The Indonesian woodworking MSME sector faces systemic challenges in the form of wood material variability fluctuations in moisture content, fiber heterogeneity, and non-uniform density which directly trigger product defects and the accumulation of unproductive solid waste. This study implemented a modified Failure Mode and Effect Analysis (FMEA) method with the integration of Eco-Severity variables: severity weighting that not only measures functional and financial impacts but also explicitly considers the volume of scrap material generated from each failure mode. The case study was conducted at a Wooden Bracket Manufacturing MSME in Pasuruan, East Java, with three months of production data (total 2,500 units, total defects 185 units or 7.4%). Pareto analysis identified two dominant types of defects: Oblique Drill Holes (48.1% of total defects, n=89) and Wood Cracks/Splitting during Clamping (28.6%, n=53), which cumulatively accounted for 76.7% of all defects. The Eco-Severity Based FMEA Matrix places the Drilling Station as the highest risk locus with a Risk Priority Number (RPN) of 336 (S=8, O=7, D=6), followed by the Cutting Station with an RPN of 210 (S=7, O=6, D=5). The accumulation of solid wood waste due to both failure modes is estimated to reach 23.95 kg in three months of observation.
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