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Evaluating the impact of RFID on warehouse process performance

Evaluating the impact of RFID on warehouse process performance. Angeliki Karagiannaki ELTRUN, Dept. of Management Science and Technology ATHENS UNIVERSITY OF ECONOMICS AND BUSINESS. 29/03/2011 RFID IN EUROPE - ACADEMIC WORKSHOP. RFID technology in supply chain processes.

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Evaluating the impact of RFID on warehouse process performance

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  1. Evaluating the impact of RFID on warehouse process performance AngelikiKaragiannaki ELTRUN, Dept. of Management Science and Technology ATHENS UNIVERSITY OF ECONOMICS AND BUSINESS 29/03/2011 RFID IN EUROPE - ACADEMIC WORKSHOP

  2. 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 chip RFID technology Process performance Integration with Processes antenna RFID tags • General research scope: PROCESS-DRIVEN VALUE OF RFID • What is the impact ofRFID and its subsequent changes in processes on process performance? 2

  3. Research Approach MOTIVATION- PROBLEM DEFINITION Approach: Literature Review Form Research Objective CONFIRMATORY Phase Approach: Experimental Simulation HYPOTHESES TESTING EXPLORATORY Phase Approach: Case Study HYPOTHESES GENERATING RFID Assessment between the as-is vs. to-be processes Refined Research Questions 3PL warehouse Simulation model on process-driven value of RFID RFID-enabled process redesign: a reference framework Manufacturing Facility Factors affecting the impact of RFID Retail Distribution Center 3

  4. 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 4

  5. 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 • Outcomes • Requirements’ analysis, development and pilot implementation of a RFID-enabled traceability system within the central warehouse • Cost-benefit assessmentof the proposed RFIDsystem 5

  6. 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 • Outcomes • A more generic simulation model of receiving, storage, picking and shipping processes • Test various RFID implementations 6

  7. Factors affecting RFID implementation 7

  8. Alternative RFID implementations RFID IMPLEMENTATION 1 Process C (Picking) Process B (Put-away) Process D (Shipping) Process D (Shipping) Process A (Receiving) Process B (Put-away) Process C (Picking) NEW Process (RFID LABELING) Process A (Receiving) …is not supported by RFID… RFID IMPLEMENTATION 2 …is not supported by RFID… …is not supported by RFID…

  9. 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

  10. Experimental Design Tagging Responsibility Tagging Level 10

  11. A Retail DC simulation model(SIMUL8 software) 11

  12. Simulation Study Steps • Process modelling • Level of detail • On-site Observation • Retrieving data from official records • Model validation 12

  13. 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 13

  14. 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 14

  15. 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.” 15

  16. 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.” 16

  17. Tagging Level*Tagging ResponsibilityLabor Utilization As-is Experiment1 Experiment 5 Experiment2 Experiment7 Experiment3 Experiment6 Experiment8 Experiment4 17

  18. 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: • evaluatingRFID implementations in terms of process-driven savings (labor hours, processing times, etc.)

  19. 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 toIndustrial 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 toInternational 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 toJournal 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, AngelikiKaragiannaki, 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) 19

  20. 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 theProceedings 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 theProceedings 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 theProceedings 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 20

  21. Questions Thank you for your attention! 21

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