Case Study: Failure Mode And Effect Analysis

Satisfactory Essays

(d) Make recommendations for the company to overcome the problems identified and evaluated.

Raw material risk
The most common technique to mitigate the raw material risk is developing a risk assessment program. The risk assessment process is prioritizing materials for assessment, determine evaluation criteria through FMEA framework, assess types of risk and set goals for tolerable risk levels. Nestle Berhad can decide the scope, assemble a team and create a plan to identify the list of materials for analysis. Besides, Nestle Berhad should involve the appropriate people for purchasing, materials planning or management, process development, quality and manufacturing. Furthermore, Failure Mode and Effect Analysis (FMEA) framework is a rigorous …show more content…

IOI Corporation Berhad can use hedging in order to mitigate the foreign exchange risk. IOI can hedge the foreign exchange through spot contract, forwards or future contract, option contract and swap. The spot contracts fix exchange rate against fluctuations and the company might not be able to get benefit but also no get loss in spot contract even loss also just lose a little money. Besides that, IOI can offset foreign currency holdings with futures and forward contracts. A forward contract is a transaction in which the delivery of the commodity is postponed until the contract has been made. The delivery is often in the future, however, the price is well determined in advance. Hedging is the act of taking an offsetting position in a related security. A perfect hedge can reduce risk to nothing except the cost of the hedge. Furthermore, IOI can use option contract to reduce foreign exchange risks. Just like stocks, currencies have calls and puts that allow buyers to buy or sell the financial asset at a predetermined price during a certain period of time or on a exercise date. Lastly, IOI can use swap to to mitigate the foreign exchange risk. The company could swap to take advantage of the lower

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