Simulation study on RFID application to crossdocking operations

Abstract

The rapid advancement and falling prices of RFID technology is gradually encouraging many companies within the supply chain to consider deployment. Its benefits in comparison to the prevalent barcode are opening up a myriad of possibilities envisioned to attaining operational efficiencies. In an era where product lifecycles and order lead times are ever decreasing, RFID seemed poised to be the solution.

Increasing consumer demands necessitate the need for efficient warehousing and distribution operations. Today’s business environments are shifting from supply chain to demand chain, as a result many are faced with minimizing inventory and reducing warehouse cost while keeping retailer’s shelves full. With pressure to reduce inventories, a trend towards smaller and fewer warehouses will transfer warehouse operations into crossdock operations.

The objective of this study is to allow a distribution centre (with warehousing and crossdocking coexisting within the same facility) to maintain its current configuration and practices but with the intent of adopting and integrating RFID with their current Warehouse Management System (WMS). Performance metrics are gathered from 2 simulation models based on barcode and RFID technologies followed by a comparative analysis on performance measures and Return on Investment (ROI).

Our analysis shows that RFID technology proved to be more effective in such a setup with a 31.3% potential increase in throughput and a decreased pallet staytime at the incoming docks of 40.8%. The ROI analysis resulted in nearly 150% returns over a period of 5 years. The results were in line with other related studies.

This project also generated a research paper in collaboration with SIMTech and was showcased at Discovering Engineering 2009 @ NTU.