The impact of RFID and EPC network on the bullwhip effect in the Italian FMCG supply chain

This paper provides a quantitative assessment of the potential reduction in the bullwhip effect, and thus in safety stocks, in the supply chain, thanks to real-time visibility of product flows provided by the Radio Frequency Identification (RFID) technology and the EPC Network. The assessment is grounded on a representative Italian Fast Moving Consumer Goods (FMCG) supply chain; specifically, the representative supply chain is composed of three echelons, namely manufacturers, distributors and retailers of FMCG, whose main features, in terms of both quantitative and qualitative data, were derived through an appropriate survey phase. Reduction of safety stocks is determined based on quantitative methodologies available in the scientific literature. The results of the assessment show that real-time visibility of the supply chain, brought in by RFID and the EPC Network, can dramatically reduce the bullwhip effect, substantially affecting the economical profitability of the whole FMCG supply chain. (C) 2009 Elsevier B.V. All rights reserved.