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FMEA Cost Column added to Associate and Prioritize Risks according to Cost

Q

qualityboi

#1
Does anyone have an example of FMEA they could share, where a cost column has been addded to associate and prioritize risks according to cost? Just wondering...:)
 
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Stijloor

Staff member
Super Moderator
#2
Re: FMEA Cost Column

Does anyone have an example of FMEA they could share, where a cost column has been addded to associate and prioritize risks according to cost? Just wondering...:)
Qualityboi,

I have never seen one, but I think that this could work in terms of prioritizing actions to help lower:
Severity
Severity x Occurrence
Remaining RPN's

I am a little hesitant to prioritize in terms of money associated with potential risks especially when regulatory and statutory issues are involved. There could be instances where they may possibly not rank high money-wise, but could potentially put a company out of business.

It is an interesting concept though and I would like to see what my Fellow Covers think.

Stijloor.
 
Q

qualityboi

#3
I was rolling the idea around in my head as a compliment to cost of poor quality. Our company is going through cost reductions as a result of the poor U.S. economy, being able to put a cost to risks would help in reviewing which risks would have the most monetary value, correlating it to RPN would be interesting.

As far as regulatory and safety risks, not too concerned in our company as our occurences are at zero or 1 because of the process infrastructure already put in place to mitigate has really reduced occurrence and increased detection.
 

Wes Bucey

Prophet of Profit
#4
I always did advocate including cost
  • consequence of failure mode
  • to implement a "mistake proof" preventative
  • to sort nonconforming goods before shipment
  • of wasted material and labor in building unusable goods
  • of recall if bad goods should escape to customers or general public
  • of repairs and "make goods"
  • of canceled contracts
  • etc.
as part of FMEA (Failure Mode and Effects Analysis)

Of course, I agree Life, Health, Safety issues trump cost, but every failure or nonconformance is NOT life, health, safety related.
 

Ajit Basrur

Staff member
Admin
#5
Does anyone have an example of FMEA they could share, where a cost column has been addded to associate and prioritize risks according to cost? Just wondering...:)
Good question Jim but risks can not be prioritized based on cost. Stijloor has pointed the same thing that I was thinking of :)
 

Jim Wynne

Staff member
Admin
#6
Good question Jim but risks can not be prioritized based on cost. Stijloor has pointed the same thing that I was thinking of :)
Risks can be prioritized based on cost, although the cost numbers might not be completely accurate. To the OP's question though, cost is but one of the factors that enter into risk analysis, as you and Stijloor have pointed out. If you account for cost in the FMEA process, the RPN numbers should reflect the cost component, so there should be no need to create a separate column on the form. In fact, creating a new column might result in distraction. Use Pareto analysis as part of the FMEA process to address relative costs.
 
H

Howard Lee

#8
I had always thought of cost as a factor of severity. When we are asking, "How bad will it be if it happens?", cost is a factor.

If the battery in my car dies or the transmission fails, my car will not go (=FAILURE). The severity of the two conditions are at opposite ends of the spectrum due to "cost to make the car go again". Maybe I'm missing something.
 

Jim Wynne

Staff member
Admin
#9
I had always thought of cost as a factor of severity. When we are asking, "How bad will it be if it happens?", cost is a factor.
Exactly. :agree1: Sometimes it's relatively easy to quantify costs associated with product failures, such as when some manufacturing operation goes awry and rework or scrap is involved. It gets more dicey when you're dealing with things like customer satisfaction, though, and what it might cost in the long run if customers aren't happy. Cost is a factor in FMEA risk evaluation, but not the only factor, and some risks can't be objectively quantified. This means that FMEA RPNs (Risk Priority Numbers) will often include a subjective component, which is why RPNs should be considered as relative values.
 
Q

qualityboi

#10
I am wanting to break out costs so we can more easily determine how much it would cost to fix the potential risks. Its more easily digested by upper management when our preventive and corrective actions are in terms of dollars.
 
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