School of Science and Technology

Palm oil production and the potential application of Failure Mode

and Effects Analysis in its supply chain Management.

by

OSITA CLETUS UDOGARANYA

in

2024

Student ID: N1216912

Date:14th March 2024

1.0 Introduction
The palm oil industry plays a crucial role in meeting the global demand for edible oils and
biofuels. Palm oil is a significant agricultural commodity in Nigeria, serving as a major export
product and a staple ingredient in traditional Nigerian cuisine (Busari, Agboola, Akintunde, &
Jimoh, 2022). Despite challenges, the palm oil industry holds the potential for economic
growth and sustainable development in the country
(Pacheco, Gnych, Dermawan, Komarudin, & Okarda, 2017)
. However, the production and supply chain of palm oil face numerous
challenges that can compromise product quality, sustainability, and operational efficiency
(Busari, Agboola, Akintunde, & Jimoh, 2022) . These challenges range from agricultural
practices and environmental factors to processing complexities and logistics issues
(Kasim, Stöhr, & Herzig, 2021)
. To address these challenges and ensure a reliable and responsible
palm oil supply chain, it is essential to adopt proactive risk management strategies.

In this study, we offer potential ways to increase palm oil production, efficiency and
consistency through supply chain risk management, correcting mistakes that the local
dealers/institutions are subjected to while continuously enhancing quality and safety control.
One such strategy is the implementation of Failure Mode and Effects Analysis (FMEA), a
systematic and preventive approach to identify and mitigate potential failures within a process
or system (Stamatis, 2003). FMEA is a well-established tool widely used in various industries,
including manufacturing, healthcare, and aerospace, to enhance product and process
reliability, safety, and quality (Liu, Liu, & Liu, 2013) ].
(Chiozza & Ponzetti, 2009)

In the context of the palm oil supply chain, FMEA can be applied across multiple stages, from
palm cultivation and harvesting to processing, transportation, and distribution
(Siregar, Sangkek, & Rimawan, )
. By conducting a thorough FMEA, stakeholders in the palm oil industry
can identify and prioritize potential failure modes, their causes, and their effects on the supply
chain. This proactive approach enables the development of effective risk mitigation strategies,
such as implementing preventive controls, improving monitoring and detection mechanisms,
or developing contingency plans (Rausand & Hoyland, 2003)
(Arvanitoyannis & Varzakas, 2007)
.
1.1 Why failure mode and effect analysis?

Risk assessment presents several approaches and tools that help develop and improve
processes. They can detect the distinct risks and weaknesses of a system (Hezla et al., 2020)
The US Armed Forces formalised FMEA in 1949 with the Mil-P 1629 Procedure, which analyses
failure mode effects and criticality. Although the FMEA method was established for military
use, it is now widely utilised in a range of industries, including semiconductor manufacturing,
food service, plastics, software, aeronautics, automotive, and healthcare, to mention a few
(Hezla et al., 2020).

1.2 Uses of FMEA

FMEA is a methodology for identifying probable failure modes in a system, product, or

manufacturing/assembly operation caused by various process defects. Similarly, it identifies
crucial design or process characteristics that require additional controls to prevent or identify
failure modes. FMEA can also be described as a quality assurance tool used in manufacturing
industries to meet customer and regulatory requirements, manage quality, and ensure safety
Teng, S. H., & Ho, S. Y. (1996).
The FMEA process can be a valuable tool for improving the quality and reliability of palm oil
production in Nigeria (Abah, Ochoche, & Orokpo, 2020) (Hezla et al., 2020) (Basiron, 2007). It
can be applied across various stages, from palm cultivation and harvesting to processing and
distribution (Hezla et al., 2020) . By identifying potential failure modes, their causes, and
effects, FMEA can help mitigate risks and enhance the overall efficiency and sustainability of
the palm oil supply chain (Razak, Mustapha, Kasim, & Shah, 2020)
.

2.0 Scope and System Description

The scope of the FMEA analysis covers the entire palm oil supply chain processes of an
Indigenous Palm Oil Production company (Osymaco LTD), from palm cultivation and
harvesting to processing, transportation, distribution, and supporting management processes.
The analysis aims to identify potential failure modes, their causes, and effects, as well as
recommend preventive measures to mitigate risks and enhance the overall reliability and
sustainability of the supply chain.
In the cultivation stage, FMEA can analyse failure modes related to factors such as pest
infestations, soil degradation, and poor agronomic practices, which can negatively impact
palm yields and quality (Basiron, 2007). For the processing stage, FMEA can address potential
failures in extraction, purification, and refining processes, including equipment breakdowns,
contamination, and quality control issues (Arvanitoyannis & Varzakas, 2007)
.

