Designing resilient multi-echelon inventory architecture in industry 4.0 manufacturing- dynamic capabilities approach to IoT-driven business process re-engineering

Background: the problem of sudden disruptions to the supply chain and complex manufacturing operations continues to impact the efficiency of manufacturing operations, revealing the shortcomings of the inflexible model of inventory management and hyper-lean manufacturing processes. However, while the architecture of the fourth industrial revolution makes it possible to track changes instantly, an important research problem remains unanswered in terms of how information from the Internet of Things (IoT) could be incorporated into BPR to strengthen multi-echelon inventory systems.Method: An integrated approach was taken where Discrete-Event Simulation (DES) modeling was used in combination with System Dynamics (SD). Empirical data and telemetry were used to design pre- and post- BPR scenarios with different levels of supply disruptions and demand volatility. The sensitivity analysis included the effects of the interplay between automated IoT replenishment nodes, WIP buffer sizes, and multi-level holding costs.Results: Simulation results from quantitative analysis reveal that the use of IoT technology for process re-engineering helps reduce inventory replenishment cycle time by 34% and minimizes the bullwhip effect for Tier-1 and Tier-2 suppliers by 28%. As a result, the improved dynamic buffer management process has led to 41% reduction in unscheduled production time during component shortages while ensuring OTIF delivery without excess safety stock.Contribution: This study enriches the body of knowledge on operations management by developing a theory-based and empirically tested model that links IoT telemetry with structural BPR. It also offers a useful tool for manufacturing decision-makers to strike a balance between lean costs and operational agility in times of supply chain disruptions.