Pearson Education Ltd. Naki Kouyioumtzis Chapter 19 Risk management Pearson Education Ltd. Naki Kouyioumtzis

Risk management Operations strategy Operations management Design Operations improvement makes processes better Operations management Organizing for improvement Design Improvement Risk management stops processes becoming worse Planning and control

Key operations questions In Chapter 19 – Risk management – Slack et al. identify the following key questions: What is risk management? How can operations assess the potential causes of, and risks from failure? How can failures be prevented? How can operations mitigate the effects of failure? How can operations recover from the effects of failure?

Failures inside the operation Why systems fail Design failures Facilities failures Staff failures Failures inside the operation Customer failures Supply failures

Infant-mortality stage How failure is measured Infant-mortality stage Normal-life stage Wear-out stage Failure rate Time

Infant-mortality stage How failure is measured (Continued) Bath-tub curves for two parts of an operation. Curve A represents a part with relatively predictable failure and curve B represents a part with a more random failure pattern. Infant-mortality stage Normal-life stage Wear-out stage Curve A Failure rate Curve B X Time y

Early failure detection and improvement How failure is measured (Continued) Service operations, after an early stage of failure detection and improvement, may suffer from steadily rising failure rates caused by increasing complacency. Early failure detection and improvement Complacency Failure rate Time Chapter 19.

The three tasks of failure prevention and recovery Failure detection and analysis Finding out what is going wrong and why Improving system reliability Recovery Stopping things going wrong Coping when things do go wrong

How failure is detected and analyzed Failure detection Failure detection mechanisms include: in-process checks; machine-diagnostic checks; point-of-departure interviews. Failure analysis Failure analysis procedures include: accident investigation; failure mode and effect analysis; fault-tree analysis.

Severity of consequence Failure Management Prevention Mitigation Recovery Normal operation Failure Severity of consequence Effect on customer

Poka-Yoke (fail-safing) File cabinets can fall over if too many drawers are pulled out. For some file cabinets, opening one drawer locks all the rest, reducing the chance of the file cabinet tipping. It is a control method. The window in the envelope is not only a labour saving device. It also prevents the contents of an envelope intended for one person being inserted in an envelope addressed to another. It is a control method.

Cumulative probability of occurrence = one in two million. Controlled flight into terrain What has to go wrong? Flying at wrong altitude p = 0.001 Co-pilot fails to cross check p = 0.01 Air traffic control fail to notice p = 0.1 Pilots ignore warning alarm p = 0.5 Cumulative probability of occurrence = one in two million.

Failure modes effects analysis Normal operation Failure Severity of consequence Effect on customer Probability of failure Degree of severity Likelihood of detection Risk priority number

Fault-tree analysis Risk – below-temperature food being served to customers Food served to customer is below temperature Plate is cold Food is cold Cold plate used Plate taken too early from warmer Plate warmer malfunction Oven malfunction Timing error by chef Ingredients not defrosted Key AND node OR node

Fault-tree analysis (Continued) Risk – filter not replaced when required Filter not replaced when required Automatic cut-out fails Inspection fails to detect blocked filter Disconnect function failure Cut-out disconnected Signal malfunction Inspection not carried out Inspection sequence violated Particle meter faulty Key AND node OR node

Maintenance modes A mixture of maintenance approaches is often used – in an automobile, for example. Engine – Use preventive maintenance Lights – Use run-to-breakdown maintenance Tyres – Use condition-based monitoring maintenance

Probability of failure Failure curve for two machines, A and B Machine A Machine A – breakdown relatively predictable, so can judge when to time preventive maintenance. Probability of failure Machine B Machine B – breakdown relatively unpredictable, so is less easy to judge when to time preventive maintenance. Time

Maintenance costs One model of the costs associated with preventive maintenance shows an optimum level of maintenance effort. Total cost Cost of providing preventive maintenance Cost of breakdowns ‘Optimum’ level of preventive maintenance Costs Amount of preventive maintenance

Maintenance costs (Continued) If preventive maintenance tasks are carried out by operators and if the real cost of breakdowns is considered, the ‘optimum’ level of preventive maintenance shifts towards a higher level. Total cost Cost of breakdowns Costs Cost of providing preventive maintenance Amount of preventive maintenance

Cutter ‘wear out’ failure pattern Reliability centred maintenance One part in one process can have several different failure modes, each of which requires a different approach. Cutters Shredding process Failures Time Cutter ‘wear out’ failure pattern Solution Preventive maintenance before end of useful life

Cutter ‘damage’ failure pattern Reliability centred maintenance (Continued) One part in one process can have several different failure modes, each of which requires a different approach. Cutters Shredding process Solution Preventive damage, fix stone screen Failures Time Cutter ‘damage’ failure pattern

Cutter ‘shake loose’ failure pattern Reliability centred maintenance (Continued) One part in one process can have several different failure modes, each of which requires a different approach. Cutters Shredding process Solution Ensure correct fitting through training Failures Time Cutter ‘shake loose’ failure pattern

The stages in failure planning Discover Act Learn Plan What’s happened What consequences Inform Contain Follow up Find root cause Engineer out Analyze failure Plan recovery