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What is the value of delivering on time?

Author

Listed:
  • Tapio Niemi
  • Ari-Pekka Hameri
  • Petro Kolesnyk
  • Patrik Appelqvist

Abstract

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.

Suggested Citation

  • Tapio Niemi & Ari-Pekka Hameri & Petro Kolesnyk & Patrik Appelqvist, 2020. "What is the value of delivering on time?," Journal of Advances in Management Research, Emerald Group Publishing Limited, vol. 17(4), pages 473-503, June.
    • Handle: RePEc:eme:jamrpp:jamr-12-2019-0218
    DOI: 10.1108/JAMR-12-2019-0218
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    Citations

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    Cited by:

    1. Tsai, Pei-Hsuan & Chen, Chih-Jou & Hsiao, Wei-Hung & Lin, Chin-Tsai, 2023. "Factors influencing the consumers’ behavioural intention to use online food delivery service: Empirical evidence from Taiwan," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    2. Kulshreshtha, Kushagra & Sharma, Gunjan, 2022. "From restaurant to cloud kitchen: Survival of the fittest during COVID-19 An empirical examination," Technological Forecasting and Social Change, Elsevier, vol. 179(C).

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