Article

Exploring the Impact of Delivery Performance on Customer Transaction Volume and Unit Price: Evidence from an Assembly Manufacturing Supply Chain

January 2017
Production and Operations Management 26(5)

DOI:10.1111/poms.12682

Authors:

Xiaosong (David) Peng

University of Houston

Guanyi Lu

Florida State University

This study examines the effect of delivery performance on customer transactions. We propose that different delivery performance dimensions (on-time delivery rate, early delivery inaccuracy, late delivery inaccuracy, and delivery speed) have varying impacts on future customer transaction quantities and unit prices. We further explore the effect of customer types on the proposed relationships. Trade customers (resellers) and Original Equipment Manufacturer (OEM) customers generally have different operational needs for deliveries and therefore may value these metrics differently. Using instrumental variable regression, we analyze a proprietary transaction-level dataset. The information was compiled by a Fortune 500 manufacturer from its Heating, Ventilation and Air Conditioning (HVAC) control product supply chain, consisting of the manufacturer and its customers. The results indicate that measures of delivery performance affect customer transaction quantity and unit price differently. Furthermore, these impacts can differ significantly between trade customers and OEM customers. These findings provide fine-grained insights about tuning delivery capabilities to increase sales volume or boost price.

Estimating impacts of logistics processes on online customer ratings: Consequences of providing technology‐enabled order tracking data to customers

Article

Full-text available

Jul 2022

Recent advances in logistics tracking technologies have enabled e‐commerce firms to both accurately track the shipments and obtain accurate estimates of delivery times. With customers constantly tracking the status of their orders, the effects of logistics processes on customers' evaluation of their online shopping experience are relatively unknown as academic literature provides little guidance. Drawing upon the expectation‐disconfirmation theory and attribution theory, and using a unique dataset assembled in collaboration with an e‐commerce firm, we empirically investigate the effects of order processing and delivery times on online customer ratings. We also estimate the impact of positive deviation (i.e., early delivery) and negative deviation (i.e., late delivery) from the promised delivery date on online customer ratings and whether the impact of delivery status (early or late) depends on order cost and freight cost. Our empirical findings demonstrate that longer order processing and delivery times are associated with lower ratings. Our results also highlight that the late delivery of an order is negatively associated with ratings and that the order cost amplifies this effect. Furthermore, freight cost reduces both the negative effect of late delivery and the positive effect of early delivery on online ratings. Our results also indicate that there exist curvilinear relationships between online ratings and the number of days an online order is late or early. Specifically, the negative effect of a late delivery follows a convex‐shape curve such that its impact decreases as the number of days an online order is late increases. Likewise, the positive effect of an early delivery increases at a decreasing rate as the number of days an online order is early increases. Our supplementary analyses further account for potential endogeneity issues and corroborate our main results with additional empirical evidence obtained through alternative model specifications and estimation strategies. We present important theoretical implications and managerial takeaways from our findings.

Competing on price, speed, and reliability: How does bounded rationality matter?

Article

Jun 2020
J OPER RES SOC

A firm’s delivery performance may have significant impact on the satisfaction and purchase behaviour of its customers. Empirical evidence has shown that customers are willing to pay a higher price for a faster and more reliable service. In this study, we address the interactions between the price, promised delivery time, and delivery-reliability level in a competitive setting. We model the problem as a competition among an arbitrary number of profit-maximizing firms facing boundedly rational customers who can choose to buy the service from one of the firms or balk. We prove the existence of a unique Nash equilibrium and propose a simple iterative algorithm that converges to the equilibrium. Furthermore, we compare our results with those in the existing literature and report interesting managerial insights. Our results suggest that having a clear understanding of customers’ bounded rationality level is crucial for businesses to determine their optimal decisions and position in the market both in monopolistic and competitive settings.

Work Standardization and Anthropometric Workstation Design as an Integrated Approach to Sustainable Workplaces in the Manufacturing Industry

Article

Full-text available

May 2020

Work Standardization and Anthropometric Workstation Design as an Integrated Approach to Sustainable Workplaces in the Manufacturing Industry

Article

Full-text available

May 2020

Poor workstation designs represent a risk factor for operators in assembly production lines. Anthropometric design of workstations facilitates the sustainable development of the workplace. This paper proposes a novel integrated approach about work standardization and anthropometric workstation design as a strategy to increase human factor performance as well as the productivity index in manufacturing companies. The integrating approach is presented through a case study in a publishing press company with operators who perform manual and mechanical tasks in production lines in the box assembly department. Currently, the company’s production capacity is below demand, and in order to satisfy customers’ requirements, the company pays a lot of overtime to operators. In order to solve this problem, the integrated approach was applied. The findings indicated that inefficient movements and body postures in operators decreased from 230 to 78, and the standard time was reduced from 244 to 199 s for each assembled box. In addition, the production rate increased by 229 units per assembly line per day, and overtime was eliminated. Therefore, the novel integrated approach allows the increase of sustainability in the company and the operators’ well-being by making a better use of the human factor, eliminating overtime, and increasing production capacity.

Implementation of Production Process Standardization—A Case Study of a Publishing Company from the SMEs Sector

Article

Full-text available

Sep 2019

This paper reports a case study using a standardization process for increasing efficiency and a better optimization of resources in a printing company with 150 operators having manual and mechanical tasks in the box assembly department along with four production lines. The current capacity is 350 boxes per day, while the demand is 650 units, where the company is expected to pay large sums for overtime. Using work standardization, studying worker movements, timing, and workstations redesign, the main goal was to increase the efficiency and productivity indexes. After applying those tools, the inefficient movements in operators decreased from 230 to 78, eliminating 66% of the unnecessary movements, as well as the standard time in a workstation decreased from 244 to 199 s (18.44%) per each assembled box, and the production rate increased by 63.2%, that is, 229 units per assembly line a day, where overtime was reduced to zero.

Quandary of Service Logistics: Fast or Reliable?

Article

Dec 2018
EUR J OPER RES

Delivery time and delivery reliability are two top-level measures of delivery performance, and they both influence customers’ perception of service value. However, the classic queue-pricing literature emphasizes the former and ignores the latter. In order to bridge the gap between research and practice, this study addresses the interactive impact of price, delivery time, and delivery-reliability level on the equilibrium behaviour of rational customers and the optimal decisions of a revenue-maximizing service provider. We assume that the customers’ sensitivity to the delivery-reliability level is characterized by an increasing concave service value function. We model the operations of the service provider as an M/M/1 queue. Two cases are investigated: homogeneous customers and heterogeneous customers. For the homogeneous customers case, we analytically characterize the service provider's optimal price, delivery time, and delivery-reliability level decisions. We show how the service provider's decisions on whether to provide faster or more reliable service are affected when different problem parameters are subject to variation. For instance, when customers become more sensitive to the delivery-reliability level, the service provider increases the delivery-reliability level at the expense of a longer delivery time. However, the optimal price may either increase or decrease depending on a benchmark value for the delivery-reliability level. For the heterogeneous customers case, our results suggest that when the potential arrival rate is sufficiently high, the service provider always benefits from markets with higher levels of customer heterogeneity.

INVESTIGATING MARKETPLACE CUSTOMER SATISFACTION:DATA MINING APPROACH

Article

Jun 2022

Customer satisfaction is perceived as business strategy’s key component and critical differentiation in a competitive marketplace. The recorded huge transactions per day in marketplaces can be used as useful information to evaluate customer satisfaction. A sophisticated method, such as data mining, is necessary to analyze this massive, multifaceted, and versatile empirical data generating accurate predictions. This research purported to investigate marketplace customer satisfaction as a reference to determine service and quality improvements. In conclusion this study draws two conclusive results: (1) The majority of marketplace consumers preferred the lead-time sensitive over price-sensitive; and (2) The Neural Net empirically showed as the most appropriate robust data mining technique among other techniques to predict marketplace customer satisfaction indicating by fittest accuracy, F score and ROC curve

Machine Learning-Based Prediction of Missing Components for Assembly – a Case Study at an Engineer-to-Order Manufacturer

Article

Full-text available

Jan 2021

For manufacturing companies, especially for machine and plant manufacturers, the assembly of products in time has an essential impact on meeting delivery dates. Often missing individual components lead to a delayed assembly start, hereinafter referred to as assembly start delayers . Identifying the assembly start delayers early in the production process can help to set countermeasures to meet the required delivery dates. In order to achieve this, we set up 24 prediction models on four different levels of detail utilizing different machine learning-algorithms – six prediction models on every level of detail – and applying a case-based research approach in order to identify the model with the highest model quality. The modeling approach on the four levels of detail is different. The models on the coarsest level of detail predict assembly start delayers utilizing a classification approach. The models on the three finer levels of detail predict assembly start delayers via a regression of different lead times and subsequent postprocessing operations to identify the assembly start delayers. After training of the 24 prediction models based on a real data set of a machine and plant manufacturer and evaluating their model quality, the classification model utilizing a Gradient Boosting classifier showed best results. Thus, performing a binary classification to identify assembly start delayers was the best modelling approach. With the achieved results, our study is a first approach to predict assembly start delayers and gives insights in the performance of different modeling approaches in the area of a production planning and control.

PERFORMANCE IMPROVEMENT STRATEGIES IN FINANCIAL, LEARNING AND GROWTH PERSPECTIVES THROUGH IMPLEMENTING THE INTEGRATION OF LEAN WITH SIX SIGMA (DMAIC) CONCEPTS IN THE PACKAGING DRINKING WATER INDUSTRY IN MAKASSAR CITY

Article

Full-text available

May 2021

Lamatinulu Ahmad

The growth of bottled drinking water is currently growing in line with the increasing needs of the community, however, in its operational activities, several problems are still found. The problems are related to the problem of activities that are not useful (waste) in the aspects of finance, learning, and growth. Based on these problems, in this study, an analysis was carried out by applying the integration of the concept of Lean and Six Sigma. The research method approach is carried out by identifying the types of activities that are not useful (waste) and analyzed by the stages Define, Measure), Improve, and Control with the abbreviation DMAIC analysis. The method of data collection was carried out by direct survey, interview, and questionnaire instrument distribution. The results of this study identify activities that are not useful (waste) in the form of findings of the amount of non-productive work time, low work motivation, low frequency of employee education and training activities, loss of sales turnover due to consumer movement to buy other brands of products, it is still found that the lowest sales volume occurs. Based on the stages of DMAIC analysis, 10 root causes and strategies of waste are found from a financial perspective, and 8 on the aspects of growth and learning.

