By Regu Regupathy, Master Black Belt, Rutgers University
You and your team have defined, measured and analyzed a business process.
You’ve gotten to the root causes of the process’ problem.
You’ve brainstormed some high-impact improvements.
OK – let’s implement those changes – GO!
STOP!
Are there any risks associated with your changes? How can you be more certain that your improvements will improve the process AND the interests of your stakeholders? Are there risks that may make things worse?
FMEA, Failure Modes and Effects Analysis, is a methodology that evaluates and provides a quantitative assessment of Risk. This information may be used to manage risks with appropriate process changes. All processes, whether you are making a sandwich or building a nuclear power plant, have several process steps. There are risks associated with activities performed in each process step. Some of you may be familiar with “root cause analysis or RCA”. RCA is a structured way to address problems after they occur. In comparison, FMEA is a structured way to identify and address potential problems, or failures and their resulting effects on the system or process before an adverse event occurs.
FMEA uses three factors to get a quantitative assessment of risk. The factors are “severity-SEV”, “frequency of occurrence-OCC” and “failure detection capability-DET” that detects the cause before the failure occurs. These three factors are multiplied to get a “Risk Priority Number -RPN. Higher the RPN, higher the risk.
Let’s say you are planning a mountain climbing trip. You are wondering about the risks associated with this trip. FMEA provides a step by step way to quantify the risk. Here’s how it works:
1.Think about all the steps involved in the climb (tools, activities etc.).
2.Then evaluate what could go wrong or the failure mode in each step.
3.Now, consider the effects of each failure mode
4.Then list the “severity-SEV” associated with the failure. Poor preparation (such as not hydrating, proper clothing, etc.) may impact safety. The higher the severity, the higher the rating.
5.Start by identifying people familiar with mountain climbing practices (your ‘process experts’). They will help you identify causes of failure, in this case what might be the causes for insufficient preparation.
6.The next step would be to quantify the frequency of occurrence-OCC of this cause. Higher the frequency, higher the rating.
7.Is there a “detection or control mechanism” that detects the cause to prevent the failure from happening? If there is a strong detection capability, then you expect fewer failures, therefore the rating number will be low. Quantify the detection capability-DET.
8.The next step in quantifying the risk is to multiply the SEV x OCC x DET = RPN
9.Address the causes that indicate high risk and recalculate RPN to ensure risk is low.
The Table below provides a template to conduct risk analysis using FMEA methodology.
Is the RPN, a data based absolute value? No-it provides a relative risk value based on participants’ understanding/perception of the process and certain guidelines set by the organization for specific processes.
Okay. You are not a mountain climber. What is the value of FMEA in the industry you are in? Say that you are in banking. You made improvements to reduce loan processing cycle time. One of the changes you made is to reduce underwriting review criteria. You may use FMEA to evaluate the risk associated with this change and adjust the process change to reduce risk. FMEA may be applied to manufacturing, healthcare, and any situation where there is a process. Happy FMEA-ing!
Peria (“Regu”) Regupathy is a Lean Six Sigma Master Black Belt with decades of experience as a practitioner, trainer and coach in quality and continuous process improvement. He is a member of Rutgers’ LSS Certification Review Board with extensive experience in industries ranging from engineering to health care. In addition to Rutgers, Regu is on the Adjunct Faculty with UGA and author of Lean Six Sigma in Six Days.