Organizations have been investing heavily in building information links with their suppliers and buyers in order to reduce costs, lead times and quality problems, and improve on time customized delivery. At present, many of these firms are unsure of the degree to which this investment is necessary. A dynamic model is presented which builds on the impact of the evolving interactions of competitors’ activities and the learning which emanates over time. This dynamic model can be used by organizations to determine the level of expenditure necessary to remain competitive. In addition, this model brings out the fact that the systems’ learning will always lead to greater automation in the management of materials; however, the cost would vary according to the interplay of these two factors. This model should also help logistics managers design more effective information systems for their supply chains.
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