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Posted: August 1st, 2024
PROJECT PROPOSAL
ENHANCEMENT OF THE LOGISTIC SYSTEMS EFFICIENCY THROUGH THE IMPLEMENTATION OF AUTOMATIC IDENTIFICATION
The following study is conducted to a technology complex named automatic identification and data capture technologies with an emphasis on automatic identification technologies and more specifically barcoding and radio frequency identification. The research topic is how the above-mentioned technologies can be used in order to optimize management of material and information flows in logistics and supply chain management. Main questions are the following: what are the automatic identification technologies, how can they be applied in logistics processes, which technology is the most suitable in logistics and how can it be integrated with other technologies, systems and methods in this field. Taking into account the listed questions this paper also presents simulation modeling showing the comparison of radio frequency identification and barcoding in an abstract warehouse system. In the course of work, it becomes obvious that these technologies significantly optimize various logistic processes, and automation is extremely useful and necessary in modern market realities.
Keywords: automatic identification; radio frequency identification; barcoding; simulation modelling
Table of contents
Automatic identification technologies
Comparison of barcoding and RFID
Ways of application in logistics
Integration of RFID and ABC analysis
Information has become the most important resource in any field of human activity. Technologies optimize all sorts of processes: they automate monotonous tasks, reduce time and costs of their execution and increase accuracy and quality of that processes. An information society is a concept which is also related to the economic sphere: each company is able to achieve high efficiency, succeed and outrun competitors only if there is a flexible management system that provides a possibility of making quick decisions. As authors like Korol’ (2008) and Sergeyev, Sterligova, Dybskaya, & Zaytsev (2018). define logistics, it is a process of management, planning and optimization of material and related to them informational, human and financial flows. They also define supply chain as a combination of each element of supply, production and distribution, starting from the moment of raw materials extraction and ending with a final consumer. Supply chain management is a concept which meaning is in an integrated approach to managing and organizing the entire information flow in the supply chain in order to optimize it and increase the aggregate economic effect of this chain. From these definitions it becomes obvious that information is not just an addition to the material flows, but it is essential as a connecting factor between all participants in the supply chain. A comprehensive trend towards automation also plays an important role in this sphere: computerization, electronic data interchange and electronic document flow; It is much more reliable to provide processing and transfer of information to technologies rather than to a person. This is where automatic identification technologies become necessary.
A fast and accurate exchange of information is especially important in logistics due to the fact that information flows accompany materials flows and this exchange is necessary for the successful management. Companies need to carefully build and analyze their supply chains, find and eliminate bottlenecks, improve performance. Technologies play a significant role in these processes by supplying data to managers in fast and accurate way. When it comes to shipment, transportation, storage and other related operations automatic identification technologies are especially important as a method of fast and accurate data transfer, ensuring transparency of business processes in the supply chain. Progress is moving forward, new perspectives are now open for new technologies, however not everyone is ready to switch to innovations due to low awareness about difficulty assessing potential losses and benefits.
The novelty of this work lies in the fact that there are few information sources that would spell out the practical benefits of using these technologies with a fairly low level of abstraction and at the same time not in general terms but rather specific possibilities and aspects of using automatic identification in logistics. Most often technologies are considered either separately without practice or vice versa in a very specific research. In addition, in the scientific publications the calculation of economic results is considered poorly.
Thesis of this paper is the following: automatic identification technologies are extremely useful and necessary in logistics, their improvement and integration with other technologies is also essential and will bring a significant reduction in costs, losses and mistakes in logistics operations. Thus, the chosen topic of automatic identification and its implementation in logistics is extremely relevant and useful for research. Research question is that it is necessary to disassemble such technologies, their areas of application and their benefits. Following from this, the research aim of this work is to describe automatic identification technologies and their application in logistics. To accomplish this goal, there is a list of research objectives that should be done:
1) to study the technology of automatic identification;
2) to identify possible ways and areas of the technology application in logistics;
3) to compare the technologies and finde the most useful one;
4) to identify possible concepts for further development;
6) to develop a simulation model of the logistics system in order to visualize the benefits of implementation of the technology.