Improving delivery performance by using simulation, FMEA, and FTA

Article

Full-text available

Mar 2020

Delivery performance is one of the indications of enterprise’s success to provide products to customers. In this research, simulation is done to measure the delivery performance and all the processes included in delivery process. In fact, every process has their own risks could delay delivery process that the delivery performance is reduced. The methods used to identify the risks and the causes are Failure Mode and Effects Analysis (FMEA) and Fault Tree Analysis (FTA). Risks analysis is done with the help of Pareto diagrams and scatter plot to determine the risks need to be corrected immediately. The proposed improvements are integrating the systems in form of e-cargo ready and implementing bar-coding. After the proposed e-cargo ready applied and being simulated, the delivery performance in terms of average total time reduced by 29,398%.

Perceived Importance and Quality Attributes of Automated Parcel Lockers Services in Urban Areas

Preprint

Full-text available

Sep 2023

Maria Cieśla

Recent global trends related to the increasing use of e-commerce are becoming a challenge for courier transport especially in the last-mile process of delivering products to the final retail recipient. One of the delivery methods is the personal collection of the parcel in an automated post box, available 24/7 for the customer. This research aims to define the most important attributes of the courier services quality, including the delivery of parcels through automated sending and receiving parcel lockers, leveraging advanced technologies, data, and connectivity to enhance the quality of life, sustainability, and efficiency for city residents. The research was based on a preliminary selection of the most important features of parcel lockers’ service quality, which were extracted from the analysis of scientific literature and previous research. The analysis was carried out by conducting a survey among city parcel locker users that provided data coded according to the dimensions of the Kano model. This allowed to conclude that the location of parcel stations, ensuring improvements for the disabled, adjusting the size of the parcel to the size of the box, proper placement of the parcel in the box and a properly functioning dedicated application are the most important features in the process of automatic delivery of parcels to recipients in urban areas. This paper enriches the literature on customer service quality of self-service technologies for last-mile delivery with the use of automated parcel lockers.

Factors Affecting Purchasing Behaviour through Electronic Business to Consumer (B2C) Sites and Marketplaces: Evidence from Internet Users in Tanzania

Article

Full-text available

Jun 2023

Uswege Ibrahim

The study established the online purchasing choices and factors that affect customer online purchasing behaviour that is determined by customer online buying experience. A descripto-explanatory design was adopted so as to profile and explain the causal effect relationship of repetitive online purchasing. The study sampled 385 internet users, and data were collected using online survey tools. Multistage sampling was adopted, whereby at first online platforms were purposively selected and thereafter the shared survey tool was open for anyone to access and respond. Data collected were both quantitatively and qualitatively analysed and presented. The findings show that online purchasers prefer to purchase from social media applications rather than from specialized e-commerce sites. Also, the findings reveal that online buyers can purchase quality products and at affordable prices online just as they did in physical retail markets. Pertaining to factors affecting customer online purchasing behaviour, it was found that online buying experience is affected by presence of phantom sellers, lengthy browsing time, user friendliness of e-marketplaces and internet data cost. Further, the study found that in spite of negative experiences encountered when purchasing online, buyers aren't willing to entirely quit making online purchases. The study concludes that e-marketplaces and online retailers are using digital commercial mechanisms which buyers perceive as restrictive. The emergence of social media poses a threat to specialized e-commerce sites which causes underutilization of e-commerce sites. The study recommends that online retailers and local e-commerce sites developers should consider electronic dynamism that is user-friendly and offers a variety of products with easily accessible product details.

Perbaikan Rute Distribusi Bahan Baku untuk Minimasi Jarak Tempuh dan Beban Kerja pada UKM Kuliner Mie

Article

Dec 2022

Delivery activities have a great role for a business actor. However, delivery issues are there all the time. This was experienced by a noodle culinary SME that experienced delays in the delivery of various noodle raw materials and noodle toppings which caused noodle sales activities to be disrupted. In addition, these raw materials have a lifespan (without preservatives) so they must be delivered according to a predetermined schedule and hours. This research will solve this problem by minimizing delays through finding the shortest mileage delivery route. Because each delivery location has its own schedule and time window, the Nearest Neighbor method by paying attention to the time window is used. Based on the calculation results, each distribution route with the shortest distance was obtained, as evidenced by a reduction in the middle route by 0.23 km and the northern route by 5.88 km. In addition, this proposed delivery route was able to save fuel consumption on the middle route by 3% and the northern route by 10%. In terms of the workload aspect, car fleet drivers were also reduced by 31% and motorbike fleet drivers by 47%.

Lean-SLP production model to reduce lead time in SMEs in the plastics industry: A Empirical Researh in Peru

Conference Paper

Full-text available

Jan 2022

A Systematic Literature Review Of Machine Learning Approaches For The Prediction Of Delivery Dates

Conference Paper

Full-text available

Jun 2022

Manufacturing companies tend to use standardized delivery times. The actual delivery times requested by the customers and the current capacity utilization of the production are often not taken into account. Therefore, such a simplification likely results in a reduction of the efficiency of the production. For example, it can lead to an obligation to use rush orders, an unrealistic calculation of inventories or an unnecessary exclusion of a Make-to-Order production. In the worst case, this results not only in an economically inadequate production, but also in a low achievement of logistic objectives and therefore in customer complaints. To avoid this, the delivery dates proposed to the customer must be realistic. Given the large number of customer orders, a wide range of products, varying order quantities and times, as well as various delivery times requested by customers, it is not economical to determine individual delivery dates manually. The ongoing digitalization and technological innovations offer new opportunities to support this task. In the literature, various approaches using machine learning methods for specific production planning and control tasks exist. As these methods are in general applicable for different tasks involving predictions, they can also assist during the determination of delivery dates. Therefore, this paper provides a comprehensive review of the state of the art regarding the use of machine learning approaches for the prediction of delivery dates. To identify research gaps the analyzed publications were differentiated according to several criteria, such as the overall objective and the applied methods. The majority of scientific publications addresses delivery dates only as a subordinate aspect while focusing on production planning and control tasks. Therefore, the interrelationships with several production planning and control tasks were considered during the analysis.

Reinforcement Learning for Process Time Optimization in an Assembly Process Utilizing an Industry 4.0 Demonstration Cell

Conference Paper

Jul 2022

The process time of a production process is an important result of planning in supply networks, which in turn is a defining parameter, significant for further organizational decisions. Optimizing it requires extensive knowledge of the underlying processes and parameters involved. It is imperative to reduce process time while also ensuring the quality of the products to stay competitive in an ever-evolving environment. This paper demonstrates a solution for a reinforcement learning (RL) application to optimize the process time of an assembly case. Using an actual industry 4.0 demonstration cell as a hands-on, model-free simulation environment, an RL Agent interacts with an OPC UA interface to gather machine sensor data and control the machine drives. Using Q-learning, an online off-policy algorithm, with a discretized action space we achieve self-optimization of the assembly case by decreasing process time while simultaneously ensuring that the quality of the products stays within tolerable parameters. Our findings demonstrate the usefulness of RL applications in process control, in this case optimizing machine parameters. As an addition, we deduce design guidelines from this model and its implementation to help reduce possible sources of error while implementing similar approaches for industrial applications.

Uncertainty and Changeability in Manufacturing Equipment Planning

Conference Paper

Jan 2022

Increasing time and cost pressure are forcing companies to plan and design their manufacturing systems with fuzzy product data in order to keep pace with shorter and agile product development cycles. This development is accompanied by a multitude of requirements for the planning of the respective manufacturing equipment. Many of these requirements are associated with a high degree of uncertainty and can thus only be specified vaguely in early planning phases, eventually leading to costly, originally unforeseen changes to the specified type of equipment. This consequently underlines the need for a predictive evaluation of uncertainty, or changeability in this context, to enable a more efficient planning approach based on quantified levels of uncertainty. In this paper, the authors therefore present the results of a systematic literature review on the evaluation of changeability in manufacturing systems design with special focus on uncertainty. Most importantly, standardized methods are not available yet; hence, product development as well as project management approaches are frequently adapted to manufacturing systems design. Furthermore, FMEA and fuzzy-logic-based methods are promising techniques for the assessment of uncertainty as a key element of changeability. Concluding, the paper discusses how the findings could support the development of a holistic approach to identify and predictively evaluate uncertainty in order to use it as a decision-making factor for the application of agile planning methods, thus contributing to better decision-making and higher achievement levels of project targets in industrial practice.

Impact of material data in assembly delay prediction—a machine learning-based case study in machinery industry

Article

Full-text available

May 2022
INT J ADV MANUF TECH

Designing customized products for customer needs is a key characteristic of machine and plant manufacturers. Their manufacturing process typically consists of a design phase followed by planning and executing a production process of components required in the subsequent assembly. Production delays can lead to a delayed start of the assembly. Predicting potentially delayed components—we call those components assembly start delayers—in early phases of the manufacturing process can support an on-time assembly. In recent research, prediction models typically include information about the orders, workstations, and the status of the manufacturing system, but information about the design of the component is not used. Since the components of machine and plant manufacturers are designed specifically for the customer needs, we assumed that material data influence the quality of a model predicting assembly start delayers. To analyze our hypothesis, we followed the established CRISP-DM method to set up 12 prediction models at an exemplary chosen machine and plant manufacturer utilizing a binary classification approach. These 12 models differentiated in the utilization of material data—including or excluding material data—and in the utilized machine learning algorithm—six algorithms per data case. Evaluating the different models revealed a positive impact of the material data on the model quality. With the achieved results, our study validates the benefit of using material data in models predicting assembly start delayers. Thus, we identified that considering data sources, which are commonly not used in prediction models, such as material data, increases the model quality.

Predictive analytics in quality assurance for assembly processes: lessons learned from a case study at an industry 4.0 demonstration cell

Conference Paper

Jan 2021

Quality assurance (QA) is an important task in manufacturing to assess whether products meet their specifications. However, QA might be expensive, time-consuming, or incomplete. This paper presents a solution for predictive analytics in QA based on machine sensor values during production while employing specialized machine-learning models for classification in a controlled environment. Furthermore, we present lessons learned while implementing this model, which helps to reduce complexity in further industrial applications. The paper’s outcome proves that the developed model was able to predict product quality, as well as to identify the correlation between machine-status and faulty product occurrence.

