A model to evaluate logistics RFID-based investments economic effectiveness in the apparel field

The paper presents a practical tool for supporting practitioners, consultants and researchers in the achievement of logistics effectiveness improvements in the fashion supply chain, through the determination of the expected profitability concerning RFID-based technology investments. Moreover, the limits related to the multipurpose implementation of this technology have been highlighted. The research explores the main cost items of an RFID based application, in order to understand to which extent the increased effectiveness, usually triggered by its implementation, is able to cover those costs. Main sources of knowledge are practitioners' report, scientific literature and case studies on the specific field. These investigations have conducted to the evidence that the RFID based applications and their investments are usually undertaken without a clear understanding of all the implications on the companies' P&L (profit and loss): the tool presented has been designed to fill this gap, providing an easy-to-use algorithm to evaluate a priori the profitability of the investment. The aim of this study is to support practitioners and managers in evaluating a priori the profitability of a RFID based investment in the fashion supply chain, understanding the related pay-back period (PBP); this indirectly will increase the success of RFID-based project implementations while reducing the uncertainty in terms of economical results. The main contribute of this research resides in the model's ease of use, quickness and effectiveness, grossly defining the economical expectations of an RFID investment; given the difficulties in defining precise figures, the study could support the investment choices