The impact of radio frequency identification (RFID) technology on retail supply chain performance

This research investigates the impact of Radio Frequency Identification Technology (RFID) on supply chain performance within the Australian retail sector. This study examines how the factors associated with RFID influence adoption intentions, taking into account organisational readiness, and consequently, the impact on supply chain performance. RFID is an emerging technology being examined in the retail sector (Sullivan 2004) and a review of literature reveals many benefits associated with adopting RFID (Sarac 2010). Equally, the literature identifies challenges that impact on the capability of RFID (Ngai & Gunasekaran 2009). This research investigates these challenges under the banner of technological, organisational, external environmental and economic context factors. These challenges may be eliminated in the future (Poirier & McCollum 2006) and organisations need to be prepared. Organisational readiness is central to this research and consists of factors such as financial resources, IT knowledge, current IT use, and previous IT implementation (Asif & Mandviwalla 2004; Lekakos 2007). There is a lack of research examining RFID in a retail supply chain setting, and very few include organisational readiness. This research bridges this gap and adopting an exploratory approach, investigates RFID factors using two methods, Analytical Hierarchy Process (AHP) and Partial Least Squares Structural Equation Modelling (PLS-SEM). Initially, managers known to be aware of RFID and operating within retail supply chain organisations were interviewed to gain an understanding for the RFID environment. Following this, an expanded pilot study using AHP enabled a rigorous approach to assess the importance of RFID factors. Respondents consisted of senior managers within two large retailers, five suppliers and five technology provider organisations. In this study, AHP facilitated the ranking of RFID factors based on their perceived importance. The results indicated that technological factors were most important, followed by economic factors with respect to organisational readiness. Within the technological context, standards were the most important factor, and in the economic category, tag costs were also important. Based on the information obtained from the AHP analysis and the literature review a survey was constructed and data collected from a sample of Global Standards 1 (GS1) members. PLS-SEM, a highly regarded quantitative modelling tool, was used to analyse the data obtained from 116 respondents and ascertain predictive relationships. The results indicated a positive relationship between supply chain performance and intentions to adopt RFID. There was also a positive relationship between organisational readiness and intention to adopt. Three factors were found to be important. These included compatibility, security, and IT investment. These factors collectively explain 60.3 per cent of the variance in organisational readiness. However, investment in information technology was identified as the major factor contributing to organisational readiness. The implications of this research highlight the need for organisations to become aware of the factors and prepare for the likely event of RFID challenges being overcome. Managers need to reflect on these results and concentrate on the important factors including IT investment as part of their strategy.