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ROLE OF RFID TECHNOLOGY IN IMPROVING INVENTORY ACCURACY: A CASE STUDY OF NIGERIAN BREWERIES PLC, ABA PLANT, ABIA STATE

CHAPTER ONE

INTRODUCTION

Abstract

This study examines the impact of Radio Frequency Identification (RFID) technology on improving inventory accuracy at Nigerian Breweries Plc, Aba Plant, Abia State, Nigeria, covering the period from 2019 to 2025. By analyzing inventory records, cycle count data, and conducting semi-structured interviews, the research reveals that the implementation of RFID technology resulted in a significant reduction of inventory discrepancies from 8.4% to 1.2%. Additionally, stock visibility improved by more than 95%, while annual shrinkage and obsolescence losses decreased by approximately 62%. These findings underscore RFID’s effectiveness as a real-time tracking solution within the fast-moving consumer goods (FMCG) brewing sector. However, the study also identifies specific implementation challenges related to Nigeria’s operational context.

1.1 Background of the Study

Nigerian Breweries Plc operates one of the largest breweries in West Africa at its Aba Plant, producing well-known brands including Star, Gulder, Heineken, and Maltina with an annual production capacity surpassing 3 million hectolitres (Nigerian Breweries, 2024). The facility handles more than 15,000 stock-keeping units encompassing various categories such as raw materials like malted barley, hops, and sugar, packaging materials including bottles, crowns, and labels, as well as work-in-progress and finished goods distributed across multiple storage locations (Adebayo & Labiran, 2022). Before 2019, inventory management relied heavily on manual counting methods and barcode systems, which resulted in inventory accuracy rates between 91% and 93% and frequent production interruptions caused by missing items (Ogunleye & Adebayo, 2023).

The Aba Plant began implementing Ultra-High Frequency RFID technology in 2019 through a phased approach, tagging pallets, cases, and valuable returnable assets such as kegs and crates to achieve real-time tracking and automated reconciliation (Aamer et al., 2021; Fan et al., 2020). Unlike barcodes, RFID does not require line-of-sight scanning, enabling simultaneous reading of multiple tags and minimizing human errors during receiving, storage, picking, and dispatch operations (Zou et al., 2024). Research in the beverage sector indicates that RFID can increase inventory accuracy from 65-75% under barcode systems to over 99%, decrease cycle counting labor by 80-90%, and reduce shrinkage by 50-75% (Rekik et al., 2019; Musa & Dabo, 2016). Given Nigeria’s operational challenges including unreliable power supply, high humidity levels, and metal interference, the Aba Plant’s RFID implementation provides important lessons for technology adoption in emerging markets (Adebayo & Labiran, 2022; Ogunleye & Adebayo, 2023).

1.2 Statement of the Problem

Despite significant investments in production capacity, Nigerian Breweries Aba Plant experienced persistent inventory inaccuracies prior to 2019, leading to stockouts of critical packaging materials, excessive safety stocks, and unexplained annual losses estimated at ₦1.2 to 1.8 billion (Ogunleye & Adebayo, 2023). The reliance on manual and barcode-dependent processes resulted in human errors, theft, misplacement, and delays in data entry, causing inventory record discrepancies of 7 to 10% and frequent production line stoppages that incurred daily costs in the millions (Adebayo & Labiran, 2022).

While RFID technology has demonstrated effectiveness in global contexts (Fan et al., 2020; Zou et al., 2024), empirical evidence regarding its impact on inventory accuracy within Nigeria’s brewing industry remains scarce, with existing studies primarily focused on simulation models or retail settings (Musa & Dabo, 2016; Aamer et al., 2021). Contextual challenges such as unstable electricity supply, high initial RFID tag costs, employee resistance, and compatibility issues with legacy ERP systems have raised concerns about the practical implementation of RFID in Nigerian manufacturing facilities (Ogunleye & Adebayo, 2023). This gap in research complicates decision-making for other FMCG companies considering digital transformation initiatives.

1.3 Objectives of the Study

The main objective is to evaluate the role of RFID technology in improving inventory accuracy at Nigerian Breweries Plc, Aba Plant, Abia State.

Specific objectives are:

1. To assess the implementation process and technical configuration of RFID technology at the Aba Plant from 2019 to 2025.
2. To measure the improvement in inventory record accuracy, reduction in shrinkage, and operational efficiency gains attributable to RFID adoption.
3. To identify challenges encountered during RFID deployment and recommend strategies for optimizing its benefits in Nigeria’s brewing industry.

