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Small Manufacturers vs. Large Retailers on RFID Adoption in the Apparel Supply Chain
Abstract
The apparel industry is one of the most rapidly growing sectors of the radio frequency identification (RFID) market, and within it, large retailers have been driving RFID adoption. However, the continuation of this industry’s fast-paced growth is questionable due to the uncertainty associated with how manufacturers, especially small ones, would react to the retailer-led RFID initiative. The literature suggests that the relationship between small manufacturers and large retailers could promote or inhibit RFID adoption among the manufacturers. In order to study the impact of the relationship between small manufacturers and large retailers on the small manufacturers’ RFID adoption decisions, this research develops a 2×2 (two-by-two) game model and conducts outcome stability analysis. The results show that, in the 2×2 game framework, (i) the retailer’s opportunistic behavior is unlikely to occur due to the strong stability associated with the manufacturer’s do-nothing option; (ii) the do-nothing option, however, may lead to missed opportunities for both parties; (iii) the retailer’s pressure tactic is not effective in persuading the small manufacturer to adopt RFID; and (iv) the retailer’s collaborative strategy also does not guarantee the manufacturer’s RFID adoption. The discussion of these results concludes with specific suggestions for how to encourage RFID adoption among the small apparel manufacturers.
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