FMEA can also be applied to the transportation and distribution stages, identifying risks such
as spoilage, contamination, and logistical delays, which can affect product quality and
availability (Basiron, 2007). By prioritizing and addressing these failure modes, the Nigerian
palm oil industry can improve product quality, reduce waste, and enhance its competitiveness
in both domestic and export markets (Busari, Agboola, Akintunde, & Jimoh, 2022)
.

However, the successful implementation of FMEA in the Nigerian palm oil industry may
require capacity building, training, and collaboration among stakeholders, including
smallholder farmers, commercial producers, processors, and regulatory bodies
(Busari, Agboola, Akintunde, & Jimoh, 2022)
.

3.0 Materials and Methods

The FMEA process was tailored by identifying palm-specific failure modes through industry
research and expert collaboration, developing customized risk rating scales aligned with palm
oil supply chain impacts, integrating sustainability factors such as environmental and social
responsibility, and leveraging technologies like plantation management systems and supply
chain visibility platforms.

Based on practical applications and relevant reports/journals, the severity, occurrence, and
detection ratings in an FMEA for the palm oil industry in Nigeria can be assessed as follows
(Abah, Ochoche, & Orokpo, 2020)(Arvanitoyannis & Varzakas, 2007)(Basiron, 2007)
(Rausand & Hoyland, 2003)
:

Severity Rating:

 This rating considers the potential consequences or impact of a failure mode on the
product, process, or customer.
  For palm oil production, high severity ratings (e.g., 9-10) could be assigned to failure
modes that significantly affect product quality, safety, or yield, such as contamination
with harmful substances or major processing defects.

 Moderate severity ratings (e.g., 4-6) might be assigned to failure modes that affect
product appearance, shelf life, or minor quality issues.

 Low severity ratings (e.g., 1-3) could be given to failure modes with minimal impact on
the final product or process.

Occurrence Rating:

 This rating represents the likelihood or frequency of a failure mode occurring.

 High occurrence ratings (e.g., 9-10) could be assigned to failure modes that are
frequently observed or have a high probability of occurrence, such as pest infestations
or equipment breakdowns.

 Moderate occurrence ratings (e.g., 4-6) might be given to failure modes that occur
occasionally or have a moderate probability of occurrence, such as extreme weather
events or labour shortages.

 Low occurrence ratings (e.g., 1-3) could be assigned to failure modes that are rare or
have a low probability of occurrence.

Detection Rating:

 This rating considers the ability to detect a failure mode before it reaches the customer
or causes significant consequences.

 High detection ratings (e.g., 9-10) could be assigned to failure modes that are difficult
to detect or have no existing detection methods, such as certain types of
contamination or quality defects.

 Moderate detection ratings (e.g., 4-6) might be given to failure modes that can be
detected through routine inspections or testing, but with some limitations or delays.

 Low detection ratings (e.g., 1-3) could be assigned to failure modes that are easily
detectable through established monitoring or control measures.
The Risk Priority Number parameter is assigned as the concluding phase of FMEA analysis.

By designating the parameters to the FMEA spreadsheet, one can delineate the priority
number of RPN risk (Stamatis, 2003). The RPN is a product of the severity, occurrence, and
detection of failure. This value is computed utilising the following formula:

RPN= S*O*D

RPN facilitates the identification of the most hazardous hazards and the hierarchical sequence
in which preventive measures ought to be initiated.

Area
Potential type of defect
Pest infestations
Soil degradation and nutrient
deficiencies
Cultivation and Harvesting Stage
Extreme weather conditions
Poor agronomic practices
Labor shortages or untrained
workers
Severity
Potential Effect of defect
Reduced yield and crop losses
Damage to palm fruits and fronds
Potential contamination of final
product
Stunted growth and lower yields
Poor fruit quality and oil content
Long-term impact on plantation
sustainability
Crop failures and yield losses
Physical damage to palms and
plantations
Disruptions in harvesting
schedules
Reduced yields and inefficient use
of resources
Increased susceptibility to pests
and diseases
Difficulty in harvesting and
maintenance
Delays in harvesting and post-
harvest handling
Improper harvesting techniques
leading to damage or loss.
Increased risk of occupational
hazards and accidents
Occurrence
Potential cause of the defect
Lack of proper pest management practices
Inadequate monitoring and early detection
7 systems
Resistance to pesticides or improper
application
Continuous monoculture and lack of crop
rotation
Excessive or improper use of fertilizers and
6 7
chemicals
Soil erosion and depletion of organic matter
Inadequate soil testing and analysis
Climate change and unpredictable weather
patterns
3 Lack of appropriate irrigation or drainage
systems
Poor site selection and plantation planning
Insufficient training and knowledge transfer
to farmers
Lack of adherence to best practices and
7 5
guidelines
Resource constraints and cost-cutting
measures
2 Lack of adequate workforce planning and
recruitment
High turnover rates and seasonal labor
fluctuations
Insufficient training programs and skill
development
Detection
Preventive measures RPN
Implement integrated pest
management,
biological control methods and
8 2 112
natural predators
Establish monitoring and early
warning systems
Practice sustainable soil
management techniques (e.g.,
2 84
fertilizer, cover crops, mulching,
crop rotation and intercropping)
Develop and maintain effective
irrigation and drainage systems.
2 5 30
Select suitable planting sites and
consider microclimatic conditions
Provide comprehensive training and
knowledge transfer to farmers.
Foster collaboration and knowledge
4 140
sharing among farmers.
Consider mechanization and
automation where appropriate
4 4 32

