Failure Risk Analysis of SMEs based on ISO 31000

Abstract

Higher competition makes Indonesian SMEs continue to improve their competitiveness, as it became the biggest driver of the national economy. The limitations of SMEs in the process of meeting customer demands are a major problem so that the risk of process failure accepted by SMEs is quite large. Therefore, this study aims to reduce the level of risk failure in SMEs to be able to increase success in meeting customer demand. The UKM used as a case study in this research is CV.Z, which is engaged in the fashion sector with made to order system. To reduce risk, the risk management process adopted adopts the approach of ISO 31000 as an international risk management standard. In the process of assessing the magnitude of the risk, the Failure Mode Effect Analysis (FMEA) technique was used in this study. The result is that as many as 38 failure modes were identified in the production process, with the highest Risk Priority Number (RPN) value 162. Corrective action was taken in the largest RPN failure mode by applying new methods and providing training to workers. It is expected that implementing corrective actions can reduce the failure rate in the process in SMEs.