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Research Details
Supply Chain Geography and Product Quality, Management Science
Abstract
We estimate the effect of supply chain proximity on product quality. Merging four automotive datasets, we create a supply chain sample that reports the failure rate of 27,807 auto components, the location of 529 upstream component factories, and the location of 275 downstream assembly plants. We find that defect rates are higher when upstream and downstream factories are farther apart. Specifically, we estimate that increasing the distance between an upstream component factory and a downstream assembly plant by an order of magnitude increases the component?s expected defect rate by 3.9%. We find that quality improves more slowly across geographically dispersed supply chains. We also find that supply chain distance is more detrimental to quality when automakers produce early-generation models or high-end products, when they buy components with more complex configurations, or when they source from suppliers who invest relatively little in research and development.
Type
Article
Author(s)
Robert Bray, Ahmet Colak, Juan Serpa
Date Published
2019
Citations
Bray, Robert, Ahmet Colak, and Juan Serpa. 2019. Supply Chain Geography and Product Quality. Management Science. 65(9): 4079-4099.
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