What is the value of delivering on time? Tapio Niemi, Ari-Pekka Hameri and Petro Kolesnyk Faculty of Business and Economics (HEC), University of Lausanne, Lausanne, Switzerland, and Patrik Appelqvist Department of Industrial Engineering and Management, Aalto University, Espoo, Finland 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 (55 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. Keywords Supply chain management, Delivery punctuality, Cost of late delivery, Polynomial distributed lag models Paper type Research paper 1. Introduction On-time delivery is one of the main objectives in supply chain management and logistics. Delivery reliability has a significant effect on customer satisfaction and company performance (Golini and Kalchschmidt, 2011; Al-Shboul, 2017; Tracey and Leng Tan, 2001) and is also one of the main factors when companies evaluate supplier performance (Forslund and Jonsson, 2010; Hanghøj, 2015; Choon Tan et al., 2002). In some cases, quantifying the benefit of on-time delivery, or cost of late delivery, is straightforward. For example, there may be penalties for missing delivery windows, or customers may cancel orders that have not been fulfilled. However, an effect that is more difficult to quantify is lost sales, defined as a drop in order volumes following late delivery. In this paper we quantify the value of on-time delivery. In other words, what does it cost to deliver late? We answer the question using a data set including over 10,000 customers of a global sporting goods company and their orders between 2004 and 2012. We find that customers who have experienced bad delivery performance tend to buy less during the following weeks. The immediate effect is a decrease of up to 20% of customer’s order value, depending on the length of delivery delay. In our data set, late orders are followed by a drop in order value that in total stands for a 5.1% reduction in sales. Secondly, in literature we find mixed evidence regarding the effect of delivering too early. Some authors consider delivery that is too early as bad or in best case neutral. However, in this paper we will demonstrate that early delivery can actually have positive effects on sales. Value of delivering on time The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/0972-7981.htm Received 4 December 2019 Revised 15 January 2020 Accepted 22 January 2020 Journal of Advances in Management Research © Emerald Publishing Limited 0972-7981 DOI 10.1108/JAMR-12-2019-0218