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There are many challenges facing organizations today, especially in competitive industries. Therefore, it is important for organizations to examine new technologies to help improve the company’s effectiveness. This was the case with German retailer Kaufhof and manufacturer Gary Weber. Both partners made the strategic decision to improve their supply chains by first examining and finally adopting RFID technology. The goal for both organizations with the use of this new technology was to reduce costs and enhance profitability. One way to measure this is the company’s EBIT margin. In the year ending in 2004, Kaufman reported EBIT margin at 1.47%; while in the year ending in 2005, Gary Weber reported EBIT margin at more than 8%.
RFID allows both companies to improve their supply chain management with the specific tracking of palettes, cartons, and individual items. RFID technology has the potential to save time with inventory shipping, lower labor costs, improve data collection, and provide new service offering opportunities. As a result the technology enables the companies to track their merchandise from production to point of sale, therefore reducing misplaced inventory and controlling theft. The outcome in the improved operational effectiveness for both Kaufhof and Weber are considerable and creates a long lasting impact to the company’s bottom line. In the year ending in 2007 both retailers reported higher profit margins; Kaufhof reported EBIT margin of 2.97% while Gary Weber increased to 10.2%. While it may be impractical to assume that these results are solely based on the implementation of RFID technology, it is safe to conclude that organizations that can effectively manage their supply chain can ...