Proactive Risk Management in Product Lifecycle: Can it be Automated?
Risk management is a crucial aspect of product lifecycle management (PLM) to ensure the success of a product being designed and developed. The product lifecycle encompasses several steps, including conception, design, development, production, verification, validation, sales, service, and obsolescence.
At each stage, several hidden risks can impact the performance and quality of the product. For example, a medical device company producing CT scanners faced significant recalls and financial setbacks due to the lack of proactive product risk management. While analyzing the recalls and the root cause, the team realized that a small design flaw had cascaded into a major issue, resulting in the recall. Had the company adopted a more proactive risk mitigation strategy, this issue could have been caught at the design stage. The key to preventing the recall was to integrate design quality and product risk management right in the early phase of designing the CT scanner.
Businesses must have a process to identify, assess, and control risks to improve the quality and performance of the product. Effective product risk management can achieve this through several key activities:
- Identifying potential risks early in the product lifecycle to mitigate their impact on development and production
- Integrate design quality with the PLM process/workflow
- Continuously assessing and updating risk profiles as new information and changes in the product arise
- Implementing control measures to prevent identified risks from affecting the final product, ensuring consistent quality and reliability
An effective risk management strategy helps enterprises reduce potential risks and improve the product’s success rate. Some of the key benefits include:
- Faster growth with ongoing risk mitigation efforts
- Lower manufacturing costs
- Enhanced customer satisfaction
- Safer and more reliable products
- Greater compliance with industry standards and regulations
- Improved efficiency
- Faster time to market
4 Essential Steps to Effective Risk Management across the Product Value Chain
Step 1: Early and Accurate Risk Identification
Risks can affect various aspects of the product, including technical, regulatory, and market-related factors. Some risks may be hidden and difficult to detect. Utilizing data can help identify trends and patterns, determine recurring issues, and predict future occurrences of similar problems.
Step 2: Prioritizing Risk Levels for Effective Management
There are varying levels of risks. Some require immediate attention due to their significant impact, while others may occur frequently and weaken systems over time. Additionally, some risks may occur rarely or have a minimal effect. Prioritizing these risks is crucial, and they must be scored and ranked to optimize resource allocation for risk mitigation.
Step 3: Crafting and Implementing Mitigation Strategies
Once risks are identified and ranked, high-priority ones must be addressed with appropriate mitigation strategies. These strategies should be documented clearly, outlining objectives, scope, responsibilities, and resource allocation. They must align with the product strategy, budget, schedule, and quality requirements. Performing a cost-benefit analysis ensures that the mitigation efforts will achieve the desired outcomes.
Step 4: Continuous Monitoring and Impact Assessment
Even the best-laid plans can go awry, making it critical to track progress and measure the success of control measures implemented to mitigate risks. If new risks arise or the impact is unexpected, implementing mid-course corrections is essential. Identifying key performance indicators is crucial for tracking and monitoring the success of risk management efforts.
Key Risk Management Approaches
Risks can vary in type, intensity, and impact. Therefore, a one-size-fits-all strategy for risk management is ineffective. It is crucial to understand these differences and approach risks appropriately. Here are some key approaches:
- Avoid: Avoiding a risk where possible can help businesses avoid costs later. For instance, it may be better to avoid sourcing cheap raw materials from a country facing political turmoil and instead pay a higher price for reliability, with quality remaining the same.
- Retain but be Aware: There could be times when dealing with risk is more cost-effective than using an alternative. For example, introducing a cheaper raw material may create the risk of greater exposure to health hazards. In such a case, sticking with the original raw material may prove more beneficial for the company and its workers.
- Spread: Continuing with the example of raw materials, it may be a good strategy to source a part of the raw material from a country facing political turmoil while also using other reliable sources. This can help balance costs while ensuring a constant supply to prevent disruptions.
- Reduce: Some risks may persist despite best efforts, but their impact can be reduced through mitigation strategies. For example, certain processes may pose a safety hazard to workers. To minimize damage, only trained workers can be deployed, allowing them to work in shorter shifts and use PPE to reduce exposure and ensure safety.
- Transfer: Often, tasks may be outsourced to a contractor to reduce the risk to the company. Construction and manufacturing companies frequently work with contractors and outsource a bulk of their operations while focusing on high-end jobs such as designing and prototype development.
Of course, it is best to get rid of a known risk but some risks cannot be eliminated. In such cases, decision-makers will have to use their experience and follow the data to handle the risk. The first step in all scenarios is to “know the risk”. The worst kind of risk is the one you didn’t even know existed.
Using a Modern PLM Solution with Integrated Risk Management
A cloud-based solution such as ProductQuest, the PLM solution from ComplianceQuest, can help product manufacturers improve their risk management capabilities. Built on Salesforce, the solution is integrated with a quality management solution and facilitates risk management by:
- Facilitating proactive risk management
- Define risk tolerance thresholds and policies
- Automatically initiate a risk assessment as required
- Enable access to historical data on past risk factors using the risk register to identify and capture trends
- Prioritize risk trends and address the highest risks to prevent future events by leveraging the assessment and evaluation capabilities of the solution
- Define metrics for real-time insights
- Provide management with oversight into key risks, risk trends, root causes, corrective and preventive action plans, and suitable strategies for risk mitigation
- Establish a risk-aware culture
The PLM solution also helps to implement an electronic Bill of Materials (eBOM) which offers significant advantages for product assembly and management, streamlining the design and manufacturing process. A centralized, accessible platform helps to manage detailed components and assembly instructions, ensuring all stakeholders have the latest, most accurate information at their fingertips. This reduces the risk of version mismatch and potential errors leading to nonconformance. It facilitates better communication and coordination among design, engineering, quality, and manufacturing teams, reducing errors, and minimizing costly revisions.
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