The paper organization is determined by the above-mentioned objectives. The first part considers the literature review with theoretical and practical study of automatic identification technologies with the main topic and terms definitions. The second part is the methodology of study, which consists of the ways the research is done. Then there is a list of the expected results of the research and a final conclusion.
In this section the main points of the research are listed with brief description and references to the points of view of the authors’ scientific works this research is based on. The first topic is a description of what automatic identification technologies are.
Automatic identification technologies
The automatic identification technologies are a part of the automatic identification and data capture technologies complex; all of them are used for automated collection and entry of data about an object into a computer system with minimal or even without any direct human intervention in order to bypass manual input by encoding data into a portable computer readable form. This complex includes barcoding and radio frequency identification (abbreviated in RFID), which can be widely used in logistics. In general, principle of operation of such technologies in logistics consists of assigning an identifier to an object, entering it into a carrier (barcode or RFID tag) and then reading it with a scanner (McFarlane & Sheffi, 2003). In logistics the most spread technology is barcoding, which is based on the optical recognition of a combination of characters. Barcodes are divided into one-dimensional and two-dimensional, the main practical difference between them is their data capacity (Kumar & Kumar, (2014). In RFID radio frequency electromagnetic radiation is used to automatically identify physical objects. Radio frequency identification tags (small transponders, where the data is stored) are sometimes (for example by the Lahiri (2005)) positioned as an enhanced and intelligent barcode. These two technologies in some aspects are similar indeed and their comparison is relevant at least due to the fact that they both are the part of one technology complex.
Comparison of barcoding and RFID
RFID is much more promising than barcoding. It exceeds barcoding in many ways: it does not require a human operator and eye contact to read the stored data; there is an increased range and speed of reading; much higher data capacity and other benefits. However, it has a significantly higher costs of equipment and some of the types of RFID tags are affected by radio frequency interference (Lotlikar, Kankapurkar, Parekar & Mohite, 2013; Yevseyev, Zavalishin, Talalayev, Proskuryakov & Anufriyeva, 2014). In addition, the above-mentioned authors assume that RFID technology is one hundred percent accurate, while barcodes can be scanned erroneously. Nevertheless, Lahiri (2005) claims, that the facts about accuracy are wrong and it depends on many factors (object material and economic field), also the author pretends that no researches and experiments have been done on topic and all the statements about the accuracy are only theoretical. However, the RFID system is unequivocally more efficient and promising technology compared to barcoding.
Ways of application in logistics
The automatic identification technologies optimize processes in warehousing, transportation, administration, planning, security, and many other areas (McFarlane & Sheffi, 2003). The main benefits of using barcodes and especially RFID are: reduced costs, manual labor, errors and time to perform an operation; also it allows to increase productivity, speed and flexibility of various logistic processes by enhancing accuracy and quality of these operations. Radio frequency identification can serve as a tool for optimization in the following industries: warehousing (for automation of warehouse processes) (Lim, Bahr & Leung, 2013); tracking and identification of moving objects in real time from tracking a train to documents and any other objects involved in logistics operations (Suriya, 2013); automation of processes in production and their control; baggage handling and delivery; counterfeit prevention and a large amount of other applications (Lahiri, 2005).
Warehouse management system. Special attention should be paid to the storage area, where automatic identification can be used as effective as it possible to automate almost all processes (Lim, Bahr & Leung, 2013). This is largely provided in conjunction with the Warehouse Management System (WMS). WMS is extremely useful for managing large warehouse facilities, distribution centers and terminals. This system significantly helps to automate the main functions performed by the warehouse like cargo acceptance, placement and shipment. For the warehouse management system it is very important to enter information about a cargo and its characteristics. If these processes are carried out manually, then the probability of errors, stagnation and damage to the goods is high; this is where automatic identification technologies play their roles. Through barcodes or much more effectively RFID tags, information is quickly and accurately entered into the system.
