'SMART GOODS' AND MOBILE RFID: A CASE WITH INNOVATION FROM VOLVO

Journal of Business Logistics, 2006 by Holmqvist, Magnus, Stefansson, Gunnar

This paper presents a case from Volvo that explores an innovative RFID solution that leverages the exiting infrastructures of mobile usage. 'Smart goods' is used to explain features applied through Radio Frequency IDentification, utilization of cellular networks (GSM/GPRS) and web technology together with collaboration among supply chain actors. This has reduced traditional barriers of entry. An empirical case provides the basis for evaluation from the perspectives of operational reliability, usability and productivity.

Key Words: IS/IT Development and Implementation, Mobile RFID, Smart Goods, Collaboration

BACKGROUND

Today, the interest in RFID (Radio Frequency Identification) technology has resulted in various development and implementation activities at Volvo and other companies. Frequently the technology only substitutes for the traditional bar-code and is not used in an innovative solution to improve supply chain performance and collaboration.

RFID is emerging as a technology that is utilized for automatic identification of products and load units in different logistics contexts. The supply chain management context of today is increasingly complex, with global flows, just-in-time deliveries, customer demands for real-time track and trace capabilities, etc. Complexity and uncertainty are prevailing and a better understanding can be gained through research that provides contextualisations in areas such as aftermarket logistics. The large numbers of stakeholders in the supply chain and the desire to manage and control these complex supply chains demand better possibilities for data capture and increase of data capacity. The current developments are increasing the usage of advanced IS/IT solutions for logistics functions (Bowersox and Daugherty 1995, Stefansson 2004, Holmqvist & Pessi 2004). IS/IT development and implementation is considered as a critical issue. At the same time, logistics operations exist in a competitive environment and must secure fast and healthy return on each investment. Consequently, important considerations need to be made regarding how to manage this context.

The implementation of new technologies and switch over from already established solutions, for example bar-codes, does not come free of charge. Baskerville et al. are addressing the need of agility from both business and IT perspectives while implementing and using new technology (Baskerville et al 2005). Most RFID solutions involve fixed and costly infrastructure installations where reading antennas and related equipment, network and communication systems as well as integration towards legacy systems need to be established. Such RFID solutions are only financially justified in setups with high volumes and high value items. Consequently, most implementations are based on closed-loop systems (Finkenzeller 2003; Fasth et al. 2005). Closed-loop systems refer to an intra company set-up where there is only one actor developing, implementing and utilizing the benefits of RFID, for example controlling assembly racks within a manufacturing plant without interaction between supply chain actors (actors are here used to describe both general participants in the supply chain as well as partners). An inhibiting factor for collaboration and more open systems is that the standardization of applying RFID is emerging but there are still implications since the standards are not (yet) widely used. An open system refers to a set-up in which several actors are collaborating and reaping the benefits of a RFID implementation, for example assurance of delivery along the supply chain.

The motivation behind the research presented in this paper is to explore how RFID can be utilized in more mobile and innovative ways and by that create new opportunities. In focus is a case including a setup of a mobile RFID solution using cellular networks (GSM/GPRS) together with web technology, and has been evaluated from the perspectives of operational reliability, usability and productivity. A mobile RFID solution that may leverage existing infrastructure, reduce integration needs and enable smooth collaboration can facilitate learning, usage and simplify implementations. By using the RFID tag as carrier of data, instead of other integration/data transfer it is possible to give the goods identification 'smart' features. 'Smart goods' are characterized by a higher level of sophistication than traditional goods identification. 'Smart goods' enhance supply chain performance through collaboration by enabling improved access, capture, usage, modification, dissemination and verification of information. The 'smart goods' capability is derived from utilization of RFID, cellular networks and web service technology.

This paper is part of several years of collaborative research between academia and industry, based on in-depth access to characteristics of Volvo and their aftermarket supply chain. The objective is to explore the business value in a new RFID setup. The results may assist practitioners concerned with RFID initiatives and nurture the academic discussion in logistics and IS/IT in general and evaluation of 'smart goods' and mobile RFID in particular.