Identifying and ranking risks using combined FMEA-TOPSIS method for new product development in the dairy industry and offering mitigation strategies: case study of Ramak Company

Abstract

Food industry as one of the most important and influential industries plays an important role in the health and well-being of the community. It is also important for the country’s economy, export, and inter-state relations. As the industry expands and competition becomes tougher, the development of new products that can compete in this competitive market has become a major concern for manufacturers but the production of new products is always associated with uncertainties and risks, the management of which is the core of the new product development process and plays an important role in the success of industries. Risks occur in different shapes at every stage of the new product development process from design to consumption. In this study, the new product development process in a dairy company is investigated. A quantitative approach is proposed to identify and rank the risks affecting this process using the combined Failure Mode and Effects Analysis (FMEA) and Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method. Shannon entropy method is also used to weight the criteria in the TOPSIS method. Identified risks by considering expert’s opinion were scored from 0 to 10 regarding FMEA method factors (Severity, Occurrence, Detective), then by utilizing Shannon entropy method in TOPSIS each risk was weighted and ranked. 14 risks are first identified and then ranked based on 30 experts opinions from different parts of the company such as marketing, accounting, engineering, staff, management etc. and prior studies. The results show that ’Mismatching product Specifications with costumer needs and tastes’ and ’The emergence of a new rival’ are the most important risk factors for new product development. Risk reduction strategies based on the standard of project management, firm strengths and weaknesses and expert opinions on all risk factors are provided. At the end, some recommendations are provided to the managers of the company. The proposed approach is applied in Ramak Company and the results are approved by experts, more importantly, they are agree that the proposed approach can be used to identify, evaluate and present risk reduction strategies in the food industry.