Operational Transparency: Showing When Work Gets Done

Abstract

Problem definition: Do the benefits of operational transparency depend on when the work is done? Academic/practical relevance: This work connects the operations management literature on operational transparency with the psychology literature on the peak-end effect. Methodology: This study examines how customers respond to operational transparency with parcel delivery data from the Cainiao Network, the logistics arm of Alibaba. The sample comprises 4.68 million deliveries. Each delivery has between 4 and 10 track-package activities, which customers can check in real time, and a delivery service score, which customers leave after receiving the package. Instrumental-variable regressions quantify the causal effect of track-package-activity times on delivery scores. Results: The regressions suggest that customers punish early idleness less than late idleness, leaving higher delivery service scores when track-package activities cluster toward the end of the shipping horizon. For example, if a shipment takes 100 hours, then delaying the time of the average action from hour 20 to hour 80 increases the expected delivery score by approximately the same amount as expediting the arrival time from hour 100 to hour 73. Managerial implications: Memory limitations make customers especially sensitive to how service operations end. History: This paper has been accepted as part of the 2018 MSOM Data Driven Research Challenge.