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Evaluating the impact of RFID on warehouse process performance

29/03/2011RFID IN EUROPE - ACADEMIC WORKSHOP

Angeliki KaragiannakiELTRUN, Dept. of Management Science and TechnologyATHENS UNIVERSITY OF ECONOMICS AND BUSINESS

RFID technology in supply chain processes

• Process-driven value– Physical flow process integration-

process redesign– Object-connected ICT: the

information is physically linked to the products (CASAGRAS, 2009)

RFID reader

RFID tags

chip

antenna

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RFID technology

Integration with Processes

Process performance

General research scope: PROCESS-DRIVEN VALUE OF RFIDWhat is the impact of RFID and its subsequent changes in processes on process performance?

Research Approach

Form Research Objective

Refined Research Questions

MOTIVATION- PROBLEM DEFINITIONApproach: Literature Review

CONFIRMATORY PhaseApproach: Experimental Simulation

HYPOTHESES TESTING

Simulation model on process-driven

value of RFID Factors affecting the impact of

RFID

RFID Assessment between the as-is

vs. to-be processes

EXPLORATORY Phase Approach: Case Study

HYPOTHESES GENERATING

RFID-enabled process redesign:

a reference framework

3PL warehouse

Manufacturing Facility

Retail Distribution Center

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Case 1: a 3PL Warehouse• Background

– 03/2006- 01/2007– 3PL company that deals with paper trading– a manual warehouse system with “some”

computer control – the warehouse consists of a number of parallel

aisles with paper rolls stored alongsides and are piled one on top of the other

• Outcomes– Simulation model of receiving, storage, picking

and shipping processes– Evaluation of the impact of RFID due to

automation in terms of Time savings & Labor utilisation

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Measurement AS-IS model

RFID-enabled model

Comparison Result

% utilisation of scanning labor 9.60% 2.48% Reduced 74%

% utilisation of storing/picking labor 19% 17.17% Reduced 9.6%

% utilisation of unloading/loading labor 3.19% 2.48% Reduced 22.5%

Average time waiting for storing 27.72 26.55 Reduced 4.22%

Average time waiting for scanning 0.21 0.06 Reduced 71.4%

Average time waiting for loading 12.56 11.86 Reduced 5.58%

Case 2: Manufacturing Facility• Background

– 01/2007- 07/2008– a leading food company in Greece

(more than 30% of market share) and one of the largest in Europe- the Frozen Foods Division

– a project partly funded by the General Secretariat for Research & Technology, Ministry of Development of the Hellenic Republic

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• Outcomes– Requirements’ analysis, development and pilot

implementation of a RFID-enabled traceability system within the central warehouse

– Cost-benefit assessment of the proposed RFID system

Case 3: a Retail Distribution Center• Background

– 07/2009- 10/2010– a retail distribution center of one of the biggest supermarket chains in Greece. – a typical retail distribution center that stores a wide variety of products until needed by the

retail location

• Data Collection– On-site observations in the research sites regarding the current production flow, process

operations, processing times, resources and facility layout– Semi-structured interviews in the three research sites with managers and operational personnel– Official records retrieved from enterprise system

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• Outcomes– A more generic simulation model of

receiving, storage, picking and shipping processes

– Test various RFID implementations

Factors affecting RFID implementation

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Factor Description

RFID Tagging Levelrepresents what objects are being passed through the RFID enabled processes

RFID Tagging Process Responsibility

represents who has the responsibility to attach the RFID tags to the objects

NEW Process(RFID LABELING)

Process C (Picking)

Process D (Shipping)

Process B (Put-away)

Process A (Receiving)

…is not supported by RFID…

RFID IMPLEMENTATION 1

Alternative RFID implementations

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Process D (Shipping)

Process A (Receiving)

Process B (Put-away)

Process C (Picking)

