An Analysis of Influential Factors on Procurement Cycle Time Using a System Dynamics Approach

Organizational agility is one approach that allows organizations to rapidly adapt to these conditions, which can be extended to the agility of individual business processes within the organization. Procurement cycle time is one of the most critical performance indicators that measure procurement process agility. This study will study the factors impacting procurement cycle time using a system dynamics modelling approach. To achieve this, the subsystems are defined and modelled, including internal subsystems like production and sales processes and external ones like market and suppliers. Next, the interactions of these subsystems are analysed, and the casual loops and stock-flow model of the problem are analysed and developed. The model has been implemented and validated in a production organization under the seasonal demand factor. Finally, three policies were proposed to reduce the procurement cycle time, and the simulation results of the policies were analysed numerically. According to the obtained results, combining the presented policies will lead to a 22% reduction in the procurement cycle time.