Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain: A Case Study at a Swedish Forest Company

Abstract

A cost analysis for the possibility of a log identification system using Radio Frequency Identification (RFID) is presented in this paper. The introduction provides a brief description of the RFID technology and its usefulness within the area of forest logistics. Information network mapping is used to facilitate an understanding of the current information flow and identification requirements along the supply chain. The cost analysis is performed using the method of break-even analysis using nine different scenarios by means of a case study at the Ortviken paper mill, which is located in central Sweden. The analyses of the processes in the supply chain revealed that the potential exists to streamline operations and to make more efficient use of the available resources by implementing an open loop RFID-based log tracking system in the supply chain using read only tags. Furthermore, this study indicates that even in those cases in which RFID does not provide any major improvements to the firm’s inventory management; it is still possible to achieve economic benefits. However, implementation of such a system will require further development of, in particular, the RFID tags to satisfy the feasibility requirements in the wood supply chain.