Cost reduction through a risk based approach
Cost reduction through a risk based approach
In these difficult times of BREXIT companies have become even more sensitive to cost. It is therefore essential that the appropriate approach to cost reduction is applied. Lean principles such as value stream mapping (VSM) can be applied in conjunction with Kaizen events to remove non-value added steps from a process. Once the low hanging fruit has been picked, so to speak, then what?
A structured approach to evaluate risk, consequences, probability of failure and the level of control you have is essential to allow you to effectively utilise what limited resources you have to their maximum effect.
Some sectors such as Automotive and Aerospace have been using quality tools such as Failure Modes and Effects Analysis (FMEA) for many years to meet this need in the industrial setting, covering design, manufacturing processes and equipment and tooling. In these sectors there are detailed guidelines that cover best practice and numerical ranking.
For those of you not familiar with FMEA it is a structured approach that identifies potential failure modes, the severity of any consequences of failure. The probable cause mechanisms that would lead to the failures occurring while considering the probability of occurrence. Consideration is also given to controls that can mitigate failure and controls that will detect failure when it occurs and the probability of detection. This results in an overall score which identifies an order in which effort can be applied.
However as a European expert in FMEA over the years I have refined the approach to suit all applications and sectors, expanding the FMEA approaches to include Business FMEA. Business FMEA is designed to manage the business risks. As with all FMEAs it has little to do with the methodology itself, as the FMEA templates are widely available, additional integrated tools are important to ensure consistency of approach and thoroughness.
The key to a cost effective and effective FMEA is the content. If the content is too detailed you will grow old compiling the document; if it is too high level there will be no value to the document. Somewhere between the two has maximum value, unfortunately selecting the correct resolution is more of an art than a science.
In my next article I will explore in more detail how to create an effective FMEA, however, years of experience has demonstrated that the best way to construct an optimum FMEA is through a practical application workshop where you provide the technical expertise and guide you through the methodology.
Please contact me for advice and guidance on the practical application of FMEA.