Risk Assessment Improve Kaizen Facilitation Objectives Identify common

Risk Assessment • Improve • Kaizen Facilitation

Objectives • Identify common sources of risk • Understand risk evaluation and mitigation steps • Explain Severity, Occurrence, and Detection 2

Risk is… • The potential that a chosen action or activity (including the choice of inaction) will lead to an undesirable outcome • Common risk categories • • • 3 People Process Cultural Environmental Systemic Legal & Regulatory

Identify and Mitigate Sources of Risk Unclear Customer Expectations Vague Standards Potential Safety Hazards Poor control plans & SOP’s Raw Material Variation Total Risk Machine Reliability/ Poor Process Capability Measurement Variation Poorly developed Specification Limits SOURCE: D. H. Stamatis, FMEA: FMEA from Theory to Practice, Quality Press, 1995 4

Risk Mitigation Proactively eliminating sources of variation that cause defects – [ process based failure prevention ] • What does it do? • Helps to evaluate how a process or design can fail • Helps to quantify risk factors assisting in prioritizing current or future changes (improvement ideas) • Can act as a forum for process or design improvements and preventative actions • Assists in identifying weaknesses in current control plans 5

Risk Assessment • The Risk Priority Number (RPN) / calculation is a dynamic process: • Can begin as soon as a project is selected for a certain process, system or design • First one usually started no later than Measure Phase, or beginning of the Analysis Phase • Should be revised as improvements or changes are made to a process to assess risk 6

Focus on Prevention of Errors / Defects The Risk Priority Number (RPN) --- allows the team to quantify various failure modes to assist in prioritizing the team’s improvement efforts The RPN is the product of: Severity x Occurrence x Detection The higher the RPN, the higher priority the potential failure mode becomes, prevention becomes the focus of the team NOTE: The value of each of these characteristics is determined by the team, guidelines are provided on following pages 7

Severity (S) Guidelines Guideline Severity Ranking Significant damage, multiple deaths, and fines Deadly 10 High likelihood of death or LTI, fines, and damage Very Hazardous 9 LTI, Injury or near miss, fines and damage Very High 8 Work stoppage, fines, and damage High 7 Work stoppage, and damage Moderate 6 Work stoppage Low 5 Rework and loss of cargo Very Low 4 Rework with delays Minor 3 Rework without delays Very Minor 2 No impact None 1 8

Severity If Container Fails? 9

Occurrence (O) Guidelines 10 Guideline Occurrence Ranking Every opportunity Inevitable 10 50% Out of Control 1% Very High Every Batch High Selective Batches Moderate Hourly Low Daily Very Low Weekly Minor Monthly Very Minor Annually None 7 5 3 1

Probability of Occurrence 11

Detection (D) Guidelines 12 Guideline Detection Ranking Undetectable 10 Multiple failure detection Random Data Based Detection Remote End User Detection Very Low Audit Detection Low Sample Detection Moderate Manual Test Detection Moderately high SPC Post Process Detection High Automated In Process Detection Very High Preventative Detection Always 7 5 3 1

Ability to Detect it 13

Example Calculation We Get An RPN = ( S X O X D ) i. e. – 4 x 1 = 16 What can go wrong? Severity Occurrence Detection RPN Clerks arrive late 4 4 1 16 Wheeled loads incorrectly spotted 5 5 2 50 Shuttle bus delays arrival 2 1 1 2 Address Highest Risk Potential w/ Plan of Attack - before the change! 14 Plan

What’s the Plan? 15

Calculation and Risk Mitigation Steps 1. 2. 3. 4. 5. 6. 7. Identify inputs to the process Determine effects of a failure Identify potential causes of each List the current detection controls Identify the potential loss – Severity List how often it happens - Occurrence Identify how the failure is caught - Detection 16

Steps (continued) 8. Assign Severity, Occurrence and Detection ratings to each cause 9. Calculate Risk Priority Number (RPN) 10. Prioritize recommended actions to reduce high RPN’s 11. Take appropriate actions to reduce risk and document 12. Update the document as appropriate & recalculate 17

Risk Assessment During Kaizen Event • Our main need for risk assessment is to evaluate the risk of our proposed process improvements (changes) before we put them in place • Risk assessment helps us: • • • 18 Analyze new processes Identify weaknesses in the control plan Establish the priority of actions Evaluate the risk of process changes Identify other potential areas to consider

Tips • Modify the guidelines and definitions prior to the team meeting • For higher sensitivity or a large amount of failure modes use 1 -10 for occurrence and detection • Leverage expertise and a novice for the best results • NEVER spend more that 5 minutes on a single item 19

Review • Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to an undesirable outcome • RPN = Severity x Occurrence x Detection • Focus on PREVENTION versus rework • Use common sense when ranking and prioritizing items with the same RPN number 20