Why: In private enterprise, failures must be concerned from a financial view point and not a gear-head approach of simply counting the number of failures; and you must speak the language of the enterprise which describes events by monetary measures over a period of time. The annual cost for failures is usually not stated in a clear cut manner nor is failure costs summarized by system/sub-system to identify the weak links in a monetary fashion so that appropriate action is taken to reduce the annual cost of unreliability by building a clear Pareto distribution to attack the vital (high cost) areas with an action plan to reduce failures (unreliability) and to reduce the cost of unreliability.

When: For new a new plant, this can be a design criteria to limit costs of unreliability for competitive reasons in the marketplace, i.e., by plan, the hidden costs of failures is made obvious as a portion of the strategic plan. For an existing plant, this can be an exercise in defining the cost of unreliability and building a long term plan to reduce the cost of failures as a portion of the tactical plan.

Where: This activity is best performed with high level involvement of the management team to provide fundamental understanding of the size of the icebergs about to rip out the underbelly of the plant and to involve the organization in a plan to reduce the costs so that profits are pushed upward because of the improvements. If the cost of unreliability cannot be reduced, then the costs become extra weight for the saddle bags in the race for survival.

These definitions are written by H. Paul Barringer and are also posted on his web site at www.barringer1.com

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