RFID-Enabled Shelf Replenishment with Case-Level Tagging: A Simulation Study

This contribution tries to quantify the value of RFID data in the FMCG supply chain for a specific application scenario. We consider the use of RFID in the shelf replenishment process in retail stores and present a simulation study on the impact of improved data quality on product availability. First, we show that RFID allows for the redesign of in-store processes which perform more efficiently regarding profits and stock-outs depending on technology costs (i.e. tag costs) and capabilities (i.e. RFID read rates). Further influence factors that need to be considered in detail are personnel costs, inventory holding costs, the respective product’s demand rate as well as other characteristics of the logistical process (e.g. case size). Second, our results indicate that in many cases the maximum benefits can only be drawn from RFID use if decisions on the optimization of shelf space are being made in parallel.