3020 Afr. J. Bus. Manage.using Bayesian probability and concluded that there isneed to extend his work to quantify the impact ofintangible disservice effects, such as customercomplaints and loss of market share. Sonntag et al.(2010) developed a modified FMEA based on the fourcritical resources required to sustain the lean systems aspersonnel, equipment, materials and schedules. Theyfound that the practical methodologies needed to improvethe reliability of the lean systems are non-existent.Segismundo and Miguel (2008) proposed asystematization of the technical risk management throughthe use of FMEA to optimize the decision making processin new product development (NPD). The result had apositive influence on the product development decision-making process, evidenced by better allocation ofresources among projects at the program. Ookalkar et al.(2009) utilized FMEA at one of the leading Hospitals inCentral India, providing kidney care and dialysis. The aimwas to identify areas in the haemodialysis unit thatneeded special attention, in order to improve the processquality and ensure better patient welfare. The resultsobtained were the reduced process errors and mitigatingoverall risks, which eventually resulted to effective patientcare.By FMEA, many world class companies have gainedgreat benefits. On the other hand, while oil has becomea dominant element within the power capability profile ofevery nation (Ugoh and Ukpere, 2010), Iran and its oilindustry play a major role in the Middle East and in theglobal economy. Therefore, although FMEA might beemployed as a part of the improvement toolboxes, suchas those of Six Sigma projects, it is expected thatconducting the approach individually will also provideconsiderable advantages to the country and itsstakeholders. As one of the world's leading oil producingcountry, Iran's importance in the world's oil market is bothindisputable and indispensable. Iran presently ranks asfifth in the world in terms of proven oil reserves andsecond in natural gas. Based on the latest estimationsreleased in 2008, it holds 96.4 billion barrels of oil. InIran, according to preliminary estimates, GDP at basicprice grew by 5.2% at constant prices and amounted to $44.9 billion in 2008. The value-added of the manu-facturing and mining, services, oil and agriculture sectorsgrew by 8.5, 6.5, 3.0 and 4.7%, respectively and theshares of these sectors in GDP were 17.1, 48.8, 26.5 and10.4%, respectively, at current prices (OPEC, 2008).Organisations have to manage their resources effect-tively due to the limited resource available, and one of theeffective strategies for managing the available resource isto reduce the cost of operations. In other words,managers have to find ways for resources to be usedeffectively by reducing work defect, shortening the timetaken to complete a particular process, or reducing waste(Yaacob, 2010). Therefore, it is expected thatpreventing oil's waste provides advantages, such as costreduction, quality improvement, higher productivity, andhigher satisfied customers.According to Tiku (2005), the oil and gas industry isriddled with risk and uncertainty
at almost every stage ofthe business from exploration
through production todownstream marketing.
They addressed FMEA as aneffective approach in studying the factors that lead torisks, in which manufacturers and suppliers of oil andgas, as well as electronics, must address whiledeveloping products for use in the proper completion andcontinuous monitoring operations. It is important to notethat risk management techniques are used in a widerange of fields and applications (Demir and Bostanci,2010).
Moghaddam (2010) studied risk management inthe National Iranian Oil Company (NIOC) and didpropose a portfolio management for improvement offinancial resources’ allocation. The causes of failuresmight not only relate to machinery or processes, but canalso include environmental conditions. Based on theinvestigation of Taiwo (2010), in the oil industry ofNigeria, improvement of the working environment canlead to higher productivity of employees and bad workingconditions can contribute to low productivity ofemployees, which in turn can influence processes andmachinery conditions. Meanwhile, oil producingcompanies play a critical role in the oil industry of Iran,out of which, Sepahan Oil Co. has a considerablecontribution. Therefore, the aim of this research is toshow how FMEA could improve the quality of products atSepahan Oil Co. In the following, FMEA is demonstratedand applied to the four litre oil production line of SepahanOil Co.
FAILURE MODES AND EFFECTS ANALYSIS
The QS 9000 FMEA manual defines FMEA as a group ofactivities aimed at recognizing and evaluating the poten-tial failure of a product/process and its effects, identifyingactions that may eliminate or reduce the likelihood of apotential failure mode occurring, and documenting theanalysis process (Estorilio and Posso, 2010). FMEA is asystematic procedure enabling designers to identifypotential failures, evaluate them, investigate them andtake action to prevent them. Through the use of a simplerating method, specifically constructed to serve thecompany’s requirements, a risk priority number (RPN) isestablished for each cause of failure. Those potentialcauses, with high RPN values, are selected for thecorrective action to reduce the risk of failure occurrence.Attention is also given to those parts of a system, wherefailure would produce adverse customer reaction andloss of company image.In order to define the potential failure modes, all waysin which it could conceivably fail to perform its intendedfunction must be considered and described. A goodstarting point is to look at past FMEAs, tests and quality,warranty, durability and reliability reports. The team must