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Do Plant Inspections Predict Future Quality? The Role of Investigator Experience

George Ball¹; Enno Siemsen²; Rachna Shah³

¹ Operations and Decision Technologies Department, Kelley School of Business, Indiana University, Bloomington, Indiana 47405; · ² Operations and Information Management Department, Wisconsin School of Business, University of Wisconsin–Madison, Madison, Wisconsin 53706 · ³ Supply Chain and Operations Department, Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455

Plant inspections enable firms to manage their quality risk in global supply chains. However, surprisingly little research examines the relationship between such inspections and future product quality. In this paper, we study how well plant inspection outcomes predict the hazard of a future recall and analyze how investigator experience affects this predictive relationship. Using secondary data spanning a seven-year period in the medical device industry and a recurrent-event Cox proportional hazard model, our analysis shows that inspection outcomes reliably predict future product recalls. However, inspection outcomes become an unreliable predictor of recalls with an increase in site-specific investigator experience. Through post hoc analysis, we also show that the hazard of a recall at a plant increases with site-specific experience, independent of the inspection outcome. Compared to the first visit by an investigator, the recall hazard increases by 21% the second time the investigator visits a specific plant, and by 57% on the third visit. We propose investigator rotation and investigator sequencing as two policies to help mitigate this increased recall risk. The online appendix is available at https://doi.org/10.1287/msom.2017.0661 .

DOI

10.1287/msom.2017.0661

Volume

19 (4)

Pages

534-550

Language

en

Export

BibTeX

Sources

crossref