Digitalisation empowering firm inventory management: a lean inventory perspective

Drawing on a lean inventory perspective, this study examines how digitalisation empowers inventory management. Using panel data on firms listed on China’s A-share market, we find that firm digitalisation significantly increases inventory leanness, which in turn enhances firm value. Mechanism analyses show that digitalisation improves inventory management efficiency primarily through an internal optimisation channel (increasing production efficiency), and an external integration channel (enhancing supply chain efficiency). In addition, digitalisation improves inventory management efficiency by reducing sales uncertainty. This study provides empirical evidence on the mechanisms through which digitalisation empowers inventory management and enables firms to optimise inventory management and enhance firm value through digital transformation.