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Analysing RFID Adoption within the South African Container Supply Chain

Analysing RFID Adoption within the South African Container Supply Chain. Lisa Seymour, Emma Lambert-Porter & Lars Willuweit UCT – IS Department Research Seminar 2007. Presentation Outline. The Container Supply Chain Inefficiencies Tracking technologies RFID potential

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Analysing RFID Adoption within the South African Container Supply Chain

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  1. Analysing RFID Adoption within the South African Container Supply Chain Lisa Seymour, Emma Lambert-Porter & Lars Willuweit UCT – IS Department Research Seminar 2007

  2. Presentation Outline • The Container Supply Chain • Inefficiencies • Tracking technologies • RFID potential • RFID Adoption factors • Methodology • Analysis and Implications • An RFID adoption tool • Conclusions

  3. The Container Supply Inefficiencies • Delayed shipments • Shrinkage • Billing delays • Often attributed to (Nikam & Satpute, 2004): • inefficient data capture • lack of collaboration between supply chain entities • manual, error-prone processes • lack of tracing items at various nodes in supply chain • disparate, non-integrated systems • Solution is deemed to be complete tracking of goods in a cost-effective manner (Nikam & Satpute, 2004).

  4. RFID Transactional (ERP) Decision-oriented (APS / SCM) Informational (Extranets / EDI) Trackingtechnologies Source: Lewis, 2005, p. 5

  5. RFID potential • Improves on barcode scanning by allowing for the identification of items without line-of-sight being necessary • (EPCs) used in RFID technology are unique to each tagged item (in contrast to universal product codes (UPCs) used by barcode scanners) and can be updated • Can provide real-time, item-level information to a number of organisations - complete information integration within the supply chain

  6. RFID Adoption • The relative lack of research and investment into the adoption of RFID has left organisations with a feeling of ‘uncertainty’ about the challenges to be faced (Ranganathan & Jha, 2005). • Which factors can be leveraged to enable adoption? • Which adoption challenges need to be managed? • Models reviewed: • The Bakry STOPE model • Gallivan’sFramework for Innovation Adoption and Implementation • User acceptance models

  7. The BakrySTOPE model • E-readiness model • Encapsulates the organisation-wide factors of technology adoption • Includes intra- and inter-organizational factors • Very high level / generic Elements of the STOPE profile (Bakry& Bakry, 2001)

  8. User acceptance models • An individual focus can help determine if a technology can be successfully adopted(Venkatesh, Morris, Davis & Davis, 2003). • The reality of organisational implementation often differs considerably from such user-based models(Mathieson, Peacock & Chin, 2001) • Technology factors • perceived usefulness • ease of use • perceived cost / resources • People factors • attitude towards using technology

  9. Gallivan’s Theoretical Framework for Innovation Adoption and Implementation • Based on Roger’s Innovation-Decision Process (2001) • includes the ‘objective reality’ of managerial interventions • We excluded assimilation and implementation phases Adapted from Gallivan (2001)

  10. Proposed RFID adoption factors

  11. The SA container supply chain • Privately-owned shipping lines own containers and vessels • Ports governed by the South African Port Operations (SAPO) and the National Port Authority (NPA). • Customs collect import duties on and inspect incoming containers • SAPO-owned container terminals offer storage for a limited amount of time • Privately-owned container depots offer storage, packing and unpacking services

  12. Documentation Shipping instructions [E1] Manifests [I1] Bill of loading [E2] Container terminal order (CTO) [E1, I3]

  13. Methodology • Qualitative semi-structured interviews and analysis • The Marketing and Operations Manager from the Cape Town Container Terminal • The Operations Manager, Logistics Manager, IT Manager and Systems Administrator for three different Shipping Lines • The Cape Town IT Manager for SAPO • The e-Commerce Manager for a Container Depot • An RFID Expert from a RFID Vendor • Limitation • No importer, exporter, trucking company, Spoornet, Transnet

  14. Strategic • Organisational strategies  • “the container terminal’s duty to balance the cost reduction with the number of jobs” • “[Shipping lines] are always going to follow. We are not going to be pioneers in IT.” • Lack of innovation and social responsibility to increase jobs offset by global competitiveness and increased security requirements • Related initiatives  - NEW • A recent drive of Spoornet towards moving containers onto rail to relieve truck congestion. “RFID would help to track containers on the railways.”

