The impact of RFID on management of returnable containers

Abstract

Inventory shrinkage is a common problem in the management of returnable containers. RFID-based container tracking systems have been proposed as a possible solution. Benefits of RFID-based tracking of returnable transport items such as pallets, kegs and boxes are documented in several case studies, but have so far hardly been analyzed from a theoretical perspective. In this article, we analyze the impact of RFID on container management using a deterministic inventory model. The analysis focuses firstly on inventory control for which we deduce changes due to RFID for the optimum policy. We then turn to the profitability of the RFID system and determine relevant relations of costs and benefits. Finally we analyze alternatives of implementing an RFID-based container tracking system. These alternatives are analyzed with respect to diffusion speed and profitability.