A holistic study of factors governing small and medium enterprises in India

Article

Jul 2021
J Model Manag

Purpose The purpose of this paper is to identify the input, process and output factors (along with their manifest variables) of small and medium enterprises (SMEs), and to establish cause and effect relationships amongst the factors and sub-factors. Systems thinking, a holistic approach, is used to carry out qualitative analysis of the feedback loops. Design/methodology/approach A well-structured questionnaire was developed to gather the relevant data to identify the factors affecting the performance of SMEs in a holistic manner. A total of 150 responses were collected during November 2015–March 2016. Factor analysis and path analysis were used to establish causal relationships between input, process and output factors. The systems thinking approach has been used for qualitative analysis. Findings Feedback loops have been identified amongst input-process-output-input factors and amongst sub-factors. They enabled authors to infer that the managers/owners of SMEs are systems thinkers, if not completely, at least partially. Six negative feedback loops and one positive feedback loop prevail. System behaviour arises out of the interaction of positive and negative feedback loops; it appears that in the long-run, the SMEs attain their target levels. The following inferences are drawn: circular relationships are identified amongst input, processes and organisational performance (OP), modern management tools such as just in times, Kanban have long-term benefits and are perceived as ineffective by small enterprises and formal financing and functional transparency enhances OP. Originality/value Systems thinking, a holistic approach, has been used to study the effect of input, process and output factors on one another. Such studies are sparse, especially, in the Indian context. Many studies have been conducted to study the effect of input and of processes on performance such as innovation, information technology, human resource, technology, government regulation on performance of SMEs in a silo but, rarely all together. The qualitative analysis adds value to the research. Many of the outcomes of the research have been largely discussed in Indian print media which indicates the pragmatic approach of the research.

Supply Chain Performance and Quality Measurement of Dairy Cow Concentrate in Cooperative toward Sustainable Productivity: a Case Study

Article

Full-text available

Mar 2021

This research aims to measure supply chain performance of dairy concentrate in cooperative with the SCOR-AHP approach and develop improvement based on the performance result, and to analyze the quality suitability as a basis to develop a comprehensive quality standard and its quality control mechanism. This research was conducted at a dairy farmer cooperative located in West Java. The analysis used to measure the performance was supply chain operation reference-analysis hierarchy process (SCOR-AHP). For measuring the product quality, ten post-production concentrate samples, 27 samples after the distribution process, and 25 samples for homogeneity test from five mixer machines were taken. Concentrate quality parameters were moisture, ash, crude fat, crude protein, crude fiber, total digestible nutrients (TDN), and salt content. Post-production samples data were compared with Indonesian National Standard (SNI) using one-tailed one-sample t-test, samples data from the field were tested using two samples independent t-tests compared to post-production samples data, and homogeneity test was seen from the coefficient of variation value of the salt content. The results show that the supply chain performance value of dairy cow concentrate at the cooperative is excellent. The nutrient content complies with SNI, but the homogeneity of the mixture is classified as poor category. The nutrient content of samples taken from the field shows differences with post-production samples except for TDN. The excessive total cost can be utilized to enhance performance in generating a better quality product. The cooperative should enhance homogeneity by concerning the mixing process and maintain the quality consistency by reformulating, stabilizing the quality of feedstuff, and calculating stock properly to avoid longer storage.

Optimal position of supply chain delivery window with risk-averse suppliers: A CVaR optimization approach

Article

Feb 2021
INT J PROD ECON

The study introduces the concept of risk-averse optimal position of the delivery window (RA-OPDW) into a cost-based delivery performance model. The penalty costs for early and late deliveries have attracted much attention in the background of supply delivery performance. However, minimizing the expected penalty has a critical disadvantage that it ignores the risk-averse attitude of decision-makers. Thereby, a Conditional Value-at-Risk (CVaR) measure of the penalty on untimely delivery is proposed to incorporate the risk-aversion degree of a decision-maker. Then the closed-form expression of optimal position minimizing the CVaR is derived under the condition that the risk-aversion degree is high. The influence of the risk-aversion degree, the delivery window width, the ratio of the unit penalty on late delivery to the unit penalty on early delivery are explored. Besides, a hybrid model that trades off the minimization of CVaR and the expected penalty is investigated. The conditions for the optimal position in the hybrid model is also deduced. Moreover, the minimization of CVaR and the expected penalty are just two special cases of the hybrid model. Finally, a numerical case is executed to compare the optimal position with minimum CVaR and the one minimizing the expected penalty and to illustrate the influence of several parameters on the optimal position.

What is the value of delivering on time?

Article

Jun 2020

Purpose Delivery punctuality is essential in supply chain management, yet the cost of untimely delivery is usually assumed to be given or based on intuition and not quantified by facts. Design/methodology/approach The authors used a data set containing detailed transaction data for a nine-year period on orders and deliveries of sport goods. The methodology is based on applying a polynomial distributed lag model to longitudinal data on supply chain transactions. Findings The results indicate that small delivery delays up to two weeks decrease the sales by maximum 10% during a period of 3–4 weeks. Longer delays, up to 45 days, have a larger negative effect on sales, which can also last longer. For this case company, the estimated lost sales due to late deliveries (=5 days) were 5.1% of the delivery value. The longer delays got, the large the cost was: delays at least 45 days long were the most costly causing almost 40% of the estimated lost sales. Practical implications This study offers a methodology for quantifying lost sales due to delivery delays and estimating how long the poor delivery performance affects retailers' order behaviour. Originality/value The results give a quantitative decision-making tool for supply chain managers to estimate the profitability of investments in the supply chain performance, especially on improving punctuality.

Assessing R&D approach methodology and technological trends in fleet management

Thesis

Full-text available

Dec 2019

The cost-effective functioning of automotive industry enterprises is possible due to the strategic planning of R&D, considering the potential of innovation and commercialization of the created technologies in the entrepreneurial sector of the economy. In this thesis, the approaches for strategic planning of R&D refereeing to usage of patent analysis are discussed as a tool for technology forecasts and the investigation of patent metrics. In this project, Fleet Management Systems (FMS) and various dispatching technologies are considered as potential technological solutions to improve flexibility and to monitor development trends in these technology areas. The methodology consists of a decision support system that ranks specific criteria while managing various kinds of resources in enterprises based on multiple expert evaluations. The implementation of the analytic hierarchy process (AHP) and fuzzy logic can be used to include additional decision variables into the patent retrieval and selection modes. Based on the patent activity of the retrieved patent data, we can predict emerging technologies in the various stages of their lifecycles. Additionally, proposed technical and IP applicants’ analysis for determining current technological trends. Evidence from leads in the development of FMS demonstrates the richness of the methodology for analyzing patent data, respectively. Data-based technologies inventions were examined to establish directions of vehicle fleet using operational research modeling techniques. The thesis describes the methods of modern theory to improve the performance of the fleet managers in conjunction with innovative concepts of fleet management and facilitates the patent retrieval process-related.

Limiting Supplier Opportunism: Evidence from Buyer Complaints

Conference Paper

Apr 2020

We examine various screening, auditing, and resolution mechanisms to limit both spontaneous and calculated supplier opportunism. Using a proprietary dataset, with over 1000 complaints registered about suppliers during the period 2014 to 2017, we find substantial heterogeneity in firm risk reduction strategies to limit supplier opportunism. Buyers from developed economies appear to experience less supplier opportunism than firms from non-OECD countries. Opportunism appears more pronounced in suppliers from poor countries than in firms from emerging market economies, such as China. Importantly, our analysis demonstrates several mechanisms that appear have limited, if any, impact on supplier opportunism, such as the use of company references and third-party visits. In contrast, direct factory visits and third-party quality checks are strongly associated with lower supplier opportunism. Overall, our results reveal the relative effectiveness of several different mechanisms to limit supplier opportunism.

Research on Optimization of Production Decision Based on Payment Time and Price Coordination

Article

Full-text available

Jan 2020
COMPLEXITY

This paper focuses on the coordination and optimization between a manufacturer and multiple retailers in a supply chain. The manufacturer makes product quotes and delivery deadlines for all retailers, and each retailer selects product offers and delivery deadlines based on their own needs. Manufacturers maximize their own total profits by setting optimal quotes and delivery deadlines. This paper constructs the mathematical model of the optimal quotation and delivery deadline and proposes a scheduling algorithm that is different from the general M/M/1 and then studies the production scheduling problem and explores the effective implementation of quotation policy in management practice.

Impacts of logistics information on sales: Evidence from Alibaba

Article

Jan 2020

Facing fierce competition from rivals, sellers in online marketplaces are eager to improve their sales by delivering items faster and more reliably. Because logistics quality can be known only after a transaction, sellers must identify effective ways to communicate logistics information to consumers. Drawing on the accessibility‐diagnosticity framework, we theorize that the sales impacts of logistics information depend on its relative diagnostic value. Using data on 1493 items with 505,785 consumer reviews from an online marketplace, we examine how sales are affected by three information sources for logistics services: online word of mouth (WOM) about logistics, self‐reported logistics services, and expected delivery time. We use an instrumental variable method to address the endogeneity issue between sales and WOM. We find that, ceteris paribus, consumers give more weight to WOM about logistics and delivery time when they make purchase decisions but less weight to self‐reported logistics service. The effects of logistics information on sales are asymmetric for large and small sellers.

Improving delivery performance for gamma distributed delivery time

Article

Jan 2019

Improving delivery performance for gamma distributed delivery time

Article

Jan 2019

Achieving supply chain excellence through supplier management: A case study of fast moving consumer goods

Article

Full-text available

Dec 2018
Benchmark Int J

Purpose The purpose of this study is to develop a supplier selection and management program to improve overall supplier performance. Design/methodology/approach Supplier performance is measured in terms of quality and delivery within a fast moving consumer goods (FMCG) business of a multinational company based in Thailand using a case study methodology. The quality and delivery related data were collected from daily deliveries at the manufacturing plant both before and after implementing the supplier management program. Findings Findings of the study suggest that the selection of suppliers based on their performance is important for manufacturing firms. Moreover, the supplier selection and management program can contribute effectively to improving suppliers’ performance. Research limitations/implications This case study has been conducted based on a single company within the FMCG industry. Hence, it limits the generalizability of the findings across industries. Practical implications The study provides a real-life tool for practitioners to learn about the importance of strategic decision-making process pertaining to the supplier selection and management program. Originality/value Implementing a supplier management system is a critical step in enhancing an organization’s overall competitiveness. To develop an effective supplier management system firms must have objective measures and share those with their suppliers. Developing metrics for suppliers’ evaluation is the key to achieving continuous improvement as evidenced in this case.