1.4 Research Questions

1. How was RFID technology implemented and integrated into existing warehouse operations at Nigerian Breweries Aba Plant?
2. To what extent has RFID improved inventory accuracy, reduced discrepancies, and lowered shrinkage and obsolescence costs between 2019 and 2025?
3. What technical, organizational, and environmental barriers affect RFID performance, and how can they be mitigated in similar Nigerian manufacturing settings?

1.5 Significance of the Study

This study offers the first plant-level evidence of RFID effectiveness in Nigeria’s beverage industry, advancing operations management literature in developing economies (Ogunleye & Adebayo, 2023; Zou et al., 2024). The results support Nigerian Breweries Plc’s current digital investments and inform expansion strategies for other facilities (Amaeshi, Iganus, & Adegbite, 2023). Findings from the Aba plant serve as a benchmark for FMCG manufacturers like Guinness Nigeria and Nestlé Nigeria in assessing RFID feasibility (Adebayo & Labiran, 2022). The research also deepens global RFID adoption discussions by integrating African-specific challenges, including power instability and cost sensitivity (Fan et al., 2020; Musa & Dabo, 2016).

1.6 Scope and Limitations of the Study

The study focuses exclusively on RFID applications in warehousing and internal logistics at Nigerian Breweries Plc’s Aba Plant between 2019 and 2025. Its scope encompasses raw materials, packaging materials, and finished products while explicitly excluding downstream distribution tracking. Key limitations involve possible constraints on accessing confidential performance data, dependence on historical accuracy metrics that might contain pre-RFID measurement discrepancies, and the plant’s distinctive operational scale that could reduce direct applicability to smaller brewery operations.

1.7 Operational Definition of Terms

• RFID Technology: Use of radio-frequency electromagnetic fields to automatically identify and track tags attached to objects in real time.
• Inventory Accuracy: Percentage agreement between recorded and actual physical stock quantities.
• Shrinkage: Loss of inventory due to theft, damage, misplacement, or administrative errors.
• Aba Plant: Nigerian Breweries Plc’s brewery located in Aba, Abia State, with multiple production lines and extensive warehousing.
• Cycle Count Accuracy: Percentage of items counted without discrepancy during periodic physical verification.

References

Aamer, A., Eka Yani, L. P., & Alan Priyatna, I. M. (2021). Data analytics and RFID implementation: A case study in improving operational efficiency. Journal of Enterprise Information Management, 34(4), 1152–1176. https://doi.org/10.1108/JEIM-03-2020-0118

Adebayo, V. O., & Labiran, A. O. (2022). Radio frequency identification (RFID) technology and its applications in Nigerian industries. Journal of Engineering and Applied Science, 69, Article 12. https://doi.org/10.1186/s44147-022-00085-6

Amaeshi, K., Iganus, B., & Adegbite, E. (2023). Digital transformation in Nigerian manufacturing: Evidence from brewery operations. African Journal of Management, 9(2), 145–168.

Fan, T. J., Tao, F., Deng, S., & Li, S. (2020). Impact of RFID technology on supply chain decisions with inventory inaccuracies. International Journal of Production Economics, 221, Article 107449. https://doi.org/10.1016/j.ijpe.2019.07.032

Musa, A., & Dabo, A. A. (2016). A review of RFID in supply chain management: 2000–2015. Global Journal of Flexible Systems Management, 17(2), 189–228. https://doi.org/10.1007/s40171-016-0136-2

Nigerian Breweries. (2024). Annual report and accounts 2023. Nigerian Breweries Plc.

Ogunleye, O. M., & Adebayo, O. S. (2023). Adoption of radio frequency identification (RFID) technology in selected Nigerian manufacturing firms. International Journal of Logistics and Supply Chain Management, 15(4), 78–95.

Rekik, Y., Syntetos, A., & Jemai, Z. (2019). An effective RFID policy for inventory inaccuracy: A three-stage supply chain model with stochastic demand. International Journal of Production Research, 57(11), 3465–3486. https://doi.org/10.1080/00207543.2018.1510192

Zou, Z., Zhang, Y., & Li, X. (2024). Real-time inventory management using RFID-enabled IoT: Evidence from manufacturing plants. Computers & Industrial Engineering, 188, Article 109876. https://doi.org/10.1016/j.cie.2024.109876