Equipment failures or
breakdowns during harvesting
Contamination
Equipment malfunctions
Processing Stage
Quality control issues
Inefficient extraction
Inadequate storage conditions
Delays in harvesting and potential
crop losses
Safety risks for workers
Increased maintenance and
repair costs
Chemical contamination
Physical contamination
Biological contamination
Equipment failures or
breakdowns
Inadequate maintenance,
Improper calibration, or settings
of equipment
Off-flavors
Improper color or appearance
High free fatty acid content
Presence of impurities or
sediments
Incorrect nutritional composition
Incomplete or inefficient
extraction of oil
Improper refining or purification
processes
Spoilage due to improper storage
conditions
Contamination during storage
Moisture absorption or loss of
product quality during storage
Lack of preventive maintenance and regular
Establish preventive maintenance
inspections
programs and regular inspections.
5 Use of outdated or poorly maintained 8 3 120
Invest in modern and efficient
equipment
harvesting equipment
Operator errors or lack of proper training
Implement strict hygiene and
Poor handling and storage of raw materials sanitation protocols.
Cross-contamination from equipment, Raw material inspection, supplier
6 7 2 84
personnel, or environment qualification
Use of contaminated water or chemicals Regular contaminant
testing/monitoring
Lack of preventive maintenance programs Strict preventive maintenance
Use of outdated or poorly maintained schedules
equipment Invest in modern, efficient
6
4 Inadequate training for equipment operators equipment. 3 72
Failure to follow standard operating Comprehensive operator training
procedures (SOPs), Improper installation or Regular equipment
set-up of equipment inspections/audits
Improper harvesting or handling of fresh fruit
Delays in processing after harvesting.
Inefficient or outdated processing techniques
4 5 Preventive equipment maintenance 3 60
Lack of quality control measures and testing
programs
Inadequate training or knowledge of
Regular equipment
processing personnel
calibration/validation
Equipment malfunctions or breakdowns
Continuous process improvement
Incorrect calibration and process monitoring
6 4 4 96
Inadequate maintenance
Inefficient or outdated processing methods
8 Poor temperature controls 7 Control temperature, humidity, 3 168
Lack of proper stock rotation or inventory ventilation
management stock rotation and regular storage
Inadequate pest control measures in storage facility inspections
facilities Inventory management systems

Human errors
Disruptions in transportation
Transportation and Distribution Stage
Incorrect or misleading labeling
information
Improper packaging or sealing
Damage to packaging during
handling
Late deliveries to customers or
processing facilities
Potential spoilage or
deterioration of product quality
Production delays or stoppages
due to lack of raw materials
Increased costs and loss of
revenue
Incorrect packaging materials or Training on procedures
specifications Traceability and batch coding
Human errors during packaging or labeling Clear packaging/labeling
4 4 3 48
processes specifications
Inadequate quality control checks for Quality checks on
packaging and labeling packaging/labeling
Optimize route planning and
scheduling
Inefficient route planning and scheduling
Implement real-time tracking and
Traffic congestion or road conditions
monitoring systems.
5 Vehicle breakdowns or maintenance issues 7 2 70
Maintain a well-maintained and
Labor disputes or strikes.
reliable transportation fleet.
Weather-related events or natural disasters
Develop contingency plans for
disruptions
Inadequate packaging materials or design Implement proper handling

