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Radio Frequency (Un)Identification: Results from a Proof-of-Concept Trial of the use of RFID Technology to Measure Microenterprise Turnover in Sri Lanka

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  • De Mel, Suresh
  • McKenzie, David

Abstract

Accurate measurement of stock levels, turnover, and profitability in microenterprises in developing countries is difficult due to the fact that the majority of these firms do not keep detailed records. We test the use of RFID tags as a means of objectively measuring stock levels and stock flow in small retail firms in Sri Lanka. In principle this offers the potential to track stock movements accurately. We compare the stock counts obtained from RFID reads to physical stock counts and to survey responses. We have three main findings. First, current RFID-technology is more difficult to use, and more time-consuming to employ, than we envisaged. Second, the technology works reasonably well for paper products, but very poorly for most products sold by microenterprises: on average we were able to read only about one-quarter of the products tagged, and there was considerable day-to-day variation in read-efficiency. Third, a comparison of survey responses and physical stock-takes shows much higher accuracy for survey measures. As a result, we conclude that this technology is currently unsuitable for improving stock measurement in microenterprises, except perhaps for a few products.

Suggested Citation

  • De Mel, Suresh & McKenzie, David, 2014. "Radio Frequency (Un)Identification: Results from a Proof-of-Concept Trial of the use of RFID Technology to Measure Microenterprise Turnover in Sri Lanka," CEPR Discussion Papers 10225, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10225
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    References listed on IDEAS

    as
    1. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
    2. Fafchamps, Marcel & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2012. "Using PDA consistency checks to increase the precision of profits and sales measurement in panels," Journal of Development Economics, Elsevier, vol. 98(1), pages 51-57.
    3. Suresh de Mel & David McKenzie & Christopher Woodruff, 2010. "Wage Subsidies for Microenterprises," American Economic Review, American Economic Association, vol. 100(2), pages 614-618, May.
    4. Lisa Daniels, 2001. "Testing alternative measures of microenterprise profits and net worth," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(5), pages 599-614.
    5. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," World Bank Research Observer, World Bank Group, vol. 29(1), pages 48-82.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Microenterprises; Profit and Sales Measurement; RFID.; Survey Methods;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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