proved to be financially feasible for many. However, an investment of this magnitude should be thouroughly investigated from many perspectives before considering investing. The following section provides a brief risk perspective on IT-investments in general. Furthermore, a number of perceived risks are identified in appendix two. The empirical/analysis section (see chapter five) presents a number of perceived risks applied to PNL. Though the risk perspective is important, it is not possible to fully cover and forecast all risks. A brief risk perspective is included in this thesis in order to provide the end user with an understanding that risks are important to consider and manage, especially when invest-13 ing in complex and new IT-technology. In this thesis, risks are presented in order to provide an initial understanding

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Evaluating benefits and risks

Following the previously outlined framework for RFID benefits and risks, findings at PNL are here presented accordingly. In appendix 1 and 2 is an evaluation of the benefits and risks that are evident for PNL. In this chapter the most prominent benefits and risks are emphasized and discussed. The purpose of this discussion is to establish a foundation of values that are worth measuring and monitoring to be able to fully comprehend the value creation from an RFID implementation. The grading of benefits and risks are given values according to impact and probability. A scale from 1 to 5 is used where 1 represents the lowest value (of impact and probability) and 5 the highest. Impact and probability are then multiplicated to have a rating of importance for each specific benefit or risk to be monitored. As evident in the appendices, many of the benefits are overlapping and occur in more than one dimension. Those benefits are put in parenthesizes. Multiple occurrences show that impact is evident on more than one level in the organization (strategic level, managerial lever and operational level) and/or have a customer or financial impact as well.

Applying balanced scorecard on business opportunity 1

The above mentioned benefits are directly linked to the proposed implementation at the HUB in Jönköping and can be fairly easy to identify (and measure). Following the reasoning with a broader perspective, it is also likely that a number of non-measurable (or hard to measure) benefits are derived from an RFID implementation. Examples of these can be seen in appendix 1, which is a framework for grading impact and probability of occurrence of benefits. Depending on the level of RFID implementation the grading of benefits will also be different. Therefore the framework should be regarded as a tool to find out what needs to be monitored in order to confirm value creation. Below follows the different dimensions of a Balance Scorecard that are chosen to evaluate the business opportunity with RFID at the HUB in Jönköping and what has been identified as important measures and objectives for PNL. The scorecard is here used solely as a tool to monitor what needs to be measured related to an RFID implementation.

Table of Contents :

1 Introduction
- 1.1 Problem
- 1.2 Purpose
- 1.3 Research questions
- 1.4 Disposition
2 Background
- 2.1 Pan Nordic Logistics
  - 2.1.1 Strategy and vision
  - 2.1.2 Lean thinking
  - 2.1.3 Goods Flow
- 2.2 Radio Frequency Identification
3 Frame of reference
- 3.1 Classifying RFID benefits
  - 3.1.1 Strategic
  - 3.1.2 Managerial
  - 3.1.3 Operational
  - 3.1.4 Customer
  - 3.1.5 Financial
- 3.2 Managing risk
  - 3.2.1 IT Productivity paradox
  - 3.2.2 IT Project failures
- 3.3 Literature review and case studies
  - 3.3.1 United States Defense logistics
  - 3.3.2 RFID receiving systems at Paramount farms
  - 3.3.3 Lahey clinic managing healthcare assets using RFID
- 3.4 Measuring performance
- 3.4.1 Using Balanced Scorecard to measure and monitor performance
4 Methodological considerations
- 4.1 Limitations and delimitations
- 4.2 General methodological considerations
  - 4.2.1 Empirical findings and analysis
- 4.3 Interpretation and analysis
5 Results and analysis
- 5.1 Evaluating benefits and risks
  - 5.1.1 Strategic
  - 5.1.2 Managerial
  - 5.1.3 Operational
  - 5.1.4 Customer
- 5.2 Balanced Scorecard used on business opportunities
- 5.3 Business opportunity 1 – The HUB in Jönköping
- 5.4 Applying balanced scorecard on business opportunity
- 5.5 Other business opportunities
  - 5.5.1 Bulk goods
  - 5.5.2 Steel Cages
  - 5.5.3 RFID as facilitator for an automated conveyer belt
  - 5.5.4 RFID at a customer DIP
  - 5.5.5 RFID on the trucks