DFMEA-Based Model for SMEs’ Risk Management

Abstract

This study aims to develop a risk management assessment model for Small and Medium-Sized Enterprises (SMEs) in Indonesia based on the ISO 31000 concept and Design Failure Mode and Effect Analysis (DFMEA). The research used a qualitative approach and descriptive analysis to identify, analyze, evaluate, and treat hazards in SMEs. The results show that the model consists of four steps: risk identification, risk analysis, risk evaluation, and risk treatment, using Risk Priority Number to quantify risk in four factors: raw material risk, production process risk, marketing process risk, capital risk, and legality risk. The findings suggest that SMEs could reduce failures and quality expenses by monitoring risk throughout the process and raising the quality of their goods to increase competitiveness. The implication of this study could support SMEs in implementing risk management to enhance their performance and contribute to the Indonesian economy.