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19.1
Chapter 19 Risk management
Pearson Education Ltd. Naki Kouyioumtzis
19.1
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.2
Risk management
Operations strategy
Design
Operations management Improvement Planning and control
19.2
Operations improvement makes processes better Organizing for improvement Risk management stops processes becoming worse
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.3
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?
19.3
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.4
Why systems fail
Failures inside the operation
Design failures Supply failures
Facilities failures
Customer failures
Staff failures
19.4
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.5
How failure is measured
Normal-life stage
Wear-out stage
Failure rate
Infant-mortality stage
Time
19.5
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.6
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. Normal-life stage
Failure rate
Infant-mortality stage
Wear-out stage
Curve A
Curve B
X
19.6
Time
y
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.7
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.
Complacency
Failure rate
Early failure detection and improvement
Time
19.7
Chapter 19.
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.8
The three tasks of failure prevention and recovery
Failure detection and analysis Finding out what is going wrong and why
Improving system reliability Stopping things going wrong
19.8
Recovery Coping when things do go wrong
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.9
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.
19.9
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.10
Failure Management
Mitigation
Prevention
Normal operation
19.10
Failure
Recovery
Severity of consequence
Effect on customer
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.11
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.
19.11
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.12
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.
19.12
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.13
Failure modes effects analysis
Normal operation
Probability of failure
Failure
Severity of consequence
Degree of severity
Effect on customer
Likelihood of detection
Risk priority number
19.13
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.14
Fault-tree analysis Food served to customer is below temperature
Food is cold
Plate is cold
Plate warmer malfunction Plate taken too early from warmer Cold plate used
19.14
Risk – below-temperature food being served to customers
Oven malfunction
Key AND node
Timing error by chef
OR node
Ingredients not defrosted Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.15
Fault-tree analysis (Continued) Filter not replaced when required Automatic cut-out fails
Signal malfunction Cut-out disconnected
Risk – filter not replaced when required
Inspection fails to detect blocked filter
Inspection not carried out
Key AND node
Inspection sequence violated
OR node Disconnect function failure
19.15
Particle meter faulty Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.16
Maintenance modes A mixture of maintenance approaches is often used – in an automobile, for example. Engine – Use preventive maintenance Lights – Use run-tobreakdown maintenance Tyres – Use condition-based monitoring maintenance
19.16
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.17
Failure curve for two machines, A and B Probability of failure
Machine A
Machine B
Machine A – breakdown relatively predictable, so can judge when to time preventive maintenance. 19.17
Time
Machine B – breakdown relatively unpredictable, so is less easy to judge when to time preventive maintenance.
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.18
Maintenance costs One model of the costs associated with preventive maintenance shows an optimum level of maintenance effort.
Costs
Total cost
Cost of breakdowns
Cost of providing preventive maintenance ‘Optimum’ level of preventive maintenance
Amount of preventive maintenance 19.18
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.19
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.
Costs
Total cost
Cost of breakdowns
Cost of providing preventive maintenance Amount of preventive maintenance 19.19
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.20
Reliability centred maintenance One part in one process can have several different failure modes, each of which requires a different approach.
Failures
Shredding process
Cutters
19.20
Cutter ‘wear out’ failure pattern
Time
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.21
Reliability centred maintenance (Continued) One part in one process can have several different failure modes, each of which requires a different approach.
Cutters
Failures
Shredding process
Cutter ‘damage’ failure pattern
Time
19.21
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.22
Reliability centred maintenance (Continued) One part in one process can have several different failure modes, each of which requires a different approach. Shredding process
Failures
Cutters
Cutter ‘shake loose’ failure pattern
Time
19.22
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
19.23
The stages in failure planning
Discover • What’s happened
• What consequences
19.23
Act • Inform • Contain • Follow up
Learn
Plan
• Find root cause
• Analyze failure
• Engineer out
• Plan recovery
Slack, Chambers and Johnston, Operations Management, 6th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
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