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 bullwhipeffect, and thus in safety stocks, in the supplychain, thanks to real-time visibility of product flows provided by the Radio Frequency Identification (RFID) technology and the EPCNetwork. The assessment is grounded on a “representative” Italian Fast Moving Consumer Goods (FMCG) supplychain; specifically, the “representative” supplychain 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 supplychain, brought in by RFID and the EPCNetwork, can dramatically reduce the bullwhipeffect, substantially affecting the economical profitability of the whole FMCGsupplychain.