Research on ‘Smart’ Supply Chains 

Promising new radio-frequency identification (RFID) sensor technology is likely to have a major effect on supply chain management in the future. The RFID-enabled supply chain is characterized by near-complete visibility of all items at all locations through use of smart tags and sensor reader devices; we call this a ‘smart’ supply chain. 

RFID utilizes so-called 'smart tags’ that can be affixed to parts, products, shipping containers, or pallets. Each tag contains a small computer chip that can hold a certain amount of information about the item, enabling automatic hands-off identification of its contents when read or sensed. The identification information can then be used to enable complete tracking of every tagged item in a supply chain, thus potentially creating complete visibility of items in supplier networks, manufacturing, distribution, storage and inventory, and retail environments. RFID sensing has several benefits, such as theft prevention and shrinkage control. In the field of supply chain management, the greatest focus is being placed on the logistics benefits through improved inventory control.

We have initiated a research project at Stanford to examine these logistics benefits. In our research we will identify the optimal inventory control policies for a ‘smart’ supply chain. The pertinent research questions are:

(1)   With real-time, near-complete product progress information, are traditional 'optimal' inventory control policies still the most effective solution?

(2)   If not, what are the new 'optimal' control policies, and what are their likely benefits compared to traditional policies?

This research area is of significance to industry because the theoretical results obtained from such a new model should be directly applicable to logistics decision-making in real-world ‘smart’ supply chains.

Professor Warren Hausman, a long-time faculty member in the AeA/SEI program, is a Professor of Management Science & Engineering at Stanford University. He is also the director of the two-day Integrated Supply Chain Management seminar in Palo Alto, California and the Academic Director of Supply Chain Online, which offers distance-learning materials in the field of supply chain management. For more information, email Professor Hausman.

This page was last updated on 05/22/03.  
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