  15. Technology [1] • Cost/Resources  • Infrastructural and integration costs are high. Most important challenge - allplayers would need to shoulder the cost • Infrastructure  • Customs expecting shipping lines to give manifests in EDI format by 2006. Only two or three shipping lines have managed to comply. “Many of the smaller importers and exporters don’t even have PCs”, “some depots still have paper-based processes” • Accuracy  • “when it’s dark, when it’s foggy, when it’s rainy, the [manually recorded] information is sometimes incorrect.” Containers had been on incorrect shipping lines and sent to, for instance, China instead of America • No organisations expressed concern that RFID might not be fully accurate (< 90% - Wu et al., 2006), stressing instead on its improved accuracy over current methods.

  16. Technology: Perceived value  • Throughput & productivity “There is always a shortage of space. The quicker you can get containers out of your system, the better.” “people work 18-20 hours a day to meet manifest deadlines”. “Atrucker is standing in line for four hours to move a container from a port to a depot” • Tracking. “Knowing where a container is and at what time it had entered the gate, or been loaded onto or off the ship.” • Information sharing to help with “the gap of information for shipping lines between the port and the depot”. Currently the port community “has about ten separate systems” • Monitoring the temperature of certain containers Most organisations either don’t fully understand the benefits to their specific organisation or haven’t considered that the individual benefits are only accrued with integrated implementation. Many felt that other organisations might benefit from RFID.

  17. Technology: Complexity  • the technology itself • The time and date need to be captured and seal checked: upon departure, on arrival at depot, at customer etc. “You would need information from all customers for all cargo types within a container on the chip.” “A container is manufactured in Japan and “then it moves to America, South Africa, West Africa, South America and Europe” • the technology implementation • The container depot is “struggling to get [manifest information] in an EDI format or even XML format” Not easily overcome, as implied by the global nature of the problem and the poor infrastructure of a number of members involved in the port community.

  18. Intra-Organisation • Organisation culture  • strict management and unfriendly co-workers and peers may become an obstacle to technology adoption (Gallivan, 2001). No explicit mention of culture • Training and support  • Training and support enable user adoption (Gallivan, 2001). In contrast, the amount of re-skillingis seen as an obstacle to adoption. • Organisation-wide readiness  • An organisation that is logistically innovative in technology usage, e.g. using EDI, is usually more willing to adopt RFID (Asif & Mandiviwalla, 2005). Heavily integrated and interconnected nature of supply chain reduces the effect of a single organisation’s readiness • Organisation size  • larger organisations have extra capacity and resources (Patterson et al., 2003). “The size and employment legislature of the port authority is a potential obstacle”

  19. Inter-Organisation [1] • Security  • RFID tags can be intercepted by ‘fraudulent’ readers, putting organisations at risk from information leakage (Smith, 2005) • “targeting of valuable containers might occur with people in the port community having knowledge of the contents of containers”, “Spoornet has had problems with people getting manifests, following containers and looting them” • “[RFID] can show where goods are in the supply chain, and show that they haven’t been tampered with”. “Seals are available with RFID chips embedded inside them.” • Intensity of information exchange  • The more information-intensive and demanding the supply chain, the greater the possibility of an organisation adopting RFID (Ranganathan & Jha, 2005). “Alot of information is collected on manifests and other documents and only some of it electronically.”

  20. Inter-Organisation [2] • Customer needs/satisfaction  • Offering unique solutions to customers is an organisational advantage (Fawcett et al., 2006). • “Customers could go onto a website and see exactly where their containers are. This would replace the lengthy, hour-long process of the customer phoning the shipping line, the shipping line phoning the depot etc.” • security restrictions that the US has imposed has meant that many exporters and importers have been cut from US market • partially off-set by potential RFID spill-over costs to customers

  21. Inter-Organisation [3] • Integrated structure of industry  - NEW • “Everyone is interlinked, no single organisation can make a decision on implementing RFID. Depots, port authority, customs and shipping lines would need to reach consensus.” • Organisational dominance within supply chain - NEW • Decisions concerning new technology adoption are made at a national level from the “SAPO, Customs, Department of Trade point of view.” “Government organisations have little experience with IT projects.” “Things move very slowly in government organisations” • Wal-Mart declared in mid-2004 that its top suppliers must include RFID tagging on all cases and pallets (Hartman, 2004). Their implementation could be attributed to their supply chain dominance.

  22. People • Management support / Authority  • Gallivan’s (2001) model factors in managerial support and authority as an enabler of technology adoption. • Overall, management support for RFID within the port seemed low • Resistance to change / Attitude  • A fear of change in the work environment has been reported as an obstacle to RFID adoption (Asif & Mandviwalla, 2005). • “COSMOS (the container terminal legacy system) is good enough.” • Expertise  • “the lack of expertise in customs with RFID could potentially be a problem in its adoption.” “There is the [necessary] intelligence in South Africa, but it comes down to funds from the industry”.