Physical damage to product
Leakage or spills during transit
Improper packaging Contamination of product
Reduced shelf-life or product
quality
Accelerated degradation of
product.
Temperature abuse during
Rancidity or off-flavors
transportation
Loss of nutritional value or quality
attributes
Contamination or spoilage Product contamination, spoilage
during transit or rancidity
Inefficient transportation and
distribution
Increased costs and resource
Logistical issues
consumption
Compliance issues and regulatory
penalties
Lack of proper handling procedures or procedures and training.
training Install appropriate
3 Rough handling or improper 3 loading/unloading equipment and 2 18
loading/unloading. facilities.
Lack of proper labeling or product Ensure clear labeling and product
identification identification
Malfunctioning or inadequate refrigeration Plan routes and schedules to
units minimize exposure to extreme
Lack of temperature monitoring systems temperatures.
3 4 2 36
Prolonged exposure to extreme temperatures Implement strict sanitation and
Failure to follow temperature control hygiene protocols for transportation
protocols vehicles.
Cross-contamination from other products or Segregate products to prevent
3 5 5 75
materials cross-contamination
Lack of coordination and communication
among supply chain partners
Invest in supply chain visibility and
4 Inadequate documentation or record-keeping 5 2 40
traceability solutions
Limited visibility or traceability in the supply
chain

Inconsistent supply of raw
materials
General Management and Support Processes
Supplier and Procurement Stage/
Contract issues
Lack of proper documentation
Ineffective communication
Regulatory or compliance
issues
Production delays or stoppages
due to material shortages
Inability to meet customer
demand or contractual
obligations.
Increased costs associated with
sourcing alternative suppliers
Disruptions in production
schedules and planning
Increased inventory costs and
storage requirements
Penalties or legal consequences
for non-compliance with
contracts
Inefficient operations and
decision-making due to lack of
data
Difficulty in tracking and tracing
products or processes
Miscommunication or
misalignment of goals and
objectives
Delays or disruptions in processes
due to lack of coordination
Potential legal penalties, fines, or
sanctions
Damage to company reputation
and stakeholder trust
Disruptions in operations due to
non-compliance
Limited number of qualified suppliers Develop a diverse and qualified
Supplier capacity constraints or production supplier base.
issues Foster long-term strategic
1 3 7 21
Natural disasters, political instability, or trade partnerships with key suppliers
disruptions Establish contingency plans and
Poor supplier relationship management alternative sourcing options
Ineffective contract management and Implement effective contract
enforcement management and enforcement
Lack of clear communication and processes.
coordination Establish clear communication
4 6 2 48
Financial instability or cash flow issues of channels and escalation procedures.
suppliers Conduct financial risk assessments
Force majeure events or unforeseen and
circumstances Develop contingency plans
Lack of standardized procedures or guidelines Document all processes and
for record-keeping procedures in detail.
3 5 3 45
Inefficient or outdated data management Establish standardized procedures
systems for common tasks.
Unclear roles, responsibilities, and
Establish communication
accountability
protocols/SOPs.
Inefficient information sharing and
4 4 Collaboration tools/platforms 5 80
knowledge management practices.
Clear roles and accountability
Unclear roles, responsibilities, and
Active listening and feedback
accountability
Stay informed about relevant laws
Lack of awareness or understanding of and regulations.
relevant regulations and standards Establish procedures to ensure
5 4 3 60
Inadequate resources or systems for compliance with legal requirements.
monitoring and ensuring compliance Conduct regular audits to verify
compliance with regulations.
4.0 Conclusion
The study aimed to utilise FMEA in the Agro-industrial supply Chain management of palm oil with emphasis of on an indigenous company(Osymaco LTD), and critical analysis to predict
potential failure causes, prioritize them, and devise appropriate measures to eliminate or diminish their likelihood. In the analysis, it was established that when the Risk Priority Number
(RPN) is below 100, the influence of factors on supply chain management is deemed insignificant. The study showed that the greatest risk in supply chain management was the storage of
palm products before and after production which resulted in the loss of quality, production degradation and devaluation. Additional factors influencing supply chain risk management
encompass poor agronomic practices, equipment failures and pest infestations.

Based on the outcome of the study, the corrective actions must configure a Collaborative Supply Chain management strategy that outlines joint actions intended to enhance production
and storage, the chain's overall performance, and the performance of each node in the chain, following the obtained results. Neglecting the outcomes of risk assessment conducted via
the FMEA method could potentially have adverse consequences for the operations of businesses operating within the supply chain under examination.

FMEA analysis can be applied in a lot of industries but requires customization. This study focuses on palm oil supply chain threats. Each analysis is unique, tailored to specific problems,
and unsuitable for different entities or industries. Risk factors vary, influenced by personal or environmental factors. In essence, FMEA is effective when applied with specificity to
individual problems.
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