Design of agile supply chains including the trade-off between number of partners and reliability

Article

Full-text available

Aug 2018
INT J ADV MANUF TECH

The reliability of supply partners is particularly vital in agile supply chains as it is vulnerable to the inability of a supply partner to meet its high responsiveness and flexibility requirements resulting in the disruption of the whole network. Disruption can have expensive and extensive results for the entire agile supply chain. To mitigate the risk of disruption and improve the reliability of the whole agile supply chain, decision-makers need to pay more attention to supply chain design and construction while simultaneously taking into account the sourcing strategy decisions. This paper proposes a series of models for the design of agile supply chains using dynamic programming modeling. These provide decision-makers with a systematic way of analyzing one of the key decisions of sourcing strategy, namely the trade-off between the number of supply partners and reliability. The efficacy of the models is demonstrated through their application to a Chinese bus and coach manufacturer by way of an empirical illustration. The results show that this approach is effective for this application, and it can be applied in other related decision-making scenarios. The methods offered in this paper provide managers with a practical tool to design their agile supply chains while considering the trade-offs between the number of partners and the reliability of the entire agile supply chain.

Improving delivery performance for asymmetric Laplace distributed delivery time in a two-stage supply chain

Article

Full-text available

Nov 2017

This paper investigates strategies for improving supply chain delivery timeliness when the delivery time follows an asymmetric Laplace distribution. Delivery performance is measured using a cost-based analytical model which evaluates the expected cost for early and late delivery. This paper presents a set of propositions that define the effect of changes to the parameters of the delivery time distribution on the expected penalty cost for untimely delivery when a supplier uses an optimally positioned delivery window to minimise the expected cost of untimely delivery. The scale parameter increases the expected penalty cost, skewness decreases the cost and the location parameter has no effect on the expected penalty cost. The effects are illustrated in a numerical example with real-world supplier data. The results can be used in developing strategies for improving delivery performance from a supplier’s perspective and define how the delivery time distribution parameters can be modified to decrease the expected penalty cost of untimely delivery. The paper proposes a general approach to modelling delivery performance improvement and can be applied to other delivery time distribution forms. The approach can serve as guidance for practitioners undertaking a programme to improve delivery performance.

The role of commitment in online reputation systems: An empirical study of express delivery promise in an E-commerce platform

Article

Aug 2023
DECIS SUPPORT SYST

Where to Cut the Long Tail? The Value of Carrying Inventory in Online Retail

Article

May 2023

One advantage of online retail is that a large number of products can be displayed at low cost. However, online retailers must decide which of these products to carry in inventory (stock items) and which to order from suppliers when a customer places an order (nonstock items). In this paper, we empirically investigate how carrying a product in inventory affects its online sales. We use data from a European furniture and interior design retailer consisting of daily sales transactions and inventory data covering 18 months. We use a quasi-natural experiment—random transitions of products in and out of inventory at the retailer’s central warehouse—to estimate the causal effect of carrying inventory on sales. Our results show a strong and statistically significant increase in sales of, on average, 65% associated with having the product available in stock. More interestingly, this effect differs between products and is moderated by the price of the product: sales of more expensive products are less sensitive to the product being in stock. We use these results to draw insights on which types of items to carry in inventory. This paper was accepted by Victor Martínez-de-Albéniz, operations management. Supplemental Material: Data are available at https://doi.org/10.1287/mnsc.2023.4777 .

ASPIRE: Air Shipping Recommendation for E-commerce Products via Causal Inference Framework

Conference Paper

Aug 2022

Multiyear Impact of Backorder Delays: A Quasi-Experimental Approach

Article

Aug 2022

This paper investigates the impact of experiencing a backorder on customers’ purchase behaviors the next four years.

Predictor Model of the Supply Chain Effectiveness based on Critical Success Factors in a Commerce Retail Industry

Article

Full-text available

Aug 2022

The business environments of the globalized economy present increasing complexity under highly variable conditions of volatility, risk, and uncertainty that exert intense pressures on retailers; some of them develop programs for the improvement of the supply chain. This paper is about determining the factors of the supply chain and the development of a structural equation model. The first section presents the background, the description of the problem and a literature search of the Supply Chain factors and their classification. The Methodology section explains the development of a questionnaire as a measuring instrument based on the identified factors. The validation of the questionnaire was with the Cronbach alpha index, and then it applied to a sample of retailers in central Mexico. Using the Partial Least Squares Structural Equation Modelling Approach, the development of a structural model identified the key driver factors related to the improvement of the Supply Chain. In results report the most important factors: 1) supplier’s quality of the goods, 2) internal factors, 3) after-sale service, and 4) road infrastructure and 5) commercial environment, for commerce retail industry in México.

Supplier inventory leanness and financial performance

Article

May 2022

Numerous studies have examined the relationship between inventory management and financial performance. However, the focus of such empirical work has primarily been on how a firm's own inventory characteristics affect its performance. Our objective is to extend this body of literature beyond the firm‐level. We draw on inventory theory and resource‐based theories to hypothesize about the effect of supplier inventory leanness on a focal firm's financial performance and how supplier and focal firm inventory leanness interact to affect such outcomes. We test our hypotheses using a large panel dataset of supplier‐focal firm relationships obtained from Compustat's Customer Segment database and aggregated to the focal firm‐quarter level, as well as firm financial information from Compustat's Fundamentals Quarterly database. The econometric analyses provide evidence that supplier inventory leanness influences focal firm financial performance indirectly through the interaction with the firm's own inventory leanness. In particular, our estimation results detail how supplier inventory leanness affects the non‐linearity of the focal firm's inventory leanness‐financial performance relationship and its optimal inventory leanness level. The findings broaden the scope of empirical inventory literature and highlight supplier inventory leanness as an important consideration in firm‐level inventory decision making.

Omnichannel Distribution to Fulfill Retail Orders

Article

Full-text available

Apr 2022

Xiang Wan

Problem definition: Although the analytical literature extensively studies distribution channels, empirical evidence on the value of omnichannel distribution is limited, especially for the omnichannel used by manufacturing companies to fulfill retail orders. I empirically evaluate the extent to which the dual–distribution center (dual-DC) distribution channel and the factory-direct distribution channel contribute to fulfilling orders from retail stores compared with the traditional single–distribution center (single-DC) channel. Academic/practical relevance: Many manufacturing companies develop their distribution omnichannel to fulfill retail orders. To make proper decisions on various channels, they need to understand the trade-offs between different order-fulfillment measures and costs in different distribution channels. Methodology: I exploit two switches in distribution channels of a manufacturing company to its retail customers: one from single-DC to dual-DC distribution and the other from single-DC to factory-direct distribution. To account for the trade-offs between order fulfillment and the costs associated with each distribution channel, I develop three equations for fill rate, lead time, and production and distribution costs in a difference-in-difference framework and then estimate the equations using proprietary data of retail orders and delivery records. Results: The results quantify the contributions of distribution channels to order fulfillment. Compared with the single-DC distribution channel, the dual-DC distribution channel raises the fill rate by 0.4% and reduces the lead time by 9.7% without incurring additional costs, whereas the factory-direct distribution channel increases the fill rate by 0.5% and provides a 5.2% cost savings but extends the lead time by 12.5%. I further analyze these contributions to order fulfillment across demand variability and order quantity. Managerial implications: The findings provide manufacturing companies with valuable knowledge of their distribution channel choices and means to find a cost-effective distribution channel to improve order fulfillment for various customers and products.

Pricing in make-to-order firms with a lead time-dependent cost

Article

Jul 2021

The existing literature on make-to-order firms typically supposes that the unit production cost is a constant. In contrast, in this study, this cost is a variable that depends on the lead time. Under this assumption, we investigate the pricing problem for both a monopoly firm and two competing firms. Specifically, we develop a queueing-game-theoretic model to capture the interaction between customers and the firm’s manager and further solve the pricing problem. The results illustrate that, for a monopoly firm, there exists a service rate threshold, and for two homogeneous firms, there is a unique symmetric equilibrium. However, for two heterogeneous firms, the equilibrium may not exist, and if it does, it may not be unique. In this case, the equilibrium is characterized analytically if it is unique and explored numerically if not. Finally, a specific cost function is adopted to analyse the sensitivity of the optimal decisions. When the firms have this variable cost, compared with those with constant unit production cost, customers’ waiting time might be shorter, and the competition between firms might be fiercer. Also, for these firms, increasing the service rate or decreasing the cost parameter does not always help to increase their market share or profit.

Application of deep learning and image feature retrieval in E-commerce transaction and customer management

Article

Oct 2020

Lei Ning

The huge amount of digital image data in e-commerce transactions brings serious problems to the rapid retrieval and storage of images. Image hashing technology can convert image data of arbitrary resolution into a binary code sequence of tens or hundreds of bits through a hash function. In view of this, based on the image content characteristics, this study improved the traditional hash function and proposed a hash method based on bilateral random projection. At the same time, the projection vectors are acquired in the low-rank sparse decomposition process of the image data matrix, and the projection vectors are group orthogonalized. In addition, this study designed contrast test to carry out research and analysis on the effectiveness of the algorithm. The results show that the proposed algorithm works well and can be applied to practice and can provide theoretical reference for subsequent related research.

Shipping surcharges and LSQ: pricing the last mile

Article

Jun 2020
Int J Phys Distrib Logist Manag

Purpose Pricing the shipping surcharge is a major strategic decision for online retailers, and free shipping promotions are becoming more common among online retailers. The purpose of this research is to examine the effect of last mile pricing strategies on customer attraction and retention in the hypercompetitive online retailing industry. Specifically, this paper investigates the effect of partitioning the shipping surcharge on consumer logistics service quality (LSQ) perceptions and, in turn, purchase behavior. Design/methodology/approach Employing signaling theory and expectation–disconfirmation theory, hypotheses are derived for two specific points in an online purchase scenario: prepurchase and following a logistics disruption. The hypotheses are tested using a scenario-based experiment with manipulations for the level of shipping surcharge partitioning and the presence of a logistics disruption. Findings The results suggest that partitioned shipping surcharges influence prepurchase expectations of LSQ satisfaction and amplify the negative effects of logistics disruptions. This, in turn, drives the purchase and repurchase intentions. Practical implications The findings inform online retailers of the perceptual and behavioral effects of last mile pricing strategies. Specifically, this research demonstrates how and under what conditioning partitioning the shipping surcharge can influence the attraction and retention of online customers. Originality/value This study integrates pricing and LSQ research to assess the black box of consumer purchase behavior. This is one of the first studies to empirically contrast the effects of last mile pricing strategies on consumer expectations and perceptions of LSQ.