…is not supported by RFID…

…is not supported by RFID…

RFID IMPLEMENTATION 2

Functional level Receiving + Shipping

RFID Tagging Level Pallets

RFID Tagging Responsibility Out-source

Functional level Put-away + Picking + Shipping

RFID Tagging Level Cases

RFID Tagging Responsibility In-house

Numerous Alternative RFID Implementations

• Numerous possible ways that the processes can be shaped – Different implementation different value of RFID– no clear cut answer as to which RFID implementation is the

best

• Discrete Event Simulation as a decision support tool– design differently configured to-be implementations and– decide on a specific one based on a credible evaluation of

the alternatives

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Experimental Design

In-houseBy all the suppliers

By the large suppliers

By the large suppliers &

In-house

Pallets Experiment 1 Experiment 3 Experiment 5 Experiment 7

Cases Experiment 2 Experiment 4 Experiment 6Experiment 8

Tagging Level

Tagging Responsibility

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A Retail DC simulation model(SIMUL8 software)

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Simulation Study Steps

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• Process modelling • Level of detail• On-site Observation• Retrieving data from official records• Model validation

Model validation

• Independent T test using SPSS software• Test the null hypothesis that the distribution of the outputs is the same

across categories of simulated and real data • Outputs

– no. of orders per day, no. of pallets receiving for each supplier

• Validation with the managers

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Output Analysis• Run (8 to-be & 1 as-is) Simulation Experiments in the Simul8 Software

– For each experiment, the simulation runs with 30 replications to eliminate the effects of random variants with:

• Warm-Up Period (20 days=4 weeks)– Time-series method– Welch method

• Run-length (70 days=14 weeks)– Robinson (1995) graphical method

• Using the outputs of the experiments, run a two-factor multivariate analysis of variance (MANOVA) in the SPSS software– Independent variables

• tagging level• tagging responsibility

– Dependent variables• labor utilization

– receiving, storage, picking, shipping, overall• time savings

– average queuing time for unloading, scanning, checking-in, storing, checking-out picking time and overall

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Hypothesis H1 Testing RFID effect on Labor Utilisation

Hypothesis H1: “The integration of RFID in warehouse processes has a positive effect on process performance in terms of labor utilisation. This effect varies depending on tagging level and who has the tagging responsibility.”

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AS-IS tagging inhouse

tagging by all the suppliers

tagging by the large

suppliers

tagging inhouse & by the

large suppliers

0.00

20.00

40.00

60.00

80.00

100.00

Tagging Responsibility

Labor Utilization

AS-IS Pallets Cases0.00

10.0020.0030.0040.0050.0060.0070.0080.0090.00

100.00

Tagging Level

Labor Utilization

Hypothesis H2 Testing RFID effect on Time Savings

Hypothesis H2: “The integration of RFID in warehouse processes has a positive effect on process performance in terms of time savings. This effect varies depending on tagging level and who has the tagging responsibility.”

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AS-IS Pallets Cases0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Tagging Level

Time Savings

AS-IS tagging inhouse

tagging by all the suppliers

tagging by the large

suppliers

tagging inhouse & by the

large suppliers

0.001.002.003.004.005.006.007.00

Tagging Responsibility

Time Savings

Tagging Level*Tagging ResponsibilityLabor Utilization

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pallets cases0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Labor Utilisation

as-istagging inhousetagging by all the supplierstagging by the large supplierstagging inhouse & by the large suppliers

Experiment1

Experiment2

Experiment3

As-is

Experiment4

Experiment 5

Experiment6

Experiment7

Experiment8

Conclusions

• RFID deployment within warehouse processes pays off the investment– numerous RFID implementations – each RFID implementation has different value

• Understand the linkages between RFID assessment and simulation for:– evaluating RFID implementations in terms of process-

driven savings (labor hours, processing times, etc.)

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Publications (1)Journals• Chryssochoidis, G., A. Karagiannaki, K. Pramatari, O. Kehagia (2009). A cost-benefit evaluation framework

of an electronic-based traceability system, British Food Journal, 111(6)• Karagiannaki, A. Papakyriakopoulos, D. and Bardaki, C. A framework for identifying RFID-enabled

warehouse settings, Submitted to Industrial Management and Data Systems (IMDS) – to be published 30-Jun-2011, vol:111, iss:5

• Karagiannaki, A., I. Mourtos and K. Pramatari. Measuring the impact of RFID on process performance metrics: a simulation study of the warehouse environment, Submitted to International Journal of Production Economics

• Karagiannaki, A., Pramatari, K. and Doukidis, G.J. Decision Support for the Design of RFID implementations: Toward a Simulation Framework, Submitted to Journal of the Operational Research Society (JORS) – 1st revision

