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Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 19.1 Chapter 19 Risk management.

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Presentation on theme: "Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 19.1 Chapter 19 Risk management."— Presentation transcript:

1 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Chapter 19 Risk management Pearson Education Ltd. Naki Kouyioumtzis

2 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Risk management Operations strategy Design Improvement Planning and control Organizing for improvement Risk management stops processes becoming worse Operations improvement makes processes better Operations management

3 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 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? Key operations questions

4 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Why systems fail Design failures Facilities failures Staff failures Failures inside the operation Supply failures Customer failures

5 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston How failure is measured Time Failure rate Infant-mortality stage Normal-life stage Wear-out stage

6 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 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. Time Failure rate Infant-mortality stage Normal-life stage Wear-out stage Curve B Curve A X y How failure is measured (Continued)

7 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Time Failure rate 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 Chapter 19. How failure is measured (Continued)

8 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston The three tasks of failure prevention and recovery Finding out what is going wrong and why Stopping things going wrong Coping when things do go wrong Failure detection and analysis Improving system reliability Recovery

9 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston How failure is detected and analyzed – in-process checks; – machine-diagnostic checks; – point-of-departure interviews. – accident investigation; – failure mode and effect analysis; – fault-tree analysis. Failure detection mechanisms include: Failure analysis procedures include: Failure detection Failure analysis

10 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Severity of consequence Effect on customer Normal operation Failure Prevention Mitigation Recovery Failure Management

11 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 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. Poka-Yoke (fail-safing)

12 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston What has to go wrong? Controlled flight into terrain Flying at wrong altitude p = 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.

13 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Probability of failure Degree of severity Likelihood of detection Risk priority number Failure modes effects analysis Severity of consequence Effect on customer Normal operation Failure

14 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Fault-tree analysis Food served to customer is below temperature Key AND node OR node Cold plate used Plate taken too early from warmer Plate warmer malfunction Oven malfunction Timing error by chef Ingredients not defrosted Plate is cold Food is cold Risk – below-temperature food being served to customers

15 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Fault-tree analysis (Continued) Filter not replaced when required Key AND node OR node Disconnect function failure Cut-out disconnected Signal malfunction Inspection not carried out Inspection sequence violated Particle meter faulty Automatic cut-out fails Inspection fails to detect blocked filter Risk – filter not replaced when required

16 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston A mixture of maintenance approaches is often used – in an automobile, for example. Maintenance modes Lights – Use run-to- breakdown maintenance Tyres – Use condition-based monitoring maintenance Engine – Use preventive maintenance

17 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston Failure curve for two machines, A and B Probability of failure Time Machine A Machine A – breakdown relatively predictable, so can judge when to time preventive maintenance. Machine B Machine B – breakdown relatively unpredictable, so is less easy to judge when to time preventive maintenance.

18 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston One model of the costs associated with preventive maintenance shows an optimum level of maintenance effort. Costs Amount of preventive maintenance Total cost ‘Optimum’ level of preventive maintenance Cost of providing preventive maintenance Cost of breakdowns Maintenance costs

19 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 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 Amount of preventive maintenance Total cost Cost of breakdowns Cost of providing preventive maintenance Maintenance costs (Continued)

20 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 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 Solution Preventive maintenance before end of useful life Reliability centred maintenance

21 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston One part in one process can have several different failure modes, each of which requires a different approach. Solution Preventive damage, fix stone screen Solution Preventive damage, fix stone screen Cutters Shredding process Reliability centred maintenance (Continued) Failures Time Cutter ‘damage’ failure pattern

22 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston One part in one process can have several different failure modes, each of which requires a different approach. Solution Ensure correct fitting through training Solution Ensure correct fitting through training Cutters Shredding process Failures Time Cutter ‘shake loose’ failure pattern Reliability centred maintenance (Continued)

23 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston What’s happened What consequences What’s happened What consequences Inform Contain Follow up Inform Contain Follow up Find root cause Engineer out Find root cause Engineer out Analyze failure Plan recovery Analyze failure Plan recovery The stages in failure planning Discover Act Learn Plan


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