Simulation-Based Models of Multi-Tier Financial Supply Chain Management Problem: Application in the Pharmacy Sector

Abstract

A crucial role in the continuation of economic activities is played by the financing of services and production in supply chains. A key element of optimizing the financial flow of these complex networks is to pay attention to the financial aspects of these complex networks since they are becoming more and more complex and expanding. This study aims to investigate the supply chain of a pharmaceutical company’s holding company and its subsidiaries while using internal resource valuation to develop a new strategy for financing the company’s operations. There is a process of money circulation through the chain, which consists of passing through two treasuries (primary and secondary), which provide liquidity to compensate the deficits of some institutions with the excess liquidity of other institutions. In this article, we present three simulation-based models based on a case study conducted at Shafa Darou Investment Company in Tehran-Iran, a leading pharmaceutical investment company in the country, to examine the impact of implementing this idea in the real world. Considering the study’s results, it has been shown that the supply chain as a whole has improved in terms of its working capital. Using a set of local treasuries is generally associated with reducing risks and a greater level of stability when relying on the excess liquidity of chain members provided that financial independence from external institutions, such as banks, is maintained. In addition, if the members’ excess liquidity is deposited in a set of local treasuries rather than a bank, the profit and internal financial flow within the chain will be circulated throughout the chain, and more added value will be generated.

Keywords

• supply chain finance
• simulation
• local treasury
• internal financing
• pharmaceutical industry