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Dynamic allocation of inventory in an RFID enabled transportation network

With increased globalization, companies across the world prefer to build globally, sell globally and also source globally. In this scenario, companies would need a tool for real time visibility into all aspects of their supply chain including transportation and shipping. RFID is one such tool and the promise of RFID-enabled supply chains is that organizations will have completed, accurate, and timely end to end visibility of their supply chain. This paper tries to see what would be the value brought by RFID generated visibility in the area of transportation and shipping. We analyze a scenario where an organization, in response to a changed demand pattern, takes a corrective action by reallocating its inventory which is already en-route to a specific geographic entity, to other geographical entities. Advocates of RFID claim that, dynamic allocation of inventory (including tracing, picking, de-packing and packing etc), which is undergoing transportation can be enabled, if RFID has been implemented in the transportation/shipping network. We develop a mathematical model to evaluate the revenue generation model for the supply chain. Using simulation, we prove that such dynamic re-allocation of inventory would indeed generate higher average profits. Thus it builds a concrete case for implementation of RFID in transportation and shipping.