FMEA – Vol I: Introduction to Failure Modes and Effects Analysis

     Failure Modes and Effects Analysis (FMEA) is most commonly used in product design and manufacturing contexts.  However, it can also be helpful in other applications, such as administrative functions and service delivery.  Each application context may require refinement of definitions and rating scales to provide maximum clarity, but the fundamentals remain the same.
     Several standards have been published defining the structure and content of Failure Modes and Effects Analyses (FMEAs).  Within these standards, there are often alternate formats presented for portions of the FMEA form; these may also change with subsequent revisions of each standard.
     Add to this variety the diversity of industry and customer-specific requirements.  Those unbeholden to an industry-specific standard are free to adapt features of several to create a unique form for their own purposes.  The freedom to customize results in a virtually limitless number of potential variants.
     Few potential FMEA variants are likely to have broad appeal, even among those unrestricted by customer requirements.  This series aims to highlight the most practical formats available, encouraging a level of consistency among practitioners that maintains Failure Modes and Effects Analysis as a portable skill.  Total conformity is not the goal; presenting perceived best practices is.

     Automotive Industry Action Group (AIAG) and Verband der Automobilindustrie (VDA) have begun consolidation by jointly publishing the “FMEA Handbook” in 2019.  This publication aligns North American and German automotive industry practice in a step towards global harmonization of FMEA requirements.  In this series, we will attempt to distill the new handbook into user-friendly guides for both new and transitioning practitioners.
     To ensure clarity of the inevitable references and comparisons to previous FMEA guidelines, we will review “classical” FMEA before discussing the new “aligned” standard in detail.  Implementation of FMEA, in North America at least, has been driven primarily by the automotive industry.  That influence will be evident here, as the presentation of classical FMEA is derived, in large part, from previous editions of the AIAG FMEA Handbook.

Costs of FMEA Implementation
     The financial impact of conducting an FMEA is difficult to accurately predict.  It is dependent upon the product and processes involved and the management styles of those responsible for overseeing them.  Likewise, only the initial cost of not conducting and FMEA – zero – can be known in advance.
     We do know, however, at least qualitatively, how the cost of conducting FMEA compares to foregoing analysis.  To be more precise, we can compare the lifecycle cost of a product with a well-executed FMEA to one with poorly-executed or eschewed analysis.  This comparison is depicted in Exhibit 1; the green line represents the cost curve of a hypothetical product lifecycle when FMEA are well-executed.  The red line represents a comparable product lifecycle without well-executed FMEA.

     As can be seen in Exhibit 1, there are costs incurred in the product and process development stages when FMEA is conducted in earnest.  This early investment flattens the curve in later stages, however.  In contrast, the cost benefit of neglecting FMEA in the early stages is eclipsed by the costs incurred as issues are discovered during launch.  The lack of proactive analysis continues to incur additional costs throughout production and beyond; even after a product is retired, lingering liabilities may continue to plague the manufacturer.  In the well-executed case, lessons learned may be applied to new programs, effectively lowering the cost of the FMEA effort.
     Note that the “neglecting FMEA” scenario is shown to have non-zero cost in the development stages; even “box-checking exercises” incur some cost.  Also, an alternative way to conceive of lowering the cost of FMEA may be more intuitive for some readers:  applying lessons learned to future programs increases the return on the investment made in FMEA implementation.
     When greater effort is expended on proactive FMEA, the lifecycle cost of a product can be estimated earlier in the cycle and with greater reliability.  Without proactive analysis, the total cost of a program will not be known until the product is retired and all outstanding issues are resolved.
     Proper FMEA implementation can be threatened by the flawed logic that endangers all proactive efforts.  In a cost-cutting frenzy, an unenlightened manager may divert resources from proactive FMEA efforts.  This failure to recognize the benefits will shift the subject program from the green line to the red line in Exhibit 1, increasing total cost.  As proactive efforts – FMEA or others – become more effective, the need for them becomes less salient to many decision-makers.  Practitioners can counter this by making reference to these efforts and quantifying, to the extent possible, the costs avoided throughout the product lifecycle as a result of the commitment to early and ongoing analysis.
 
Other Reasons for FMEA
     Direct costs of neglecting to conduct a proper FMEA were discussed first for one simple reason:  direct costs get the most attention.  Now that I have yours, there are other reasons to consider investing in proactive analysis.  Ultimately, each can be associated with costs, but the links are not always obvious.  These indirect costs, however, can also be “make or break” factors for a product or company.
     Customer satisfaction or, more broadly, customer experience, is determined, in large part, in the product development stage.  Launching a product without incorporating “the voice of the customer” or the end-user perspective can lead to various perceived failures.  Customer experience deficiencies exist in addition to “traditional” failures, such as physical damage or product malfunction.  Issues ranging from minor inconvenience or dissatisfaction to physical injury and property damage can be prevented with proper FMEA implementation.
     Failures that cause physical injury or property damage can result in extensive legal and financial liabilities.  The great expense of conducting a product recall is only the beginning of such a nightmare scenario.  The ability to present a considered evaluation of product risks and evidence of mitigation efforts can reduce awarded damages and other claims against a manufacturer.
     Analysis in the process development stage can lead to improvements for both customers and the producer.  Reducing process variation generates increased customer satisfaction by providing a more consistent product.  Producer costs are simultaneously reduced by minimizing scrap, rework, and testing.
     Other producer benefits may include the identification of potential productivity and ergonomic improvements.  “Lean wastes,” such as excessive handling and transportation, or overprocessing may also be identified as causes of reduced product performance.  Eliminating these issues prior to series production improves quality and customer satisfaction while increasing efficiency.
     Proactive analysis facilitates maintaining a project schedule with a smoother launch and target market introduction dates achieved.  The costs of neglecting analysis in early stages of the product lifecycle cannot be recovered.  Future performance can be improved, but recovering from a damaged reputation may be far more difficult.  Costs will continue to accrue as discounting or other promotional means may be necessary to regain a position in the market.
     Other benefits may also accrue.  The value of generating a deeper understanding of a product or process is difficult to quantify.  The value of developing confidence among executives in a product’s potential, however, is often quantified in budgets and salaries.  Financial or otherwise, proactive analysis pays dividends.
 

     The FMEA series will cover a broad range of related topics.  If there is a specific topic you would like to see covered, or question answered, feel free to send suggestions.
 
     For additional guidance or assistance with Operations challenges, feel free to leave a comment, contact JayWink Solutions, or schedule an appointment.
 
Jody W. Phelps, MSc, PMP®, MBA
Principal Consultant
JayWink Solutions, LLC
jody@jaywink.com
 
Directory of “FMEA” entries on “The Third Degree.”
Vol. I:  Introduction to Failure Modes and Effects Analysis (23Mar2022)
Vol. II:  Preparing for Analysis (6Apr2022)
Vol. III:  “Classical” Design Failure Modes and Effects Analysis (20Apr2022)
Vol. IV:  “Classical” Process Failure Modes and Effects Analysis (4May2022)
Vol. V:  Alignment (18May2022)
Vol. VI:  "Aligned" Design Failure Modes and Effects Analysis (1Jun2022)
Vol. VII:  "Aligned" Process Failure Modes and Effects Analysis (15Jun2022)
Vol. VIII:  Monitoring and System Response (29Jun2022)
Vol. IX:  Visual Action Priority Tables (13Jul2022)
Vol. X:  Suggested Formats for “Aligned” FMEA Forms (27Jul2022)
Vol. XI:  Commentary, Critique, and Caveats (10Aug2022)

Related post:  “P” is for “Process” (FMEA) (27Jun2018)