Effect of RFID technology on Profitability, Productivity, and Efficiency in U.S. Retail Supply Chains: Financial Ratio Analysis
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Dissertation - Open Access
Ten years have passed since Wal-Mart’s public announcement about its RFID technology adoption plan in 2003. Some large competitors of Wal-Mart in the U.S. retail industry jumped on the trend of RFID technology adoption. However, many U.S. retailers do not consider adopting RFID technology because of the uncertainty of return on investment and the lack of business cases demonstrating its profitability, productivity, or efficiency. This study investigates whether RFID companies have better financial performance ratios in the U.S. retail industry. RFID retailers have significantly higher operating margin, lower days-in-inventory, and lower per-employee costs. Compared with pre-RFID, the RFID retailers did not improve profit ratios after they adopted it, but their days-in-inventory ratio and sales efficiency improved significantly. Compared to small RFID retailers, large RFID retailers show greater inventory management efficiency and sales efficiency. Regression analyses show that inventory management efficiency does impact gross margins, but the impact of cost efficiency is negligible. RFID retailers have a positive relationship with gross margin increases. The regression analyses using the Cobb-Douglas production function show that the RFID retailers have a little higher labor productivity than non-RFID retailers. In summary, the analyses reveals that RFID retailers have a better record of maintaining an efficient inventory management and higher labor productivity, but more research is needed to demonstrate the relationship between cost efficiency and profitability.
Shin, Seungjae, "Effect of RFID technology on Profitability, Productivity, and Efficiency in U.S. Retail Supply Chains: Financial Ratio Analysis" (2013). Theses and Dissertations MSU. 1682.