An investment evaluation of supply chain RFID technologies: A normative modeling approach In Leea, , and Byoung-Chan Leeb, a Department of Information Systems and Decision Sciences, College of Business and Technology, Western Illinois University, Stipes Hall 431, Macomb, IL 61455, USAb Department of Business Administration, Graduate School, Keimyung University, Taegu, South KoreaReceived 24 April ; accepted 13 February . Available online 18 February . AbstractAs Radio Frequency Identification (RFID) technology advances rapidly and major retailers start to push their suppliers to adopt the technology, RFID costbenefit analysis has become a subject of great focus. RFID complements or replaces barcode systems and traditional manual tracking systems to identify, retrieve, track, and store merchandise automatically. The adoption of this technology is gaining momentum rapidly as technological, societal, and competitive pressures push firms to transform and innovate themselves. Because of the potential benefits gained and high investment costs incurred by RFID, firms need to carefully assess every RFID opportunity and challenge to ensure that their resources are spent judiciously. This paper presents the Supply Chain RFID Investment Evaluation Model, and provides a basis for enhancing our understanding of RFID value creation, measurement, and ways to maximize the value of RFID technology. A future research direction is also discussed.Keywords: RFID; Supply chain; InvestmentArticle Outline1. Introduction 2. Literature review 2.1. Supply chain RFID 2.2. RFID valuation methods3. The Supply Chain RFID Investment Evaluation Model 3.1. RFID investment in the ordering efficiency 3.1.1. The minimum demand level for RFID investment in the ordering efficiency3.2. RFID investment in the JIT efficiency 3.2.1. The minimum demand level for RFID investment in the JIT efficiency3.3. RFID investment in the operating efficiency 3.3.1. The minimum demand level for RFID investment in the operating efficiency3.4. Simultaneous RFID investment decisions4. Analysis of RFID investment with an illustrative scenario 5. Conclusions References1. IntroductionGlobal competition, short product life cycle, and information technology (IT) advances have rapidly changed the ways firms operate their businesses. These changes have driven firms to cut costs, innovate their products/services, and redesign their business processes. Radio Frequency Identification (RFID) technology is one of the emerging technologies that are being used by a number of organizations such as manufacturers, retailers, logistics providers, hospitals, and libraries. The timing and magnitude of the RFID adoption and related process redesign have become more critical than before as firms strive to use RFID technology at an unprecedented rate. RFID technology shows great potential for process improvement and cost reduction related to supply chain management. The supply chain has become the central organizing unit in todays global industries (Miles and Snow, ). Furthermore, in todays environments in which competition is among supply chain networks rather than individual firms, firms are confronted with the need to effectively manage increasingly extending supply chain activities beyond the boundary of the firms (Patnayakuni et al., ). As firms extend supply chain activities beyond the boundary of the firms, the need for new inter-firm information technologies has increased significantly. RFID technology is the most advanced technology for supply chain integrity and traceability (Kumar and Budin, ). As evidenced by Wal-Marts recent RFID mandate to its suppliers, RFID has received significant attention as a viable supply chain management technology. RFID invested in supply chain is expected to enhance information sharing and collaboration between supply chain partners due to its automated data collection and transmission capabilities. A recent case study on a system of integrating mobile commerce and RFID applications illustrates that the RFID provides greater visibility of the operations data and improves the control processes (Ngai et al., ).RFID technology management is a process of evaluating RFID technology, developing RFID systems, and managing RFID infrastructure to achieve business objectives. In the evaluation stage of RFID technology, managers identify potential business processes, explore different technologies, assess the costbenefits of alternative technologies, and choose the best technology. Despite the popularity of RFID technology, the disappointingly slow return on RFID investment forced senior managers to scrutinize the investment opportunity more closely and to reshape their existing RFID initiatives. As RFID projects often compete with other IT projects for the scarce resources, the fundamental questions for RFID adoption are whether RFID technology can create a value that will justify its investm