Name/Course & Year: Almodiel, Feliz Justine L.

/ BSCA-3
Subject/Time/Days: CBMEC 322/ 3:30- 4:30/ MWF
Mrs. Julieta A. Fabio, MBA
Case Study - Chapter 3

1. How does the RFID compare to bar coding

• Nearly all inventory, projects, and jobs are tracked via bar code, which is one of Bracket
International's key organizational components. With this technology, every item that an
employee uses or works on at a workstation must be scanned in. Another automatic
identification and data collection method is radio-frequency identification (RFID). The
main distinction between the two tracking methods is that an RFID tag may be tracked
without an employee scanning it. The objects would be continuously tracked thanks to
the RFID tracking software's automatic detection of the tag signals.
2. What is the economic payback in years for this possible RFID adoption? (Hint: There are two
benefits that can be quantified- Labor savings due to faster scan times and misread savings.
Annual benefits divided by economic benefits equals payback.)
• Given that a Bracket International employee works 2,000 hours per year with a $69,000
salary, an hourly wage of $34.50 is paid to each employee. From this, it can be
calculated that the cost of each 10-second barcode scan is approximately $0.10. At the
rate of 9,850 scans per day, Bracket International could save $985 per day, or $256,100
annually, by switching to RFID tracking. Additionally, the cost of misreads would change
with a switch to RFID. Replacing a damaged or defective bar code label takes
approximately 5 minutes, costing Bracket International $2.88 per replacement.
Misreads account for an estimates 2 percent of total yearly scans, or 51,220 scans. This
totals to a cost of $147,513.60 per year in misreads for the current barcode technology.
With RFID technology, a misread is uncommon, accounting for 0.2 percent of annual
scans, or 5,122 scans. At the given cost of $4 per misread, the total annual cost of
misreads on an RFID system is $20,488. By switching, the company would save
$127,025.60 on misreads each year. The initial investment of transitioning to an RFID
system is $1,100,000 ($620,000 for necessary hardware and software, plus $480,000 for
new supply chain operating system software). By dividing the initial investment by the
total annual economic benefits ($1,100,000 / ($256,100 + $127,025.60)), it can be found
that the economic payback for the RFID system is 2.87 years.
3. What are the risks of adopting a new technology too early? Too late?
• Loss of business is one serious risk of implementing the technology too late. According
to the case, Bracket International lost Wolf Furniture's business as a result of its late
response to order specifications. Home Depot, the company's biggest client, has also
expressed dissatisfaction with Bracket International's poor response times since newer
on-demand point-of-sale systems would result in more frequent order modifications.
Losing Home Depot's business might be fatal for Bracket International.
4. What do you recommend Mr. Bracket do in the short and long terms? Explain your reasonings.
• Mr. Bracket should use bar coding for short term. RFID should not be adopted if the firm
is still beginning because it may be too small and the risk is too big. He should start with
RFID awareness and do some research about it. But if he does long term, it would be
great to use RFID which will cost him the installation cost and it takes around 3 years for
the payback but the output will be better.