  23. Environment [1] • Willingness to collaborate  • Real advantage from RFID is seen to be only possible if parties collaborate (Fawcett et al., 2006). • Various players are willing to collaborate, but “it took 7 years of meeting and discussions to reach some agreement on EDI.” Without a driver from government, reaching consensus would be slow. • Relative advantage  • A great enabler to technology change is the organisation’s perceived advantage over its competitors (Prescott, 1995). • Monopolies don’t see an advantage, all shipping lines share benefits, only trucking companies seen to gain potential relative advantage.

  24. Environment [2] • Standards  • Multiple standards exist (ISO/IEC JTC1, ANSI, EPC, etc.) for RFID hardware, software, and data management (Jones et al., 2007) • “if there was a standard technology and communication standard, then [the port authority] would be more than happy to adopt RFID”, “it will be a very long process to get a standard going that’s internationally accepted by all of the shipping lines” • Supply chain culture- NEW • Implied that the port community was inert, made up of monopolies, bureaucratic, not service-oriented enough and lacking initiative. • While SAPO and NPA both replaced Portnet in 2000 and Transnet changed from being government run in 1990, some interviewees still referred to Portnet and government ownership of the Transnet subsidiaries.

  25. RFID Adoption in the SA Container supply chain     

  26. Proposed RFID Adoption assessment tool

  27. Conclusion • RFID adoption in the South African port community • Cost, the absence of a universally-adopted standard and supply chain culture are currently the major obstacles. The bureaucratic and monopolistic nature of the supply chain community contributes to the creation of an environment that struggles to reach a position of consensus. • Partially offset by customer needs and usefulness • RFID adoption has been problematic, companies need to assess • Which factors can be leveraged to enable adoption? • Which adoption challenges need to be managed? • A framework to analyse these has been proposed. It is hoped that these factors are studied further to see their impact on the adoption of global technologies across global supply chains

  28. References Asif, Z. & Mandviwalla, M. (2005). Integrating the Supply chain with RFID: A technical and business analysis, Communications of the Association for Information Systems, 15, 393-427. Bakry, S. H. (2003). Toward the development of a standard e-readiness assessment policy, International Journal of Network Management,13(2), 129-137. Fawcett, S. E., Ogden, J. A., Magnan, G. M. & Cooper, M. B. (2006). Organizational commitment and governance for supply chain success, The International Journal of Physical Distribution & Logistics Management, 36(1), 22-35. Gallivan, M. J. (2001). ‘Organizational adoption and assimilation of complex technological innovations: development and application of a new framework’, The DATA BASE for Advances in Information Systems, 32(3), 51-85. [Electronic], Retrieved from ACM SIGMIS Database. Lewis, S. (2005). A Basic Introduction to RFID Technology and its Use in the Supply Chain. Retrieved April 5, 2006, from http://www.rfidjournal.com/whitepapers/1/2 Mathieson, K., Peacock, E. & Chin, W. W. (2001). ‘Extending the Technology Acceptance Model: The Influence of Perceived User Resources’, The DATA BASE for Advances in Information Systems, 32(3), 86-112. [Electronic], Retrieved from ACM SIGMIS Database. Nikam, M. & Satpute, S. (2004). RFID: Changing the face of supply chain management, (Working Paper, Welingkar Institute of Management and Development Research). [Electronic], Retrieved from www.indiainfoline.com/bisc/ari/chan.pdf. Prescott, M. B. (1995). ‘Diffusion of Innovation Theory: Borrowings, Extensions, and Modifications from IT Researchers’, The DATA BASE for Advances in Information Systems, 26(2&3), 16-19. Retrieved from ACM SIGMIS Database. Ranganathan, C. & Jha, S. (2005), Adoption of RFID Technology: An exploratory examination from supplier’s perspective, Proceedings of the Eleventh Americas Conference on Information Systems, August, Omaha. [Online], Retrieved from http://aisel.isworld.org/proceedings/amcis/2005/ Venkatesh, V., Morris, M.G., Davis, G. B., & Davis, F. D. (2003). User Acceptance of Information Technology: Toward a Unified View, MIS Quarterly, 27(3), 425-478. Wu, N.C., Nystrom, M.A., Lin T. R. & Yu, H.C. (2006). ‘Challenges to global RFID adoption’, Technovation, 26(12) 1317-1323. Retrieved from Elsevier.

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