LONDON SCHOOL OF COMMERCE

UNIVERSITY OF WALES INSTITUTE CARDIFF

MASTER FOUNDATION PROGRAM

FEB 2006

ASSIGNMENT

IN

INFORMATION ANALYSIS

ALI OZAN PEKINER

174JCJCWCF06


TABLE OF CONTENTS


Introduction

Until 1960s and 70s, a typical company owned all the activities related to the production, from acquisitions of raw materials –even it had owned mines or heavy industries to supply themselves- to conversion of these materials into finished goods. The same firm was delivering the final product directly to the consumer. With the increasing globalisation and advance in information technologies, businesses have faced the change and have been trying to adapt to these new conditions of the marketplace by changing their organisations and implementing new and approved technologies. Because of the increasing competition and need to efficiency, millennium companies are looking for more flexible structures and low costs. Rather than staying in fully vertical integration model, they are reducing their extra-weight by different strategies, like outsourcing, mergers and acquisitions, dot.com companies, etc. They focus their motivation to their core competencies and specialities, and leave the rest to their trade partners in supply chains.

Today, businesses are operating globally integrated with each other. Supply chains have replaced old structures of supplying materials or components, and have extended their limits to after-production activities, like distribution, stocking and storing. As they cover all activities from supplying raw materials to delivering final products to consumer, the supply chain systems became the object of cost-cutting activities. Companies are trying to build fast, accurate and error free chains to decrease their costs and relatively their prices, which is a strategic factor in competition with others. Radio frequency identification systems (RFID) are one of the solutions to the automation of supply chains, which enable companies tracking and controlling their assets among the supply chain.

This report is going to study radio frequency identification systems and their impact on businesses. To do so, the concept of supply chain will be defined in the first section. In this part, we will comprehend why companies are trying to outsource their activities, and how they manage these activities. In the second part, a brief description of radio frequency identification system will be given, by explaining its mechanism and principles. The advantages and disadvantages of this technology will be discussed in this section. Finally, we will analyse a case in which we will recommend whether to implement or to drop RFID technology in the supply chain of a company.

  1. Supply Chain

Supply chain is a group of firms that work in a coordinated manner in procuring raw materials and components, manufacturing a product from these materials, and delivering a finished product to a consumer. This definition will be detailed in further parts, but before that, we will describe briefly the evolution of business enterprises to understand where it is coming from.

  1. Evolution of Business Enterprise

In very early examples of enterprises, we see family businesses. These are characterised by ownership, which means that he family who owns the firm is the unique source of power and decision. Especially after the civil war in USA, the origin country of modern business, the concept of ownership is separated from management. Companies started to hire managers, who would decide and organise the production, which leaded to professionalisation of business. With the impact of industrial revolution, the mass production has marked business all around the world. Companies started to use the benefits of economies of scale by producing in large quantities. The advance of technologies has helped this age to organise and plan the production to reduce the costs. Mechanisation and computerising have resulted to the creation of simple information systems. The development of information technologies in the end of 20th century has linked all these simple information systems inside and outside of the company to each other. This interaction has provided to companies the ability to respond quickly to changes, to be more effective and efficient. The globalisation has changed one more time the business environment by connecting companies from all around the world to each other. They have started to transfer some of their internal activities and resources to other firms, in order to benefit the efficiency that comes with specialisation. This process is called outsourcing, which enables companies to focus on their own competencies. Companies operate today in dependent structures called supply chains. Information technologies have excelled in coordination of the flow of goods and services across the supply chain, with a simple goal of reducing the costs.

  1. Supply Chain Management

Supply chain is the integration of all activities that procure materials and services, transform them into intermediate goods and final products, and deliver them to customers. Beside this general definition, different views of supply chain exist depending on the model of organisation of the company. In vertical integrated companies, we can not talk about supply chain in its modern definition. Because these companies own all the factors of production and distribution in their organisation, and they are independent or less dependent on the rest of the world. In reality, this kind of company doesn’t exist in today’s business. Some companies are still trying to integrate their activities vertically, but it has enormous investment costs and less flexibility.

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        In market economy model of organisations, supply chains have linear flow from acquisition of raw materials to delivery of the finished product to consumer.

Figure 1: Market economy model of supply chain

        

In this type of supply chain, raw materials and components required for the production of final product are supplied by a chain of suppliers, which are connected and dependent on each other. Regarding to the model of supply chain, the production strategy of the firm is also changing. In market economy model of supply chain, companies use the pushing strategy, which consists ...

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