Paper Type
Completed Research Paper
Abstract
Many companies do not consider adopting radio frequency identification, or RFID, technology because of the uncertainty of return on investment and the lack of business cases demonstrating its profitability or efficiency. This study investigates whether companies that have adopted RFID technology have better financial performance ratios in the U.S. retail industry. Companies using RFID technology have significantly higher operating income margins, lower inventory ratios, and lower per-employee costs. A regression analysis shows that inventory efficiency and cost efficiency do impact profit margins. The analysis also reveals that maintaining a low-level inventory ratio creates higher profit margins, but more research is still needed to demonstrate that higher profits result when companies adopt RFID technology.
Recommended Citation
shin, seungjae and Eksoglu, Burak, "Effects of RFID Technology on Profitability and Efficiency in Retail Supply Chains" (2013). AMCIS 2013 Proceedings. 7.
https://aisel.aisnet.org/amcis2013/eBusinessIntelligence/GeneralPresentations/7
Effects of RFID Technology on Profitability and Efficiency in Retail Supply Chains
Many companies do not consider adopting radio frequency identification, or RFID, technology because of the uncertainty of return on investment and the lack of business cases demonstrating its profitability or efficiency. This study investigates whether companies that have adopted RFID technology have better financial performance ratios in the U.S. retail industry. Companies using RFID technology have significantly higher operating income margins, lower inventory ratios, and lower per-employee costs. A regression analysis shows that inventory efficiency and cost efficiency do impact profit margins. The analysis also reveals that maintaining a low-level inventory ratio creates higher profit margins, but more research is still needed to demonstrate that higher profits result when companies adopt RFID technology.