The Hidden Cost of Worker Turnover: Attributing Product Reliability to the Turnover of Factory Workers

23 Pages Posted: 28 Apr 2020

See all articles by Ken Moon

Ken Moon

University of Pennsylvania - The Wharton School

Prashant Kumar Loyalka

Stanford University - Freeman Spogli Institute for International Studies

Patrick Bergemann

University of Chicago - Booth School of Business

Joshua Cohen

Apple University

Date Written: April 4, 2020

Abstract

Product reliability is a long-standing concern among product manufacturers, and researchers have identified a number of factors that significantly affect product reliability. In this paper, we examine a previously under-recognized yet impactful determinant of product reliability: a high rate of turnover on the manufacturing line when the product was assembled. Even when assembly lines are designed to minimize product defect rates through simplified tasks and stringent quality control tests, quality variations may exist in the manufactured units that are only revealed after they have been used repeatedly. If this is the case, then the disruptiveness of high turnover may directly lead to product reliability issues. To evaluate this possibility, we link four post-production years of field failures for tens of millions of consumer mobile devices back to their production lines. After controlling for known factors affecting reliability (workloads, learning, and component quality), we find that the likelihood of field failure increases by 7-8% when a device is produced in the monthly high-turnover weeks following paydays; and that even in other weeks, product reliability responds significantly (2-3%) to the individual assembly lines' weekly turnover rates. Together, we demonstrate that staffing and retaining a stable factory workforce critically underlies product reliability, and we show the value of connected field data in informing manufacturing operations. Ultimately, products are more reliable when workers are more reliable.

Keywords: Data-driven workforce planning, Empirical operations management, Employee turnover, People operations, Product quality, Productivity, Quality management, Supply chain management

JEL Classification: D22, J63, M11, M12

Suggested Citation

Moon, Ken and Loyalka, Prashant and Bergemann, Patrick and Cohen, Joshua, The Hidden Cost of Worker Turnover: Attributing Product Reliability to the Turnover of Factory Workers (April 4, 2020). Available at SSRN: https://ssrn.com/abstract=3568792 or http://dx.doi.org/10.2139/ssrn.3568792

Ken Moon (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Jon M. Huntsman Hall
3730 Walnut St.
Philadelphia, PA 19104-6365
United States

Prashant Loyalka

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Patrick Bergemann

University of Chicago - Booth School of Business

Joshua Cohen

Apple University ( email )

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
26
Abstract Views
193
PlumX Metrics