Blockchain and Machine Learning Framework for Financial Performance in Pharmaceutical Supply Chains

2. Inventory And Financial Performance

Inventory management is a crucial factor in determining the financial performance of a business (Cannon, 2008). Effective inventory management can reduce inventory holding costs, increase cash flow, and improve profitability (Santhi & Karthikeyan, 2016). Optimizing inventory levels is one way to improve financial performance (Cannon, 2008). Maintaining the right amount of inventory helps ensure a business has enough stock to meet customer demand without overstocking, which ties up capital and increases carrying costs. A business can optimize inventory levels and reduce inventory holding costs using inventory management techniques such as demand forecasting, safety stock calculations, and economic order quantity models (Sadeghi & Niaki, 2015).

Another way inventory management can improve financial performance is by reducing stockouts. A stockout occurs when a business runs out of a particular product, leading to lost sales and dissatisfied customers. By using inventory management tools based on machine learning algorithms such as just-in-time (JIT) inventory management and vendor-managed inventory (VMI), a business can ensure that it always has the necessary inventory to meet demand and avoid stockouts (Sadeghi & Niaki, 2015).