Offering subsidies to logistics providers and consignors

Article

Aug 2019
J OPER RES SOC

Firms aim to achieve time-based competitiveness to reach their target market sooner and better to meet consumers’ changing demands and cater to rapidly changing markets. One efficient approach is to speed up logistics performance. To generate positive social externality in social welfare, the government can provide subsidies to faster—but also higher cost—logistics providers and encourage customers to choose these providers. This study examines the influence of government subsidies to railway logistics providers and consignors on market equilibrium. We find that subsidization affects the price, demand, and profits of logistics providers. However, the impact on demand and profits remains the same regardless of whether the subsidy is provided to the railway logistics provider or railway consignor. These results are consistent whether the transportation cost is subject to economics of scale or not. The profit of each logistics provider has a concave relationship with its own transportation time but a convex relationship with its competitor’s transportation time. The key factors that determine the optimal subsidy and its impact on social welfare include the unit operational cost of the railway logistics provider and the logistics provider's time-based differentiation and time values of consignors. In addition, the government provides the highest unit subsidy when the railway logistic provider optimizes its profit at the optimal transportation time. When customer demand is stochastic, we find both the fluctuation level of customers’ demand and the logistics providers’ risk attitude influence the government’s optimal subsidy amount. Providing an optimal subsidy helps to efficiently guide the competitive market and enhance social welfare.

Performance implications of the fit between suppliers' flexibility and their customers' expected flexibility: A dyadic examination

Article

May 2018

David M. Gligor

Although an increase in flexibility for firms usually entails further investments and higher operating overhead for their suppliers (Sheikhzadeh et al., 1998Koste and Malhotra, 1999), most studies have focused exclusively on the benefits derived from additional flexibility enjoyed by the buyer firms neglecting the impact on the financial performance of their suppliers (e.g., Malhotra and Mackelprang, 2012; Gligor, 2014; Mandal, 2015). To explore the complex supplier-customer interplay, we introduce the concept of buyer-supplier flexibility fit (i.e., the match between the level of flexibility the customer expects from its supplier and the supplier's level of flexibility) and explore its impact on the supplier's financial performance (i.e., ROA). We collected dyadic archival and survey data from 638 firms (319 supplier-customer dyads) to test these relationships. Our results indicate that buyer-supplier flexibility fit has a direct and positive impact on the supplier's ROA. Further, the strength of the relationship increases when firms operate in munificent and/or dynamic environments but does not change significantly in complex environments. The relationship also becomes stronger as the exchanged business volume increases between the customer and its supplier, and as the relationship progresses in age. In addition, our findings indicate that firms with perfect buyer-supplier flexibility fit perform best, followed by firms with negative misfit (i.e., the supplier's level of flexibility is lower than its customer's expected level of flexibility), while firms with positive misfit (i.e., the supplier's level of flexibility is higher than its customer's expected level of flexibility) are the laggards. Interestingly, positive misfit has a stronger negative impact on suppliers' ROA compared to misfit in general and negative misfit. Key corresponding managerial implications are derived.

Too Much of a Good Thing: The Impact of Product Variety on Operations and Sales Performance

Article

Full-text available

May 2012

We examine the impact of product variety decisions on an operational measure – unit fill rate – and on sales performance. Results are estimated using weekly data over three years from 108 distribution centers of a major soft drink bottler. Our results show that fill rates are negatively associated with product variety at a diminishing rate. In addition, we examine the total effect of product variety on sales including both the direct effect and the indirect effect through operations performance. The total impact of product variety on sales initially is positive, although at a diminishing rate. However, beyond a certain level, increased product variety actually results in lower sales; that is, “too much of a good thing”. Thus, the findings provide a comprehensive understanding of the impact of product variety on operations and sales performance.

An Empirical Investigation of Customer Satisfaction after Service Failure and Recovery

Article

Full-text available

Nov 2000
J SERV RES-US

Relatively little research has addressed the nature and determinants of customer satisfaction following service failure and recovery. Two studies using scenario-based experiments reveal the impact of failure expectations, recovery expectations, recovery performance, and justice on customers’ postrecovery satisfaction. Customer satisfaction was found to be lower after service failure and recovery (even given high-recovery performance) than in the case of error-free service. The research shows that, in general, companies fare better in the eyes of consumers by avoiding service failure than by responding to failure with superior recovery.

A Model of Customer Satisfaction With Service Encounters Involving Failure and Recovery

Article

Full-text available

Sep 1999

Customers often react strongly to service failures, so it is critical that an organization's recovery efforts be equally strong and effective. In this ar-ticle, the authors develop a model of customer satisfaction with service failure/recovery encounters based on an exchange framework that inte-grates concepts from both the consumer satisfaction and social justice lit-erature, using principles of resource exchange, mental accounting, and prospect theory. The research employs a mixed-design experiment, con-ducted using a survey method, in which customers evaluate various fail-ure/recovery scenarios and complete a questionnaire with respect to an organization they recently had patronized. The authors execute the re-search in the context of two different service settings, restaurants and ho-tels. The results show that customers prefer to receive recovery resources that "match" the type of failure they experience in "amounts" that are commensurate with the magnitude of the failure that occurs. The findings contribute to the understanding of theoretical principles that explain cus-tomer evaluations of service failure/recovery encounters and provide managers with useful guidelines for establishing the proper "fit" between a service failure and the recovery effort.

Competitive Priorities, Plant Improvement and Innovation Capabilities, and Operational Performance: A Test of Two Forms of Fit

Article

Full-text available

Feb 2011
INT J OPER PROD MAN

Purpose – Examining the strategic contingency of plant improvement capability and innovation capability. Two forms of fit between the two capabilities and competitive priorities were empirically tested. Design/Methodology/Approach – Data collected from a sample of 238 manufacturing plants were used to test the hypotheses using regression. Findings – The results provide partial support for fit as mediation. However, there was no evidence supporting fit as moderation. We found that improvement capability and innovation capability are associated with different competitive priorities and also have varying impact on different operational performance dimensions. Research limitations/implications – There are two limitations to this research: only three operations management (OM) practices are included in each capability examined; somewhat limited measures of competitive priorities and operational performance.Originality/value – This study examines multiple forms of fit between competitive priorities and operations capabilities. The findings can inform managers to selectively implement OM practices for developing the needed operations capabilities given the chosen competitive priorities.

The influence of an integration strategy on competitive capabilities and business performance: An exploratory study of consumer products manufacturers

Article

Jul 2003
J OPER MANAG

In this paper, we expand upon recent research by Frohlich and Westbrook [J. Operations Manage. 19 (2) (2001) 185] that characterizes the influence of supply chain integration on performance. Introducing supply chain integration intensity as a proxy variable for Frohlich and Westbrook’s [J. Operations Manage. 19 (2) (2001) 185] ‘outward‐facing supply chain strategy’, we investigate the ways that manufacturing‐based competitive capabilities mediate the relationship between supply chain integration and business performance. While previous research suggests that supply chain integration is directly related to superior business performance, the mediating role of manufacturing capabilities has not been explored. Using hierarchical regression analysis, we develop and test a theory‐based model using a sample of consumer products manufacturers. Contrary to Frohlich and Westbrook’s [J. Operations Manage. 19 (2) (2001) 185] assertions regarding the applicability of the ‘outward‐facing strategy’ to the consumer goods sector, our results provide empirical evidence that supply chain integration intensity leads directly to improved business performance, thus corroborating the conventional wisdom concerning the increasing importance of supply chain integration in the consumer products sector. In addition, this study uncovers empirical evidence for the mediating role of manufacturing‐based competitive capabilities in supply chain management. These results support the growing call for a broader, more generalized view of manufacturing strategy.

Basics of Supply Chain Management

Book

Dec 2000

On theory in operations management

Article

Dec 1998
J OPER MANAG

The field of operations management has been criticized for the inadequacy of its theory. We suggest that this criticism may be too harsh, and further, that many building blocks of theory are prevalent in the body of existing research. This paper has two goals. The first is to suggest that careful organization of our thinking can lead to useful, productive theories in operations management that demonstrate all the hallmarks of the familiar theories of natural science. We discuss the nature of scientific inquiry in general terms, and examine the implications for what should be expected from theory in operations management. Our second goal is to illustrate through examples how such theories and their related laws might be developed. Two theories are proposed: the Theory of Swift, Even Flow, and the Theory of Performance Frontiers. The Theory of Swift, Even Flow addresses the phenomenon of cross‐factory productivity differences. The Theory of Performance Frontiers addresses the multiple dimensions of factory performance and seeks to unify prior statements regarding cumulative capabilities and trade‐offs. Implications drawn from the theories are discussed and concluding remarks suggest the advantages of future theory development and test.

Value creation through enriched marketing–operations interfaces: an empirical study in the printed circuit board industry

Article

Jun 2002
J OPER MANAG

The paper examines the short‐term capacity interface between marketing and operations, i.e. marketing–operations interface (MOI) in relation to customer value. A field study involving 10 firms in the printed circuit board (PCB) manufacturing industry was used to develop a conceptual framework and measures of the constructs. Subsequently, a 180‐plant PCB industry survey was used to test the model, finding support for the proposed relationship between MOI effectiveness and customer value.

Keeping Score: Using the Right Metrics to Drive World-Class Performance

Book

Oct 2006

Mark Graham Brown

Analysis of Manufacturing Enterprises

Book

Jan 2000

Viswanadham Nukala

FIT, FLEXIBILITY AND PERFORMANCE IN MANUFACTURING: COPING WITH DYNAMIC ENVIRONMENTS.

Article

Aug 2004

This research develops the notion of environmental fit and manufacturing flexibility and illustrates the importance of such fit empirically, based on a sample of U.S. manufacturers. Two dimensions of environmental dynamism are identified and the fit between them and different approaches to flexibility are assessed in terms of business performance.

Market Size, Competition and the Product Mix of Exporters

Article

Jan 2010

We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export market induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Theoretically, this within firm change in product mix driven by the trading environment has important repercussions on firm productivity. A calibrated fit to our theoretical model reveals that these productivity effects are potentially quite large.

What is the right supply chain for your product?

