System Dynamics Modelling to Study the Effects of Investment in Information Technology on Logistics Performance: A Case Study from India

In this era of globalization, adoption of information technology (IT) is one of the critical contributing factors of logistics companies' competitiveness and growth. This paper investigates the investment in IT by an Indian based logistics company on the logistics performance. Technologies like RFID, EDI, GPS/GIS and ERP are chosen for improving processes like tracking and tracing, planning and forecasting, transportation automation, coordination with suppliers and customers and decision optimization. Simulations are carried out using system dynamics modelling and scenarios are generated. Through 15% investment in RFID, 30% investment in EDI, 15% investment in GPS and 40% investment in ERP of the total investment amount, the logistics cost reduced by 0.21%, delivery time reduced by 0.17%, reliability of services improved by 4.61%, flexibility improved by 5.52% and safety improved by 5.8% leading to an 0.52% improvement in LPI and 0.049% improvement in profit.