Impacts of digital technologies on supply chain performance: a system dynamics approach

The advent of Industry 4.0 and associated digital technologies makes it possible to share information and access data real-time. Such a capability needs to be investigated in the Supply Chain Management (SCM) to study the joint impacts of digital technologies on transforming SC members’ behavior. In this paper, Cloud Computing, Internet of Things, and Big Data Analytics have been selected due to their relevant effects on real-time information sharing within different SC echelons rather than inside one echelon. Moreover, the implementation of these technologies in real SC requires high investments. Also, due to the increased complexity of the SC after applying these technologies, their impacts on SC behavior and performance should be determined precisely. This paper proposes simulation as a cost-effective and comprehensive method to investigate how digital technologies affect SC performance. A three echelon manufacturing SC has been simulated by using System Dynamics (SD) modeling under different scenarios in both traditional and digital SCM. The results reveal a significant improvement of SC performance, in terms of inventory level and cost as well as order fulfillment ratio, in digital SCs compared to traditional SCs. Future research will further develop the model by validating the simulation results with real cases from the industry.