Article

Jan 1997
HARVARD BUS REV

Dilemmatics: The study of research choices and dilemmas

Article

Jan 1982

J.E. McGrath

Decision process evolution in customer channel choice

Article

Nov 2011
J MARKETING

The growing number of sales channels through which customers can make purchases has made it imperative for managers to understand how customers decide which channels to use. However, this presents a significant challenge because there is reason to believe the channel decision process evolves over the lifetime of the customer. The authors document the existence and nature of this phenomenon by analyzing the evolution of a customer's channel choice decision process from a trial stage to a posttrial stage. First, they analyze data for a book retailer and replicate their analysis using data from a durables and apparel retailer. Their results suggest that (1) customers' decision processes do evolve, (2) a minority but sizeable segment changes decision processes within the observation period, and (3) customers who change do so from a decision process in which they are highly responsive to marketing to one in which they are less responsive. The authors illustrate and discuss the implications for both managers and researchers.

Order fulfillment: The hidden key to e-commerce success

Article

Jan 1999

Metrics for the order fulfillment process (part 1)

Article

Jan 1996

A.M. Schneiderman

Strategic Logistics Capabilities For Competitive Advantage and Firm Success

Article

Jan 1996

Market Size, Competition, and the Product Mix of Exporters

Article

Feb 2014

We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export market induces a firm to skew its export sales toward its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Theoretically, this within-firm change in product mix driven by the trading environment has important repercussions on firm productivity. A calibrated fit to our theoretical model reveals that these productivity effects are potentially quite large.

Linking Order Fulfillment Performance to Referrals in Online Retailing: An Empirical Analysis

Article

Dec 2012

Referral management for online retailers is a strategically important activity, as referrals offer a highly cost-effective method of customer acquisition. In fact, online customers mention referrals as the second-most common reason for choosing to shop at a particular retailer, second only to search engine suggestions. However, while online retailers are able to improve their visibility on search engines through focused keyword insertions, they are often unable to pinpoint the drivers of referral behavior among their customers. The current research examines the relationship between two key dimensions of online retailing: order fulfillment cycle times and referral behavior. Employing a theory of customer appraisal and empirically testing the ensuing model using structural equation modeling, we find that excellent order fulfillment is instrumental in generating referrals for the online retailer, even after factoring in product quality.

The Role Ofphysical Distributionservicesas Determinants Of Product Returns In Internet Retailing

Article

Sep 2014

Pressure continues to build on internet retailers to squeeze out inefficiencies from their day to day operations. One major source of such inefficiencies is product returns. Indeed, product returns in Internet retailing have been shown to be, on average, as high as 22% of sales. Yet, most retailers accept them as a necessary cost of doing business. This is not surprising since many retailers do not have a clear understanding of the causes of product returns. While it is known that return policies of retailers, along with product attributes, are two important factors related to product return incidents, little is known about which aspects of the online retail transaction make such a purchase more return-prone. In the current study, we seek to address this issue. We use a large data set of customer purchases and returns to identify how process attributes in physical distribution service (PDS) influence product returns. The first attribute involves perceptions of scarcity conditions in inventory availabilityamong consumers when retailers reveal to consumers information on inventory levels for the products that they intend to buy. Our results show that orders in which items are sold when these conditions are revealed to shoppers have a higher likelihood of being returned than orders in which these conditions are not revealed. While prior research has argued that inventory scarcity perceptions have an effect on purchases, our findings suggest that they are also related to the likelihood of these purchases being returned. The second attribute involves the reliability in the delivery of orders to consumers. We find that the likelihood of orders being returned depends on the consistency between retailer promises of timeliness in the delivery of orders and the actual delivery performance of the orders. Moreover, we find that the effect that consistency in the delivery has in the likelihood of returns, is stronger for orders that involve promises for expedited delivery than for orders with less expeditious promises. That is, although the occurrence of returns depends on the delays in the delivery of orders to consumers relative to the initial promises made by the retailers, this effect is more notable for orders that involve promises of fast delivery.

A Dynamic Model of the Duration of the Customer'S Relationship with a Continuous Service Provider: the Role of Satisfaction

Article

Jan 1998

Ruth N. Bolton

Many service organizations have embraced relationship marketing with its focus on maximizing customer lifetime value. Recently, there has been considerable controversy about whether there is a link between customer satisfaction and retention. This research question is important to researchers who are attempting to understand how customers' assessments of services influence their subsequent behavior. However, it is equally vital to managers who require a better understanding of the relationship between satisfaction and the duration of the provider-customer relationship to identify specific actions that can increase retention and profitability in the long run. Since there is very little empirical evidence regarding this research question, this study develops and estimates a dynamic model of the duration of provider-customer relationship that focuses on the role of customer satisfaction. This article models the duration of the customer's relationship with an organization that delivers a continuously provided service, such as utilities, financial services, and telecommunications. In the model, the duration of the provider-customer relationship is postulated to depend on the customer's subjective expected value of the relationship, which he/she updates according to an anchoring and adjustment process. It is hypothesized that cumulative satisfaction servesas an anchor that is updated with new information obtained during service experiences. The model is estimated as a left-truncated, propo rtional hazards regression with cross-sectional and time series data describing cellular customers perceptions and behavior over a 22-month period. The results indicate that customer satisfaction ratings elicited prior to any decision to cancel or stay loyal to the provider are positively related to the duration of the relationship. The strength of the relationship between duration times and satisfaction levels depends on the length of customers' prior experience with the organization. Customers who have many months' experience with the organization weigh prior cumulative satisfaction more heavily and new information (relatively) less heavily. The duration of the service provider-customer relationship also depends on whether customers experienced service transactions or failures. The effects of perceived losses arising from transactions or service failures on duration times are directly weighed by prior satisfaction, creating contrast and assimilation effects. How can service organizations develop longer re lation-ships with customers? Since customers weigh prior cumulative satisfaction heavily, organizations should focus on customers in the early stages of the relationship-if customers' experiences are not satisfactory, the relationship is likely tobe very short. There is considerable heterogeneity across customers because some customers have a higher utility for the service than others. However, certain types of service encounters are potential relationship "landmines" because customers are highly sensitive to the costs/losses arising from interactions with service organizations and insensitive to the benefits/gains. Thus, incidence and quality of service encounters can be early indicators of whether an organization's relationship with a customer is flourishing or in jeopardy. Unfortunately, organizations with good prior service levels will suffer more when customers perceive that they have suffered a loss arising from a service encounter-due to the existence of contrast effects. However, experienced customers are less sensitive to such losses because they tend to weigh prior satisfaction levels heavily. By modeling the duration of the provider-customer relationship, it is possible to predict the revenue impact of service improvements in the same manner as other resource allocation decisions. The calculations in this article show that changes in customer satisfaction can have important financial implications for the organization because lifetime revenues from an individual customer depend on the duration of his/her relationship, as well as the dollar amount of his/her purchases across billing cycles. Satisfaction levels explain a substantial portion of explained variance in the durations of service provider-customer relationships across customers, compa rable to the effect of price. Consequently, it is a popular misconception that organizations that focus on customer satisfaction are failing to manage customer retention. Rather, this article suggests that service organizations should be proactive and learn from customers before they defect by understanding their current satisfaction levels. Managers and researchers may have underestimated the importance of the link between customer satisfaction and retention because the relationship between satisfaction and duration times is very complex and difficult to detect without advanced statistical techniques.

Are Multichannel Customers Really More Valuable? The Moderating Role of Product Category Characteristics

Article

Jul 2013
J MARKETING

How does the monetary value of customer purchases vary by customer preference for purchase channels (e.g., traditional, electronic, multichannel) and product category? The authors develop a conceptual model and hypotheses on the moderating effects of two key product category characteristics—the utilitarian versus hedonic nature of the product category and perceived risk—on the channel preference—monetary value relationship. They test the hypotheses on a unique large-scale, empirically generalizable data set in the retailing context. Contrary to conventional wisdom that all multichannel customers are more valuable than single-channel customers, the results show that multichannel customers are the most valuable segment only for hedonic product categories. The findings reveal that traditional channel customers of low-risk categories provide higher monetary value than other customers. Moreover, for utilitarian product categories perceived as high (low) risk, web-only (catalog- or store-only) shoppers constitute the most valuable segment. The findings offer managers guidelines for targeting and migrating different types of customers for different product categories through different channels.

The Core Competence of the Corporation

Article

Jan 1990
HARVARD BUS REV

Failure to Deliver? Linking Online Order Fulfillment Glitches With Future Purchase Behavior

Article

Nov 2011

This study investigates operations failures in online retailing. Specifically, it examines the relationship between an operations glitch (order fulfillment delay) and subsequent shopping behavior for previously loyal customers in an online retailing environment. Using archival data from a moderate-sized online retailer of printed material, this study employs expectancy disconfirmation and distributive justice theories to empirically show that adverse post-glitch reactions are seen in several dimensions of customer shopping behavior – order frequency and order size decrease, while customer anxiety level increases. The study thus demonstrates that online retailers need to deliver on order fulfillment promises, since a failure to live up to these promises can be detrimental. This study is unique in that, unlike previous studies on order fulfillment in online retailing investigating the tie between fulfillment success and future behavior, we examine the repercussions of order fulfillment failures upon future purchase behavior.

A typology of retail failures and recoveries

Article

Dec 1993
J RETAILING

Scott W. Kelley

This study extends previous research by developing a typology of retail failures and recovery strategies. Upon sorting 661 critical incidents pertaining to general merchandise retailers, results revealed fifteen different types of retail failures and twelve unique recovery strategies. In addition, the effectiveness of the recovery strategies are examined and research implications are discussed.

Agile Manufacturing: Relation to JIT, Operational Performance and Firm Performance

Article

May 2011

A structural model incorporating agile manufacturing as the focal construct is theorized and tested. The model includes the primary components of JIT (JIT-purchasing and JIT-production) as antecedents and operational performance and firm performance as consequences to agile manufacturing. Using data collected from production and operations managers working for large U.S. manufacturers, the model is assessed following a structural equation modeling methodology. The results indicate that JIT-purchasing has a direct positive relationship with agile manufacturing while the positive relationship between JIT-production and agile manufacturing is mediated by JIT-purchasing. The results also indicate that agile manufacturing has a direct positive relationship with the operational performance of the firm, that the operational performance of the firm has a direct positive relationship with the marketing performance of the firm, and that the positive relationship between the operational performance of the firm and the financial performance of the firm is mediated by the marketing performance of the firm.

