When your reliability program is working well, it may be difficult to recognize the benefits incurred.
Likewise, when the program is not working, it is obvious.
As you work to improve your program, keep in mind you may need to include elements to ensure your efforts remain visible.
I don’t mean staging field issues that you can solve quickly, rather that you are able to show the impact you and your program make to the organization.
The problems of lack of drama and long term value
If the organization first hired you to help build a program, often in order to reduce the occurrence of failures, then they know the pain and drama product or system failures provide.
A customer complaint or plant shut-down is now. The pain, loss of revenue, is now. The ‘bias for action’ is now.
When the reliability program succeeds in reducing or eliminating the ‘high drama’ situations, well that is not visible now.
Just because a customer didn’t complain today, doesn’t mean we necessarily succeeded. The lack of something is difficult to notice.
The other issue is the time it takes to realize the return on reliability improvement efforts. As you work to improve the reliability program, you make investments.
The work to improve designs, testing, processes all take time and resources now.
The lack of warranty expenses, repairs or downtime occurs later.
At first, the benefits may be subtle and possibly overshadowed by the existing and troublesome products previously installed. The impact of improvements takes time to occur.
Here are a few tips to help make a well functioning reliability program’s value visible.
1. Capture the cost of drama
Talk to your finance folks or the director of engineering to determine the costs involved when a major field issue occurs.
This may include engineering time, root causes analysis expenses, scrap or rework costs, etc.
Quantify the cost for a few major issues if possible and establish an average cost per major field issue.
Tally how many such issues occur per month, quarter or year and make the cost to the organization visible in part as an incentive to avoid such problems in the future.
Also, make the costs visible to help justify the investments in making reliability program improvements.
Over time, as you track major and minor field issues, help your organization notice the difference.
Avoiding one major issue a quarter may result in millions of dollars of savings per year.
2. Forecast the benefits of reduced failures
As you make investments in your reliability program you will be asked ‘why?” or ‘what the value of this activity?”
Be prepared.
The easiest way to estimate future value is to estimate the change in failure rate.
If the FMEA work has the chance to reduce failures by a few percentage points, and you know the cost per failure, the result may be significant.
Comparing the savings to the cost of R&D as a percent of net revenue may illustrate the magnitude of the potential savings.
3. Track change in engineering time spent on failures
Organizations that have a large number of field issues to resolve often create a team of engineers devoted to improving existing designs and solving field issues.
If you don’t’ have such a team, then the development teams may be diverted from work on the next project to resolving field issues.
In my experience, many directors of engineering report 25% of their engineering talent focuses on past problems.
Reducing field issues by designing and deploying reliability systems reduces the need for teams to resolve issues.
The savings come by shifting the engineering talent away from solving field issues to working on improving the existing process and future designs.
4. Track changes in shipment delays or supplier holds
A major, and many minor, field issues involve scrapping or reworking components or subsystems provided by suppliers.
You may place shipments on hold till the supplier issues resolve. There are direct costs of scrap or rework, along with increased risks to your organization’s ability to ship products.
The actual change to production or even the change in risk of meeting production numbers may impact the organization’s ability to commit to sales.
The loss of revenue is real and quantifiable with a little effort.
Changing the ability to ship to meet sales, by reducing reliability problems results in real profits.
5. Track changes in customer satisfaction
Do not overlook the value of customer satisfaction.
Happy customers tend to continue to purchase you products. The marketing team may have a cost associated with securing a new customer and the cost to sell to an existing (happy) customer.
That difference is in part due to the product reliability performance.
Work with your marketing team to understand how important reliability is to the purchase decision.
You can claim the value (difference in cost per sale) proportion to the importance to the purchase decision.
The improvements in customer satisfaction often result in increases in repurchasing, word of mouth promotion, and brand loyalty.
Summary
Each of these tips may involve a bit of work alongside your immediate tasks to establish baselines or metrics.
The ability to show the impact of changes due to the improved reliability program is essential to keep your program’s value visible.
See more ideas to illuminate your reliability program’s value by reviewing the ebook Finding Value: How to Determine the Value of Reliability Engineering Activities.
Related:
Purpose of a Reliability Program (article)
10 Ways to Find Reliability Value (article)
Reliability Management and Risk (article)
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