Quality (philosophy)

Marketing

Quantum mechanics

Product (mathematics)

Engineering

Philosophy

Aerospace engineering

Upstream and downstream (DNA)

Chromatography

Automotive industry

Downstream (manufacturing)

Upstream (networking)

Telecommunications

Component (thermodynamics)

Computer science

Manufacturing engineering

Business

Thermodynamics

Physics

Supply chain management

Mathematics

Epistemology

Supply chain

Operations management

Geometry

Factory (object-oriented programming)

Industrial organization

Chemistry

Programming language

Sample (material)

Management Science

We estimate the effect of supply chain proximity on product quality. Merging four automotive data sets, 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. This paper was accepted by Vishal Gaur, operations management.

Supply Chain Proximity and Product Quality