Browse Publications Technical Papers 2001-01-0375

FMERA - Failure Modes, Effects, and (Financial) Risk Analysis 2001-01-0375

Continuous Improvement activities are often based on a list of top concerns, such as highest RPN (Risk Priority Number) on the PFMEA (Process Failure Modes and Effects Analysis), warranty items, or scrap rates. But a company is in business to make a profit for its stockholders. Therefore, money should be considered, rather than just technical engineering tools and RPNs.
Current PFMEA methodology (See references 1 and 2) focuses on delivering quality parts to the customer. The financial impact of various potential process problems is not considered directly. A new and extended technique called FMERA (pronounced Fuh-MAIR-uh) can identify and prioritize the process part of potential problems that have the most financial impact on an operation. Alternatives can be evaluated to maximize the financial benefits. FMERA is a method for getting the voice of the stockholder into process decisions.
This methodology should not be used to justify risk when there are issues such as human safety, product safety, company policy, or regulatory concerns. These types of issues should be addressed using other guidelines, such as design specifications and product testing. FMERA is useful for comparing and selecting process alternatives that reduce the potential financial cost of a particular process alternative.


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