The Cost of Delivery Delays
Maria Jose Carreras-Valle, Alessandro Ferrari

TL;DR
This paper models how increased delivery delays and supply disruptions from global sourcing impact U.S. manufacturing inventories, prices, and output, explaining recent trends despite shorter import distances.
Contribution
It introduces a stochastic delivery time model that explains rising inventories and delays, reconciling empirical trends with supply chain risk considerations.
Findings
Delivery delays increased by 21 days from 2018 to 2024.
Delays contributed to a 2.6% decrease in output.
Delays caused a 0.4% rise in prices.
Abstract
Since 2018, there has been a consistent decline in the distance traveled by U.S. manufacturing imports, reaching a level not observed since 2008. This trend is the result of the substitution away from imports from China and towards imports from closer countries. At the same time, U.S. manufacturing inventory-to-sales ratio has continued to rise. These trends are at odds with the literature, which finds that reductions in the distance of imports are associated with a decline in inventories. We argue that a rise in delivery time risk, driven by longer and more frequent delays and supply disruptions, can reconcile these trends. We do so in the context of a model of global sourcing with stochastic delivery times and inventories. Firms trade off the lower price of farther inputs with the increase in exposure to demand volatility and longer delays. In response, firms increase their…
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Taxonomy
TopicsHealthcare Operations and Scheduling Optimization
