System dynamics investigation of information technology in small and medium enterprise supply chain

Purpose – The purpose of this paper is to study the impact of information technology (IT) capabilities on an organization's performance. It investigates the effect of adoption of IT on the market share of the small and medium enterprise. Design/methodology/approach – The system dynamics methodology is used as a modeling and analysis tool to investigate the supply chain problem of an organization. The simulation model of the supply chain is made considering the relationships among different variables, using system dynamics concepts. Findings – This work suggests that an organization should increase its capacity joining rate simultaneously with increase in orders (which increases due to improvement in IT capability), to reduce further backlog which leads to customer switch to another manufacturer. Research limitations/implications – The work is based on simulation work, so the results cannot be generalized for all situations. Originality/value – The present model can be used to study different scenarios and variables. Also, the model can be extended by considering more accumulations and variables in the supply chain system. It may be useful to policy makers, decision makers and regulators dealing with a wide spectrum of strategic issues and policies in the supply chain.