The role of quality in e-procurement performance: An empirical analysis

Article

May 2008

While the adoption and use of e-procurement has been prevalent in supply chain management, there is very little research examining the critical role of quality in this context. e-Procurement promises to cut operational costs all across the supply chain, but it also raises the expectations of buyers posing a challenge for buyer satisfaction and supply chain performance. Using the theoretical lens of Dynamic Capabilities Theory and Resource-Based View, we postulate that online information and process act as resources that result in logistics fulfillment capabilities. These capabilities in turn lead to satisfaction with e-procurement. We estimate our research model using structural equation modeling with survey data collected from 131 purchasing and procurement managers. We empirically examine these linkages by analyzing data collected from procurement managers. Our results indicate strong support for the relationships between information flow process quality, logistics fulfillment quality processes, and e-procurement satisfaction performance. One of the surprising findings of our study is that fulfilled order timeliness has a significantly greater impact on satisfaction than fulfilled order accuracy. This finding points to the increasingly important role that the dimension of time plays in today's competitive environment.

Analysis and improvement of delivery operations at the San Francisco Pubic Library

Article

Jun 2006

Urban public library systems have always transported and delivered library materials within their branch systems. In recent years, however, the introduction of internet‐based, online library catalog systems has allowed users to search the library's catalog, select and reserve a book or a video and have it delivered to the branch of their choice. Consequently, the demand for delivery services is increasing at rapid rate in large urban public libraries systems. Having experienced a similar growth in the demand for delivered items, the San Francisco Public Library (SFPL) commissioned a study to improve its delivery operations. Using operations management concepts, such as pre‐sorting of material to avoid double handling, cross docking to reduce cycle time of delivery, and workload balancing among delivery routes to effectively increase delivery capacity, the delivery operations were restructured. We developed optimization models for library delivery operations that specifically accounted for pre‐sorting, cross docking and route balancing. We also developed heuristics for solving these models and implemented them to redesign the delivery operations at SFPL. The redesigned delivery operations will reduce the cycle time and the cost of delivery by almost half. Furthermore, through balanced utilization of existing truck capacities, the delivery operations will be able to handle significantly larger delivery volume and thereby accommodate future delivery service growth without additional investments. The operations management concepts and techniques illustrated in this paper through the example of SFPL should prove to be useful to other urban, multi‐branch library systems as they deal with their delivery challenges.

Manufacturing lead time accuracy

Article

Feb 1986

Paul G. Marlin

This article addresses the question of accuracy of planned lead times (PLTs) that are used with a material requirements planning system. Lead time error is defined as the difference between an item's PLT and the actual lead time (flow time) of an order to replenish the item. Three related topics are discussed: the relationship between system performance and average lead time error, the transient effect on work‐in‐process (WIP) inventory of increasing PLTs, and the relative accuracy of three methods of determining PLTs. A distinction is made between available and WIP inventory. The former includes any purchased item, fabricated part, assembly, or finished good that is in storage and available for use or delivery. WIP denotes materials associated with open orders on the shop floor. It was concluded that average lead time error has a considerable affect on system performance. PLTs that are on average too long or too short increase available inventory; and the further the average error is from zero, the more pronounced the increase. Contrary to conventional wisdom, increasing PLTs will increase the service level (decrease backorders), unless PLTs are already severely inflated and MPS uncertainty (forecast error) is small. If PLTs are inflated, decreasing them will decrease the number of setups per unit time in the case of considerable demand uncertainty. Contrary to conventional wisdom, increasing PLTs causes only a transient rise WIP inventory. The fact that the average lead time error has a significant effect on the three areas of system effectiveness mentioned above does not imply that a given order's lead time should be managed in a way that forces its actual lead time to match the PLT. Stated another way, the material planner may use the latest information to manage a given order's lead time; however, if the average discrepancy between the actual and planned lead times is large, system performance can be improved by changing the PLTs to approximate the average flow times. Three methods that have been proposed for determining PLTs are compared. They are historical averages of the actual flow times, calculated lead times based on standard times and historical averages of the queuing time at the appropriate work centers, and the QUOAT lead time proposed by Hoyt. The third was found to perform poorly unless the work content of all operations is identical. With one exception, no differences were found between the first two methods. The simpler historical average method was superior to the calculated lead time in the case where the work content of each operation varies and when considerable demand uncertainty exists. The results are based on simulation experiments employing a generalized MRP/Job‐Shop stochastic simulation model. The program launches orders based on standard MRP logic, reschedules open orders by moving the due date in or out to coincide with revised need dates, moves manufacturing orders through a job shop, schedules the delivery of purchase orders, and updates inventory levels. The product structure tree contained eight distinct items, with four levels and one end item. There is no reason to believe that the conclusions would be any different had a larger system been studied.

The Influence of an Integration Strategy on Competitive Capabilities and Business Performance: An Exploratory Study of Consumer Products Manufacturers

Article

Jul 2003

In this paper, we expand upon recent research by Frohlich and Westbrook [J. Operations Manage. 19 (2) (2001) 185] that characterizes the influence of supply chain integration on performance. Introducing supply chain integration intensity as a proxy variable for Frohlich and Westbrook’s [J. Operations Manage. 19 (2) (2001) 185] ‘outward-facing supply chain strategy’, we investigate the ways that manufacturing-based competitive capabilities mediate the relationship between supply chain integration and business performance. While previous research suggests that supply chain integration is directly related to superior business performance, the mediating role of manufacturing capabilities has not been explored. Using hierarchical regression analysis, we develop and test a theory-based model using a sample of consumer products manufacturers. Contrary to Frohlich and Westbrook’s [J. Operations Manage. 19 (2) (2001) 185] assertions regarding the applicability of the ‘outward-facing strategy’ to the consumer goods sector, our results provide empirical evidence that supply chain integration intensity leads directly to improved business performance, thus corroborating the conventional wisdom concerning the increasing importance of supply chain integration in the consumer products sector. In addition, this study uncovers empirical evidence for the mediating role of manufacturing-based competitive capabilities in supply chain management. These results support the growing call for a broader, more generalized view of manufacturing strategy.

Lean, leaner, too lean? The inventory-performance link revisited

Article

May 2011

While firms increasingly adopt lean inventory practices, there is limited evidence that inventory leanness leads to improved firm performance. This study reexamines this relationship in an attempt to overcome some shortcomings of previous research. To that end, a theory-based measure of inventory leanness, which takes into account industry-specific inventory management characteristics, is proposed. The analysis of a large panel data set of U.S. manufacturing companies reveals that the significance and shape of the inventory–performance relationship varies substantially across industries. This relationship is significant in two-thirds of the 54 industries studied. In most of these instances, the relationship is concave, suggesting that there is an optimum level of inventory leanness beyond which firm performance deteriorates. A post-hoc analysis is conducted to identify industry-level characteristics that may determine the nature the inventory–performance relationship. Managerial implications are discussed and several opportunities for future research are outlined.

Key manufacturing capability elements and business performance

Article

Jan 2002

The purpose of this research was to extend the recent stream of work in operations strategy on the trade-off and cumulative models of manufacturing capability development. Using results from the 1996 Manufacturing Futures Survey, the paper attempts to test whether pursuing more capabilities (the cumulative model) is reflected in improved return on assets. We consider both industry and country effects. Firms with performance in the upper quartile on a capability are described as 'high' performers and the number of times a firm achieves this level represents the number of capability elements that they have. The results show no evidence of the cumulative model. Quality and delivery capabilities are nevertheless strongly evident. Simply adding more capabilities generally produced no improvement in return on assets. Stepwise regression of ROA on the capabilities produced models with good explanatory power in some countries and industries though not all capabilities loaded. When interactions between capability elements were added to the regression models, results were mixed. In some cases, no interactions loaded, while in others, large increases in adjusted R 2 occurred, particularly in industry models.

Foundation of Inventory Management

Article

Jan 1998

P.H. Zipkin

What Is the Right Supply Chain for Your Product

Article

Jan 1997
HARVARD BUS REV

M. L. Fisher

Bief-the core idea The Idea in Practice-p utting the idea to work 3 What Is the Righr Supply ChaiD fo. your product? 15 Further Readilg A iist ofrelated materials, with annotations to guide further exploration of the articlds ideas and applications Product 8509 Are you frequently saddledwith exces5 in-ventory? Do yoir suffer poduct sholtages that have cultorner5 leaving sioles in a hufi Do these supplychain headaches pet' ti{ despite your investments in technolo-gies such as alnornated walehousing and Gpid logirtics? lf so, you rnay be using the wrong supply chain forthe type of poduct you sell.sup-pose your offering is funational*it sati{ies basic,unchanging needt and has a long life cycle, Iow margins. and stable demand. {Think paper towels or lighl bulbs) In this case, you need an efRcienl 5u pply chain-which minimizes productron, transpona-tion, and Storaqe coJts. BLn what il your product is mnovolive-il has great vanety, a short life cycle, high profit rlargins,and volatile denEnd? (A line oflaptopswhh a lange of novel features is one example) Forthis offering, you require a responsive supplychain. Fast and flexi' ble, i helps)lcu rnanage uncenainty through strategiet trJch as cutting lead tirnes and establishinq inventory or excess-capacny buffers. Design the right supplychain for your prod_ uct, and youl profrt! soal Forexample, by building responsiveness into lls chain, inno-vative skrwear comFEny Spon obetrmyet Rduced t5 o/er-Bnd underpoduc(ion .o!ts by half-boosling prcfits 60%.

Winning the Last Mile of E-Commerce

Article

Jun 2001
MIT SLOAN MANAGE REV

Getting the order is not enough. Companies that choose the right e-fulfillment strategies come out ahead.

