Mitigating Supply Chain System Entropy by the Implementation of RFID

Information transfer in the supply chain is complex and causes instability and unpredictable behavior, when information transferred is incomplete or incorrect. This instability is characterized by the Bullwhip Effect that represents concretization of entropy, namely the degree of disorder within a system. In this paper we assume that "complete" and "accurate" real-time information sharing concerning product and inventory levels through RFID reduces entropy and limits its effects on the supply chain. RFID can reduce information loss and increase accuracy. From the literature we show that RFID can improve visibility, reduce uncertainty and complexity of the supply chain permitting us to conclude that it represents a regulatory mechanism of informational entropy in the supply chain.