RFID tracking implementation model for the technical trade and construction supply chains

Highlights

• Improved tracking could contribute many of the current material handling problems.

• RFID is widely used in numerous industries, but in construction, the use is scarce.

• Construction companies are not interested to be active adopter of RFID tracking.

• Main HPAC manufacturers and wholesalers are adopting RFID tracking in Finland.

• If HPAC wholesalers adopt RFID first, construction companies can join to same system.

Abstract

The use of RFID (Radio Frequency Identification) tracking has increased considerably in supply chain management during the past ten years. Despite the large diffusion of the technology, the use of RFID tracking has remained scarce in the construction industry despite the intense research. The particular design and temporary operating sites of the construction supply chains delay the diffusion, because the best-known RFID tracking systems in other industries are mainly designed to support the retailers' processes. The particular supply chain structure of construction industry, demands different business logic to build and gain benefits of RFID tracking systems. This paper presents RFID tracking implementation model for technical trade and construction industries. The approach for building feasible model was Technology Acceptance Model. The model design is based on the research project, where 16 manufacturing and wholesaler companies of technical trade were involved, and survey where customers of these manufacturers and wholesalers were interviewed.

Introduction

The use of Radio Frequency Identification (RFID) for tracking in supply chains has increased in the past ten years. RFID tracking is used in closed-loop operations in manufacturing, in streamlining processes in distribution centers, and in retailing [1], [2]. Even if most of the current RFID tracking systems in use are designed to improve certain supply chain member's operations or specific task, the aim for RFID tracking system research has been to create an open standardized system, which could benefit the whole supply chain as most of the current barcode systems do today [3], [4], [5].

In a traditional supply chain, which consists of manufacturers, distribution centers and retailers, the more downstream in the supply chain the bigger the benefits are [6], [7]. Therefore, the majority of existing RFID tracking solutions have been designed for the purposes of a single retailer, and not for supply chain-wide system. As an illustration, consider one of the best-known and largest RFID tracking implementations by Wal-Mart, the U.S.-based retailer. The implementation is based on Wal-Mart's strong position as a buyer with power and control over suppliers. Suppliers attach RFID tags only on shipments to Wal-Mart, and only because they are obliged to do so. Very few suppliers even consider using RFID tracking in their own operations and see little benefits of RFID tracking for their operations [7].

If supply chain-wide RFID tracking system is seen as an extension of retailers' tracking system, building a tracking system for industries where the retailers have a minor role can be regarded to be challenging. The construction industry is part of this kind of industry as the products are mainly used by construction contractors or industrial companies, who source the products from the technical trade wholesaler. There are some retailers such as hardware stores or electrical and pipe supplies shops, but these stores handle only a small share of the total volumes of the industry. Therefore, building a supply chain-wide RFID tracking system for this industry based on retailers' need is not plausible.

Despite the low diffusion of applications of RFID tracking in the construction industry, the literature highlights the potential benefits of the technology for the industry and proposes useful application areas [8], [9], [10]. However, in this paper, we assume that the supply chain design in the technical trade and construction industries differs essentially from those supply chains where the use of RFID tracking applications is larger, and therefore technical trade and construction companies' motivation for adopting RFID tracking is different than those companies acting in supply chains dominated by retailers. In retail-driven supply chains, retailer companies try to improve their processes with support of their suppliers as in Wal-Mart's supply chain. Thus, the purpose of this paper is to study a possible implementation of RFID tracking to selected case supply network, the Finnish technical trade and construction, where the majority of the products are delivered by other distribution channels than retail stores. The research question is formulated as:

How should a supply chain-wide RFID tracking system be implemented in the Finnish technical trade and construction industries?

The objective of the paper is to define a conceptual model for the implementation, based on the ideas of Davis [11] about Technology Acceptance Model (TAM). The first approach of TAM, perceived usefulness, is studied by researching potential benefits of RFID tracking in technical trade supply chain. The second approach, perceived ease-of-use, is studied by analyzing the companies' motivation and effort needed to adopt RFID tracking in different phases of supply chain. The defined model needs to fulfill both approaches.

The paper is divided into six sections. After the introduction, the theoretical background of tracking and RFID adoption is presented and the lack of literature around the research question is expressed. The third section presents the used methodology. The case supply chain is presented, and results of the survey conducted are analyzed in the fourth section. Based on the analysis, the fifth section presents the proposed model for adoption of RFID tracking in technical trade and construction industries, and, finally, the sixth section discusses the results of the paper and suggests further research topics.