The field in which the company operates requires strict certification, in multiple areas, and procedures to the point of ensuring the very reliability of the processes. Certifications, especially ISOs, therefore also needed to be analyzed from a risk perspective. To be able to do this, a system had to be built that could evaluate the processes affecting the company as a whole even before those regarding safety or manufacturing: a business process analysis (business process analysis) was needed.
The company also asked us to see if a system to control the reliability of the company’s internal processes was able to affect the KPIs related to productivity and efficiency.
Business Process FMEA: An Approach to Risk Management
The business process analysis is poorly codified because each company has a particular organization that is difficult to fit into preset models; it needs to be studied and customer-built. To get it, we combined two tools:
- FMEA Failure Mode and Effects Analysis
- DMAIC Define, Measure, Analyse, Improve, Control
The FMEA process analysis and review technique is typical in design and manufacturing and is aimed at identifying potential risks and failures in a product. It is a very practical, technical methodology that has been coupled with an improvement methodology, DMAIC.
DMAIC is a problem solving tool that we have used to improve, optimize and stabilize organizational processes.
Finally, we identified and proposed specific evaluation parameters to be able to quantify in percentage points the degree of reliability of each individual process implemented by the company.
Risk Analysis and Mitigation: Measuring to Manage
An analytics system that provides accurate current and predictive data enables truly strategic decision making.”
The first step was to identify and collect the most important processes for the company, those that were strategic to its competitiveness.
So teams were created to work on the identified processes and specific training was given to the persons in them so that they all had the same vocabulary and working tools. To that regard may we add that, the FMEA and DMAIC methodologies were familiar to some technical figures, while to others they were new: without a common basis it is difficult to arrive at a satisfactory result.
The analysis according to FMEA makes it possible to draw certain data, the RPNs (Risk Priority Numbers), that indicate the priority of risks for each process and process step. This makes it possible to identify which actions are most urgent, where action is needed to lower the probability of risk.
By converting the object of the analysis from design processes to business processes, the meaning of the Risk Priority Number also changed: its reciprocal then always indicated the priority of risk but viewed as reliability (or lack of reliability) of the processes of the business system. This allowed us to combine the process reliabilities and find an indicator of business process reliability.
You cannot manage what you cannot measure.”
Kaplan R.S. e Norton D.P. 1996
The next step was to see if there was a relationship between increased reliability and the corporate indicators (KPIs) of productivity and turnover such as, for example, EBITDA (Earning Before Interests, Taxes, Depreciation and Amortization), one of the most widely used indicators of profitability.
To analyze this correlation, a business intelligence tool was used to compare two different analyses and their results:
- the business process analysis (the FMEA business process)
- the Balanced Scorecard (BSC) management analysis
The BSC is a planning and control model that allows strategy to be translated into a consistent set of performance indicators to facilitate their measurability.
Results Achieved in Increasing Business Reliability
The consulting activities led to:
- 7 teams established and trained in FMEA and DMAIC methodologies
- 10 processes analyzed using the above methodologies
- 400 risks detected on which to act quickly
The methodology of analysis introduced led to a:
- +16% overall reliability of the enterprise system
When a process is reliable, it means that we can predict outcome with certainty, and because of this certainty we can build a strategy, e.g., market strategy, based on a sound and effective business system.
The analysis also found that an increase in process reliability was associated with an improvement in the values of KPIs that measure productivity and profitability.
Collaboration with the company currently continues to incorporate the use of the design & process FMEA analysis system into the various phases of the risk control cycle of new product design and development programs, integrating it with the management system already developed, to achieve operational excellence.
In a fiercely competitive market, having reliable processes upon which business choices and strategies can be built is a critical success factor.”
Paolo Sanguanini – Partner ŌdeXa
