A Quality Value Chain Network: Linking Supply Chain Quality to Customer Lifetime Value

49 Pages Posted: 4 Jun 2017

See all articles by Qiuping Yu

Qiuping Yu

Scheller College of Business, Georgia Institute of Technology

Masha Shunko

Foster School of Business, University of Washington

Shawn Mankad

Cornell University

Date Written: June 2, 2017

Abstract

We create a quality value chain network concept to analyze the impact of supply chain quality (SCQ) on the customer lifetime value (CLV). We apply our framework to a rich dataset from a major restaurant chain utilizing text analysis of the complaints to measure SCQ, a two-stage least squares (2SLS) model with instruments to assess the impact of SCQ on customer experience, and a structural model of consumer purchasing behavior to eventually link customer experience to CLV. Note that we consider not only the impact of customer experience at the focal store but also that from adjacent stores on CLV. Considering such network effect significantly improves the model performance in predicting customer behavior and quantification of financial returns. We identify the profile of the most valuable customers and provide insights on which SCQ issues the supply chain should focus on, and which restaurants should be prioritized for supply chain improvements.

Keywords: Quality Value Chain, Service Network, Customer Lifetime Value, Structural Estimation, Causal Inference

Suggested Citation

Yu, Qiuping and Shunko, Masha and Mankad, Shawn, A Quality Value Chain Network: Linking Supply Chain Quality to Customer Lifetime Value (June 2, 2017). Kelley School of Business Research Paper No. 17-43. Available at SSRN: https://ssrn.com/abstract=2979592 or http://dx.doi.org/10.2139/ssrn.2979592

Qiuping Yu (Contact Author)

Scheller College of Business, Georgia Institute of Technology ( email )

800 West Peachtree NW
Atlanta, GA 30308
United States

HOME PAGE: http://https://qiupingyu.com/

Masha Shunko

Foster School of Business, University of Washington ( email )

PACCAR Hall
Seattle, WA 47185
United States

Shawn Mankad

Cornell University ( email )

Ithaca, NY 14853
United States
6072559594 (Phone)

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