FMEA Supply Chain Risk Management

FMEA (failure mode and effect analysis) allows you to recognize potential failure factors in the product, system, or process and prevents and reduces their impact from occurrence. The FMEA tool plays a key role in improving the efficiency, reliability, and quality of the supply chain processes to meet the customer’s expectations and gain a competitive edge. Today, we’ll discuss FMEA supply chain risk management; common variables, and steps involved in implementing FMEA for SCRM.

Businesses and companies could decrease the supply chain risk factors by carefully screening and selecting the right suppliers and partners. Many research studies have shown that businesses and companies employ FMEA to analyze and manage supply chain risks.

• 67% of the respondents supported SCRM, said in the survey study
• The same respondent said that they employed the FMEA tool as a part of their supplier’s selection process
• They often use FMEA for supplier risk analysis

Steps Involved in the FMEA Process

• Recognizing the Risk Categories and Types
• Point out potential Risk Factors
• Rating and scaling severity, probability, and opportunity of every risk factor
• Calculating the RPN of every risk factor
• Analyzing every risk factor by RPN by employing various strategies and techniques like Pareto Distribution
• Developing a comprehensive action plan to decrease the risk factor with higher RPN
• Analyzing different risk factors with the FMEA cycle

Variables to Quantify Risks in the Following Circumstances

• Defects severity
• Probability of defects
• Capability to recognize defects
• Number of parts and elements attached with defects
• The frequency of activities associated with the defects

Steps in Implementing FMEA Supply Chain Risk Management

Some of the main steps involved in implementing FMEA supply chain risk management; they’re as follows;

Defining & Outlining Scope

First of all, FMEA allows you to define and outline the scope of your analysis. It comprises specifying the product, system, and processes that you plan to analyze; goals and objectives that you want to achieve,

For instance, you plan to analyze and evaluate the entire supply chain network. You should precisely target the specific stage that you want to focus on, such as material sourcing, supplier selection, production and manufacturing, distribution, and delivery. Depending on the complexity of the risk factors, it is significant to employ the highest to lowest level strategic approach. It is necessary to streamline your FMEA scope with the quality goals and objectives, and the customer’s requirements.

Recognizing Failure Modes

As the name implies, here you should recognize the potential risk factors if the product, system, and processes fail to perform to their optimum and desired level. For instance, the failures and risks in the supply chain network and processes would be in the form of customer complaints, theft, loss, damage, damage, excessive inventory, shortages, defects, and delays.

Some of the main methods, tools, and strategies that you could employ to recognize the potential risk factors and failures; are as follows;

• Historical data
• Diagrams
• Flowchart
• Checklists
• Brainstorming

It is significant to create a list of all the possible failure modes and risk factors for every step and component of your scope.

Analyzing Causes & Impacts

The FMEA strategic approach allows you to analyze and monitor the cause and effect of every failure stage and the risk factors. It focuses on finding the source and consequences of every failure stage. For instance, some of the main impacts of failure in the supply chain risks are as follows;

• Flawed designs
• Environmental factors
• Suppliers issues
• Equipment malfunctioning
• Human errors

It is necessary to outline the list of all the causes and impacts of every failure mode and you should list them in logical and rational order.

Monitoring Priority and Risks

FMEA focuses on analyzing and monitoring every failure mode and the risk factor; it comprises of analyzing the severity and likelihood of the impact and failure. For instance, some failure modes and risk factors are probably more difficult than others; depending on the detection, impact, and frequency of failures. You could employ various methods and strategies to analyze the priority and risk of every failure and risk factor stage like; risk metrics, scoring systems, and rating scales.

Executing the Actions

The FMEA helps you to take necessary actions to avoid and decrease the potential failure and risk modes. Some of the main actions that you could take to avoid the failure mode are as follows;

• Taking and implementing the contingency plan
• Optimizing the inventory management system
• Selecting and choosing reliable suppliers and vendors
• Improving the quality control measures
• Amplifying the designing processes

This stage requires you to choose and select the most feasible and effective action plan for the failure mode based on the following factors;

• Prioritizing and performing analysis
• Assigning various roles and responsibilities
• Deadlines
• Implementation resources

Reviews and Monitoring

The final stage of FMEA is to analyze and review the actions and implementations of your results. It comprises of Measuring and evaluating the performance and Improving the products, systems, and processes. For instance, some of the main indicators of failure mode in the supply chain network are as follows;

• Customer feedback
• Inventory turnover
• Fill rate
• Defect rate
• Lead time

It requires you to collect and analyze data before and after implementation of the action; comparing them with various criteria and objectives.

Conclusion: FMEA Supply Chain Risk Management | FMEA For SCRM | FMEA in Supply Chain Risk Management

After an in-depth study of the FMEA supply chain risk management; we have realized that FMEA is a highly effective tool for measuring and avoiding the risk factors. If you are learning about FMEA for SCRM; then you should keep in mind the abovementioned steps involved in the execution process, variables, and other factors.