Financial Calculation on Saving with FMEA

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    Vineet Aggarwal

    Could someone help me calculate the financial savings done with the help of FMEA. I have already gone through the article in the weblink on this site.

    Is there any other method to calculate the same.




    @aggarwal.vineet – since RPN isn’t really tied to anything concrete, I’d hesitate to use it to scale any COPQ. What I’ve used is the annualized estimate of defects multiplied by the financial cost of a defect (the more tangible and “hard” you can make this the better – cost of rework or scrap is much easier to defend than is “lost sales”). If you’re familiar with a design scorecard, this is very easy to add.


    Mike Carnell

    @aggarwal.vineet I am not sure what anyone needs an FMEA for to calculate benefits. Before you even begin a project you should have a financial model of the process you are trying to change. If you don’t know how to do that then find someone in accounting or preferably finance to help you do it. Once you have the model and you do something to “fix” it then you simply change that parameter in your model and the answer falls out. If the finance people can’t do it take a look at some of the CapEx justifications.

    If none of that works and you can send financial data outside your company you can send it to [email protected] and I will work on it with you.

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