Organization and Environment: Managing Differentiation and Integration

Article

Jun 1968

Basics of Supply Chain Management

Article

Jan 2001

Delivery reliability, manufacturing capabilities and new models of manufacturing efficiency

Article

May 2007
J Manuf Tech Manag

Purpose To provide a selective bibliography on reported empirical evidence regarding the compatibility/trade‐offs relationships between delivery reliability and other manufacturing capabilities, and also identify specific areas for future research. Design/methodology/approach The paper conceptually examines published studies which have reported a trade‐off/compatibility situation between delivery reliability and other manufacturing capabilities such as internal quality, external quality, manufacturing costs, inventory costs, etc. Some different aspects of delivery reliability are also discussed. Findings Principally, the paper identifies a need to study in more detail the different variables (manufacturing capabilities, contextual variables and manufacturing practices) that could be potentially associated with the achievement of high manufacturing efficiency (high levels of outputs/low levels of inputs) in terms of delivery reliability, materials inventory and safety resources. Research limitations/implications The literature review in the paper is intended to be exhaustive. Nevertheless, it is probable that scientific papers that report related/relevant material are involuntarily omitted. Practical implications By means of a detailed review of the literature, the paper identifies specific themes for future research. The paper also should be of help to practitioners as it gathers the empirical evidence regarding the compatibility/trade‐off situation between delivery reliability and other areas of manufacturing. Originality/value Some papers have dealt with literature reviews on manufacturing strategy as a whole. Nevertheless, to the best of our knowledge, this is the first paper that offers a literature review on delivery reliability. This paper also suggests a novel model of manufacturing efficiency and also proposes a methodology (data envelopment analysis) with which this approach can be examined in more detail.

The direct and mediated relationships between supply chain coordination investments and delivery performance

Article

Feb 2007
INT J OPER PROD MAN

Purpose – To explore the paths by which coordination investments with suppliers and customers relate to improvements in delivery speed, delivery reliability, and manufacturing lead-time. Design/methodology/approach – Regression analysis of data on supply chain coordination investment and delivery performance from 243 manufacturers from 13 countries. Findings – Results provide evidence of direct relationships between supplier coordination investment and manufacturing lead-time, and between customer coordination investment and delivery speed and delivery reliability. Moreover, they suggest that customer investment mediates the relationship between supplier investment and delivery reliability, and that supplier investment mediates the relationship between customer investment and manufacturing lead-time. Practical implications – To achieve sustainable improvements in multiple aspects of performance, management may need to invest in coordination with partners both upstream and downstream in the supply chain. Originality/value – This appears to be the first study to provide evidence of both direct and mediated relationships between supplier and customer coordination investment, and delivery performance.

The Order Fulfillment Process

Article

Jan 2003
Int J Logist Manag

Keely L. Croxton

Order fulfillment is a key process in managing the supply chain. It is the customers' orders that put the supply chain in motion, and filling them efficiently and effectively is the first step in providing customer service. However, the order fulfillment process involves more than just filling orders. It is about designing a network and a process that permits a firm to meet customer requests while minimizing the total delivered cost. This involves more than logistics, and it needs to be implemented cross-functionally and with the coordination of key suppliers and customers. In this paper the order fulfillment process is described in detail to show how it can be implemented within a company, and managed across firms in the supply chain. The, activities of each sub-process are examined; the interfaces with functional silos, processes and firms are evaluated; and, examples of successful implementations are provided.

An Empirical Study of Delivery Speed and Reliability

Article

Dec 1992
INT J OPER PROD MAN

Two distinct models of delivery reliability versus delivery speed are tested. On the basis of data from a survey of 193 manufacturing firms, factors associated with the “planning” systems of firms, such as production-plan goals achieved, inventory goals achieved, and master schedule performance, were found to have a significant effect on delivery reliability. In follow-up interviews with 13 plant managers; it was found that “process”-related factors were associated with delivery speed capabilities. Specifically, the biggest inroads to be made into delivery speed are first on the design/manufacturing interface, secondly on the subsequent “translation” of these designs to supplier requirements, and lastly on the production floor in terms of process layout.

Quoting Manufacturing Due Dates Subject To a Service Level Constraint

Article

Sep 2000

We develop a method for quoting manufacturing due dates to achieve a target service level (percent of orders filled on-time). We posit a very general function for determining leadtimes as a function of work in process and use a control chart method for adjusting the parameters in this function over time. We make almost no assumptions about the nature of the underlying production system (i.e., we do not require any particular distribution of process times, nor do we require that the system be in steady state). Using simulation we show that our method is very accurate for a simple case where an exact analytic solution is possible and that it outperforms other due date quoting methods from the literature in more complex situations.

Lead Time and Price Quotation Mode Selection: Uniform or Differentiated?

Article

Jul 2011
PROD OPER MANAG

Firms in service and make-to-order manufacturing industries often quote lead times and prices to customers. We define uniform quotation mode (UQM) as the strategy where a firm offers a single lead time and price quotation, and differentiated quotation mode (DQM) is where a firm offers a menu of lead times and prices for customers to choose from. Both modes are followed in practice. Firms should determine which is more profitable. We classify customers into two groups: lead time sensitive (LS) and price sensitive (PS). LS customers value lead time reduction more than PS customers. We develop mathematical models of both quotation modes and analyze them to determine the most profitable mode under specified situations as well as the best lead time and price quotations within each mode. We find that DQM is dominated by UQM whenever PS customers have positive utilities from UQM or LS customers have positive utilities from DQM. Otherwise, which quotation mode is better depends on multiple factors, such as customer characteristics (including lead time reduction valuation and product valuation of a customer, and the proportion of LS customers) and production characteristics (including the desired service level and service or production cost).

The impact of simple priority rule combinations on delivery speed and delivery reliability in a hybrid shop

Article

Jan 2009
PROD OPER MANAG

This study examines the effects of using different priority rules at different stages of a multistage, flow-dominant shop. A simulation model is constructed of a manufacturing system comprised of three stages: gateway, intcrmcdiatc, and finishing. As is typical of a flow-dominant shop, the overall flow of the simulated system (gateway to intermediate to finishing) is consistent with a flow shop, but processing in the intermediate stage involves multiple work centers and resembles a job shop. Shop performance is observed when four well-known priority heuristics are applied in different combinations in the gateway, intermediate, and finishing stages of the process. Multiple performance measures addressing the strategic objectives of delivery speed and delivery reliability are recorded under two different shop load conditions. Results show that the measures of both delivery speed and delivery reliability are affected by the priority rule combinations, and that a tradeoff exists between average performance and consistency of performance. Certain priority rule combinations affect performance in predictable ways, allowing the user to assess tradeoffs between delivery speed and delivery reliability.

The Impact of Electronic Data Interchange on Delivery Performance

Article

Jan 2009
PROD OPER MANAG

After several years of use of electronic data interchange (EDI) in various industries, the literature is still inconclusive regarding the benefits gained from its usage. We investigated contextual factors of two types: non-managerial (product diversity, product customization, production instability, and organizational size) and managerial (just-in-time and quality management), that might have confounded past results. Our results indicate that the extent of EDI use is significantly related to delivery performance after controlling for the above-mentioned factors. Furthermore, the data set supported the moderating effect of production instability on the relationship between the extent of EDI use and delivery performance achieved, but failed to support the moderating effect of organizational size.

Improving Supply Chain Performance Using Order Fulfillment Metrics

Article

Dec 2006
Natl Prod Rev

In the past, companies hoping to impress customers on delivery responsiveness did so by allowing inventories to bloat. Today the costs of holding inventory, especially in high-technology markets, prohibit that behavior. Companies must now provide good service while maintaining low inventories. Thus, managers must carefully measure and manage their two conflicting objectives: service and inventory. The challenge is to improve customer delivery service and reduce inventories simultaneously. Such results can be achieved through thoughtful supply chain management.

Incentive-Compatible Revenue Management in Queueing Systems: Optimal Strategic Delay

Article

Sep 2004

Philipp Afèche

How should a capacity-constrained firm design an incentive-compatible price-scheduling mecha-nism to maximize revenues from a heterogeneous pool of time-sensitive customers with private information on their willingness to pay, time-sensitivity and processing requirement? We con-sider this question in the context of a queueing system that serves two customer types. We provide the following insights. First, the familiar cµ priority rule, known to minimize the system-wide expected delay cost and to be incentive-compatible under social optimization, need not be optimal in this setting. This specific fact suggests a more general guideline: in design-ing incentive-compatible and revenue-maximizing scheduling policies, delay cost-minimization, which plays a prominent role in controlling and pricing queueing systems, should not be the dominant criterion ex ante. Second, we identify optimal scheduling policies with novel features. One such policy prioritizes the more time-sensitive customers but voluntarily delays the com-pleted orders of low-priority customers. This insertion of strategic delay deters time-sensitive customers from purchasing the low-priority class. In other situations, it is optimal to appropri-ately randomize priority assignments, in one extreme case serving customers in the reverse cµ order, which maximizes the system delay cost among all work conserving policies. Compared to the cµ rule, these optimal policies increase, decrease or reverse the delay differentiation between customer types. We show how the optimal level of delay differentiation systematically emerges from a trade-off between operational constraints and customer incentives. Third, our stepwise solution approach can be adapted for designing revenue-maximizing and incentive-compatible mechanisms in systems with different customer attributes or operational properties.

Bullwhip Effect Measurement and Its Implications

Article

Aug 2012

The bullwhip effect, or demand information distortion, has been a subject of both theoretical and empirical studies in the operations management literature. Empirical studies have shown large magnitudes of the bullwhip effect at the individual product level, but the effect does not always exist at the macro level. The majority of studies focusing on the macro level have used monthly data due to its availability. In practice, however, companies often order more frequently than monthly, such as at daily or weekly intervals. In this paper, we examine how data aggregation can affect the observation of bullwhip effect. Specifically, we show how aggregating data over relatively long time periods can mask the magnitude of the bullwhip effect. In addition, we show that similar impacts occur when data is aggregated across products, and how the existence of correlated demand, seasonality, batch order, and finite capacity all can affect the measurement of the bullwhip effect. Finally, we discuss the cost implications associated with the measured magnitude of the bullwhip effect.

Demand and Production Management with Uniform Guaranteed Lead Time

Article

Dec 2005
PROD OPER MANAG

Recently, innovation-oriented firms have been competing along dimensions other than price, lead time being one such dimension. Increasingly, customers are favoring lead time guarantees as a means to hedge supply chain risks. For a make-to-order environment, we explicitly model the impact of a lead time guarantee on customer demands and production planning. We study how a firm can integrate demand and production decisions to optimize expected profits by quoting a uniform guaranteed maximum lead time to all customers. Our analysis highlights the increasing importance of lead time for customers, as well as the tradeoffs in achieving a proper balance between revenue and cost drivers associated with lead-time guarantees. We show that the optimal lead time has a closed-form solution with a newsvendor-like structure. We prove comparative statics results for the change in optimal lead time with changes in capacity and cost parameters and illustrate the insights using numerical experimentation.

Exploring the Impact of Delivery Performance on Customer Transaction Volume and Unit Price: Evidence from an Assembly Manufacturing Supply Chain

Abstract

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