• Karagiannaki, A. and Pramatari, K. The interaction effects of RFID tagging level and tagging responsibility on warehouse process performance, Submitted to the special issue: “Interdisciplinary Research in Operations Management” , International Journal of Production Economics

Book Chapters• Karagiannaki,A., C. Bardaki and K. Pramatari. “RFID and its role in food supply chain” in the book entitled:

“Delivering performance in food supply chains”, Woodhead Publishing (forthcoming) • Karagiannaki,A. and K. Pramatari. “Leveraging RFID-enabled Traceability for the Food Industry: a case

study” in the book entitled “Intelligent Agrifood Chains and Networks: Current Status, Future Trends & Real-life Cases” (forthcoming)

• Andriana Dimakopoulou, Katerina Pramatari, Angeliki Karagiannaki, George Papadopoulos, Antonis Paraskevopoulos. “Investment evaluation of RFID technology applications: An evolution perspective” in the book entitled "Unique Radio Innovation for the 21st Century: Building Scalable and Global RFID Networks“(forthcoming)

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Publications (2)Conferences• Karagiannaki, A., Pramatari, K. and Doukidis, G.J. (2010). Using simulation to design & evaluate RFID implementations in the

supply chain, In the Proceedings of the Operational Research Society Simulation Workshop 2010 (sw10), 23-24 March, Worcestershire, England

• Panousis, K. and A. Karagiannaki (2009). Quantifying RFID-Enabled Traceability for the Food Industry: a Case Study. In the Proceedings of the 4th Mediterranean Conference on Information Systems (MCIS), September 25-27, Athens, Greece

• Karagiannaki, A. and M. Kehagia (2009). Modeling the Warehouse Operations to Quantify the Value of RFID. In the Proceedings of the 4th Mediterranean Conference on Information Systems (MCIS), September 25-27, Athens, Greece

• Karagiannaki, A. and K. Pramatari (2008). Towards a framework for simulating the impact of RFID on different warehouse settings, In the Proceedings of the 15th International Annual EurOMA Conference, June 15-18, Groningen, the Netherlands

• Karagiannaki, A. and K. Pramatari (2008). “The impact of RFID on different levels of packaging for streamlining the warehouse operations”. In the Proceedings of the 1st Panhellenic Packaging Convention of Food & Drinks , March 17-18, Athens, Greece (best-paper award)

• Bardaki,C., A. Karagiannaki and K. Pramatari (2008). A Systematic Approach for the Design of RFID Implementations in the Supply Chain. In the Proceedings of the Panhellenic Conference on Informatics (PCI 2008), August 28-30, Samos, Greece

• Karagiannaki, A. and K. Pramatari (2008). Leveraging Traceability using RFID technology: a case study. In the Proceedings of the Department of Management Science & Technology (DMST) 5th Conference, May 8, Athens, Greece

• Karagiannaki, A., I. Mourtos and K. Pramatari (2007). Simulating and Evaluating the Impact of RFID on Warehousing Operations: a case study. In the Proceedings of the Summer Computer Simulation Conference (SCSC), July 15-18, San Diego, CA

• Bardaki, C., A. Karagiannaki, K. Pramatari (2007). A RFID-enabled Supply Chain Traceability System for The Food Industry. In the Proceedings of TRACE 3rd Annual Meeting, April 26-27, Crete, Greece

• Karagiannaki, A. and L. Oakshott (2006). Simulation for Facility Layout Redesign. In the Proceedings of the 20th European Conference on Modelling and Simulation (ECMS), May 28-31, Bonn, Sankt Augustin, Germany

• Karagiannaki, A., I. Mourtos and K. Pramatari (2006). Evaluating the impact of RFID in supply chain operations by using simulation: A review. In the Proceedings of the Department of Management Science & Technology (DMST) 3rd Conference , May 10, Athens, Greece

• Bardaki, C., A. Karagiannaki, K. C. Pramatari, and I. Mourtos (2006). RFID technology: Simulating the impact on supply chain and demand in retail industry. In the Proceedings of the 21st European Conference in Operational Research (EURO XXI 2006), June 2-5, Reykjavik, Iceland

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Thank you for your attention!

Questions

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