Failure Mode and Effects Analysis

 

Any business in the manufacturing industry would know that anything can happen in the development stages of the product. And while you can certainly learn from each of these failures and improve the process the next time around, doing so would entail a lot of time and money.
A widely-used procedure in operations management utilised to identify and analyse potential reliability problems while still in the early stages of production is the Failure Mode and Effects Analysis (FMEA).

FMEAs help us focus on and understand the impact of possible process or product risks.

The FMEA method for quality is based largely on the traditional practice of achieving product reliability through comprehensive testing and using techniques such as probabilistic reliability modelling. To give us a better understanding of the process, let’s break it down to its two basic components ? the failure mode and the effects analysis.

Failure mode is defined as the means by which something may fail. It essentially answers the question “What could go wrong?” Failure modes are the potential flaws in a process or product that could have an impact on the end user – the customer.

Effects analysis, on the other hand, is the process by which the consequences of these failures are studied.

With the two aspects taken together, the FMEA can help:

  • Discover the possible risks that can come with a product or process;
  • Plan out courses of action to counter these risks, particularly, those with the highest potential impact; and
  • Monitor the action plan results, with emphasis on how risk was reduced.

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Article 8 of the EU Energy Efficiency Directive ? Orientation

Following in-depth discussion of the UK?s ESOS response, we decided to backtrack to the source, especially since every EU member is facing similar challenges. The core purpose of the directive is to place a pair of obligations on member states. These are

  1. To promote the availability of energy audits among final customers in all sectors, and;
  2. To ensure that enterprises that are not SMEs carry out energy audits at least every four years.

Given the ability for business to look twice at every piece of legislation it considers unproductive, the Brussels legislators took care to define what constitutes an enterprise larger than an SME.

Definition of a Large Undertaking

A large undertaking meets one or both of the following conditions:

  1. It employs 250 or more people
  2. Its annual turnover is more than ?50 million and its balance sheet total exceeds ?43 million

Rules for Energy Audits

If accredited / qualified in-house specialists are unavailable then independent experts should supervise audits. The talent shortage seems common to many EU businesses. In hindsight, the Union could have ramped up slower, especially since the first compliance date of 5 December 2015 does not leave much swing room.

ecoVaro doubts there was a viable alternative, given the urgent imperative to beat back the scourge of carbon that is threatening the viability of our planet. The legislators must have been of a similar mind when laying down the guidelines. Witness for example the requirement that penalties be ?effective, proportionate and dissuasive?.

In order to be compliant, an energy audit must

  1. Be based on twelve months of verifiable data that is
    • over a continuous period beginning no more than 24 months before the beginning of the energy audit, and;
    • identifies energy saving opportunities including paths to their achievement
  2. Analyse the participant’s energy consumption and energy efficiency
  3. Have not been used as the basis for an energy audit in a previous compliance period

Measurement of current status and progress tracing are at the core of energy saving and good governance generally. EcoVaro has a powerhouse of software tools available on the cloud to help project teams save time and money.

The Better Way of Applying Benford’s Law for Fraud Detection

Applying Benford’s Law on large collections of data is an effective way of detecting fraud. In this article, we?ll introduce you to Benford’s Law, talk about how auditors are employing it in fraud detection, and introduce you to a more effective way of integrating it into an IT solution.

Benford’s Law in a nutshell

Benford’s Law states that certain data sets – including certain accounting numbers – exhibit a non-uniform distribution of first digits. Simply put, if you gather all the first digits (e.g. 8 is the first digit of ?814 and 1 is the first digit of ?1768) of all the numbers that make up one of these data sets, the smallest digits will appear more frequently than the larger ones.

That is, according to Benford’s Law,

1 should comprise roughly 30.1% of all first digits;
2 should be 17.6%;
3 should be 12.5%;
4 should be 9.7%, and so on.

Notice that the 1s (ones) occur far more frequently than the rest. Those who are not familiar with Benford’s Law tend to assume that all digits should be distributed uniformly. So when fraudulent individuals tinker with accounting data, they may end up putting in more 9s or 8s than there actually should be.

Once an accounting data set is found to show a large deviation from this distribution, then auditors move in to make a closer inspection.

