Exploring the linkage between inventory automation, distribution effectiveness and inventory knowledge on efficiencies of SMEs using dynamic capability view theory

Purpose The study investigates the impact of inventory automation practices (IAP) on improving the operational efficiency (OE) of Indian small and medium enterprises (SMEs). It further examines the mediating role of distribution effectiveness (DE) in the relationship between IAP and OE, and the moderating role of knowledge of inventory automation (KIA) in the IAP–DE relationship. Design/methodology/approach A structured questionnaire was developed, and the hypotheses were tested using empirical data from 348 individual respondents representing 230 SMEs operating in the textile, chemical and metal-processing sectors, including steel and aluminium. The Dynamic Capability View (DCV) served as the theoretical foundation for establishing relationships among the constructs. PLS-SEM was employed to assess the reliability and validity of the measurement model and to test the proposed hypotheses. Findings IAP significantly enhance DE and OE. DE partially mediates the relationship between IAP and OE. Further, KIA significantly moderates the IAP–DE relationship, indicating that the strength of the indirect effect of IAP on OE through DE varies with the level of KIA. Originality/value This study suggests that managers require expertise to design an Inventory Automation (IA) system tailored to their organisation's needs. Industry-tech collaboration, research and advanced inventory management practices are vital for successful IA practices and OE enhancement.