Premium
Exploring the Impact of Delivery Performance on Customer Transaction Volume and Unit Price: Evidence from an Assembly Manufacturing Supply Chain
Author(s) -
Peng David Xiaosong,
Lu Guanyi
Publication year - 2017
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/poms.12682
Subject(s) - delivery performance , original equipment manufacturer , supply chain , business , database transaction , transaction cost , industrial organization , computer science , operations management , marketing , process management , database , economics , finance , operating system
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.