Benford’s Law spreadsheets and templates

Because Benford’s Law has been proven to be effective in discovering unnaturally-behaving data sets (such as those manipulated by fraudsters), many auditors have created simple software solutions that apply this law. Most of these solutions, owing to the fact that a large majority of accounting departments use spreadsheets, come in the form of spreadsheet templates.

You can easily find free downloadable spreadsheet templates that apply Benford’s Law as well as simple How-To articles that can help you to implement the law on your own existing spreadsheets. Just Google “Benford’s law template” or “Benford’s law spreadsheet”.

I suggest you try out some of them yourself to get a feel on how they work.

The problem with Benford’s Law when used on spreadsheets

There’s actually another reason why I wanted you to try those spreadsheet templates and How-To’s yourself. I wanted you to see how susceptible these solutions are to trivial errors. Whenever you work on these spreadsheet templates – or your own spreadsheets for that matter – when implementing Benford’s Law, you can commit mistakes when copy-pasting values, specifying ranges, entering formulas, and so on.

Furthermore, some of the data might be located in different spreadsheets, which can likewise by found in different departments and have to be emailed for consolidation. The departments who own this data will have to extract the needed data from their own spreadsheets, transfer them to another spreadsheet, and send them to the person in-charge of consolidation.

These activities can introduce errors as well. That’s why we think that, while Benford’s Law can be an effective tool for detecting fraud, spreadsheet-based working environments can taint the entire fraud detection process.

There?s actually a better IT solution where you can use Benford’s Law.

Why a server-based solution works better

In order to apply Benford’s Law more effectively, you need to use it in an environment that implements better controls than what spreadsheets can offer. What we propose is a server-based system.

In a server-based system, your data is placed in a secure database. People who want to input data or access existing data will have to go through access controls such as login procedures. These systems also have features that log access history so that you can trace who accessed which and when.

If Benford’s Law is integrated into such a system, there would be no need for any error-prone copy-pasting activities because all the data is stored in one place. Thus, fraud detection initiatives can be much faster and more reliable.

You can get more information on this site regarding the disadvantages of spreadsheets. We can also tell you more about the advantages of server application solutions.

Eck Industries Sheds Fresh Light

William Eck began his business in 1948 in a 650m2 garage building. The aluminium foundry prospered, and now has an 18,500m2 factory in Manitowoc, Wisconsin employing 250 people casting a variety of casings. Like high-tech industries around the globe it needs effective illumination. After it measured its carbon footprint, it realised it needed energy efficient lighting too.

When Eck Industries began its review it had around 360 high-pressure sodium lights throughout the plant. Their operating cost was substantial. After taking independent advice from an independent agency they realised they needed to replace these with more energy-efficient fluorescent lights that consume half as much energy.

The feasibility team conducted performance tests to determine the optimum solution. After selecting enclosed, gasketed and waterproof T8 fluorescents (available in G13 bipin, single pin and recessed double contacts) they collaborated with the supplier to calculate the best combination of 4 and 6 bulb fixtures.

The fittings they chose cost $60,000 plus $10,000 installation. However a $33,000 energy rebate wrote down 47% of this immediately. They achieved further energy savings by attaching motion sensors to lights over low-traffic walkways.

The retrofit was a huge success, with an 8 month payback via a direct operating saving of $55,000 a year. Over and above enhanced illumination Eck Industries slashed 674,000 kilowatt hours off its annual lighting bill. During the 20 year design life, this equates to a total 13.5 million kilowatt hours. Other quantifiable benefits include 443 tons less carbon, 2 tons less sulphur dioxide, and 1 ton less nitrogen oxide per year.

Many companies face similar opportunities but fail to capitalise on them for a number of reasons. These may include not being aware of what is available, lacking technical insight, being short of working capital and simply being too busy to focus on them.

Eck Industries got several things right. Firstly, they consulted an independent specialist; secondly they trusted their supplier to provide honest advice, and thirdly they accepted that any significant saving is worth chasing down. Other spin-offs were safer, more attractive working conditions and an opportunity to take their foot off the carbon pedal. This is an excellent example of what is possible when you try.

If you have measured your illumination cost and are concerned about it (but are unsure what the metric means within the bigger picture) then Ecovaro offers online reports comparing it with your industry average, and highlights the cost-benefits of alternative lighting. 

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