Internet of Things. Tu, Lim & Yang (2018) claim that nowadays one of the main trends in the development of information technology in logistics is the concept of the Internet of Things (IoT). The Internet of Things is a network connection of physical objects and their interaction with each other by using such technologies as Bluetooth, Wi-Fi, mobile Internet connection, sensor technologies and RFID. The concept is not aimed specifically at logistics but its application has been found in it across all supply chains including warehouse operations, freight transportation and manufacturing. In general, the Internet of Things is a complex model of automation and full transparency of business processes. RFID like the other technologies mentioned provides access to information and also directly collects it from the environment (for example, tags can report changes in weather conditions or collect and send information about a particular driver’s driving style). The tags connect to the network and identify any item or equipment, and the wireless networks link them together.
ABC analysis. Automatic identification technologies can be integrated not only with other technologies and systems in logistics but with economic models and methods. The example this is ABC analysis. ABC analysis is a method of locating goods in a warehouse according to its parameters, for example a turnover. With the RFID it can be updated in real-time and the storage cell can be changed due to a rise or fall in turnover of a particular type of goods (Gusev, 2011).
In the research methods of studying will be used on the theoretical and empirical levels. The theoretical level includes learning scientific publications on both Russian and English languages, such as articles, journals, monographs, conference proceedings. Then will be done such methods as generalization and systematization of the received information, its analysis, synthesis and creation of a complex display of actuality. Empirical research will include studying the real data about companies and their economic indicators while implementing automatic identification technologies, also some of the parameters are expected to be get from simulation modelling.
Ganyukov, Khanova & Suldina (2012) affirm that a simulation model displays a real object in the system with its internal and external relations and checks how it will work under certain conditions. Thus, a model of a conditional warehouse system in the program named AnyLogic will be created, reflecting the difference in the processing of cargo units based on barcoding and radio frequency identification (Dejam, 2015). This will be done on the basis of queuing theory, according to this theory there will be simulated an incoming flow of requests which is then processed by the service channels (Kachanova, 2009).
Integration of RFID and ABC analysis
ABC analysis, for example, can be used to place new shipments in the storage area in accordance with how quickly customers buy this particular product in the store, thereby filling the goods on the shelves in large stores could be done more quickly. By itself, ABC analysis works as follows: depending on the turnover, a group of goods is determined: group A – the most important product group, providing up to 80% of the economic result, makes up 20% of the stocks; Group B – the average in importance product group of goods, giving 15% of the result and constituting 30% of stocks; Group C is a problematic assortment group that yields 5% of the result and constitutes 50% of stocks. This group differentiation can be done in many ways and it is expected to choose the most appropriate one (Gusev, 2011).
The data for the selected methods will be obtained by analyzing the literature, annual reports and articles where the comparison between the barcoding and radio frequency identification was made. From companies’ annual reports it is expected to get real empirical data in which will be represented how a technology was implemented and how it helped to reduce costs or improve speed of process execution.
The anticipated result of the study will be the comparison between automatic identification technologies with the aim of finding the best one. The research will confirm or reject the hypothesis that radio frequency identification is an innovation which should be implemented and become a great replacement of barcodes. The expected outcome of this study is simulation model of a warehouse and experiments which will represent the difference between these two technologies graphically. It is expected that the paper will demonstrate the perspectives of implementing RFID technology in logistics. Also there will be information, with the help of which companies will be able to understand which automatic identification technology is more suitable for their supply chains. Besides, the study is supposed to provide ways and example of economic evaluation of such an implementation with approximate payback periods.
To sum up, the research will prove that information is the most important resource of the company nowadays, thus methods of work with it directly affects the overall efficiency and competitiveness of the company. The purpose of automatic identification technologies is to optimize the information flow, which is a necessary part of the material flow and the connection between the elements of the supply chain.
Automatic identification technologies are successfully used in trade, production, warehousing, construction, agriculture, pharmaceuticals and other fields. The main benefits of them are: speeding up, cheapening and simplifying operations, increasing their quality and reducing errors. In logistics, they are used to track and identify goods and vehicles, as well as their condition; optimization of warehousing and inventory; automation of various operations, including production; prevent counterfeiting and theft; monitoring and controlling various operations; increased safety; planning and administration. In addition, the study will define how the technology of radio frequency identification overcomes barcoding in almost all aspects of application.
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