Inventory management in pharmaceutical companies: challenges and optimization strategies

Abstract

Purpose. This article investigates the determinants of inventory efficiency in Ukrainian pharmaceutical enterprises operating under the challenging conditions of war during the period 2021–2024. The main goal is to find out, which factors of operational, technological and regional character affect inventory turn around, and to build practical recommendations to increase inventory resilience in high risk environments. It resolves some issues remaining unanswered regarding inventory performance in the system being disrupted, and importantly, embraces digital adaptation and supply chain flexibility.

Methods. This is a quantitative econometric approach that forms the basis for the methodological framework. To examine the relationship between inventory turnover and a set of explanatory variables, i.e. lead time, demand variability, stockout rate, order frequency, holding cost, supply reliability, forecast accuracy, R&D intensity, and the use of enterprise resource planning (ERP) systems, a multiple regression model was constructed. The origin of firm level data covers 10 leading Ukrainian pharmaceutical manufacturers for 2021 to 2024. Furthermore, comparative regional analysis was conducted to ascertain the conflicts’ geographic exposure on inventory outcomes.

Results. The findings suggest that the most notable positive inventory turnover determinants are ERP adoption, higher forecast accuracy, and higher order frequency. Of course, the companies that had more advanced digital infrastructure and proactive supply chain strategies did better (more inventory efficiency) with the external instability. On the contrary, inventory performance for firms based in conflict affected regions was lower due to extended lead time, significant stockout and unreliable supplier networks. The research validates that technological and organizational adaptation are major factors for alleviating supply chain risks and maintaining operational continuity during time of crisis.

Conclusions. The contribution of the study is to provide empirical insights into the strategies followed by pharmaceutical companies during wartime, and, thus, contribute to the inventory management under extreme uncertainty. This need integrated digital systems, demand forecast capability and region-specific risk management to be in place. The results of this research accord with the general discussion on supply chain security and provide key information for elaboration of policies aimed to fortify pharmaceutical logistics in crisis conditions. Future research should examine the long-term transition of the dynamic from crisis to recovery and the long-term effects of digital transformation to inventory systems.