Hidden Factory- Harry - Text

8/10/2019 Hidden Factory- Harry - Text

1/13

H PTERSIX

Unmasking

the

HddenFactory

s

young

engi neer , Mkemanaged t he s t a r t e r motor f i e l d

c o i l

oper -

at i on

f or

l ar ge

di vi s i on of maj or aut omobi l e manuf act ur er Sever al

weeks

i n t o t he j ob, Mke

di scover ed that t he

company s

mant r a was

Meet

pr oduct i on schedul e

at

ny

cost

meani ng

that

t he

penal t i es

f or not

del i ver i ng cer t ai n

number of f i e l d

c o i l s

by a speci f i ed date

t o

t he as sembl y

pl ant were

f ar

greater than i ncur r i ng

addi t i onal

costs

t o pr oduce

t he

f i e l d c o i l s on

t i me

M ke s success

as a

f r ont - l i ne

man

ager depended

on

pr oduct i on speed and

quant i t y, nd

he was

r ewar ded w t h

pr omot i ons and sal ar y i ncr eases

f o r pushi ng hi s

empl oyees t o

bui l d

more

f i e l d c o i l s rather

than

examni ng

and

cor-

r ect i ng t he root causes f or

def ect i ve f i e l d c o i l s , whi ch l ed t o yi el d

l o s s

s l ong as hemet

t he

pr oduct i on

schedul e, l t t l

was

sai d about t he

pr ocess yi el d

Recogni zi ng

M ke s a b i l i t y t o

consi st ent l y

meet

pr oduc-

t i on nd schedul i ng r equi r ement s ( w t h no regard

t o

c o s t ,

t he

com

p ny

r ewar ded

himf o r bei ng such n

e f f i c i e n t

nd

dependabl e

manager , nd sel dom ques t i oned t he oper at i on s

escal at i ng over -

t i me,

mat er i al s,

i nspect i on,

nd r ewor k costs

Focus was pl aced

on

t he outcome Y ,

rather than

t he process

X Thi s phi l osophy

di d

not

al l ow

ny t i me

t o

i mpr ove t he

process, but f ocused on keepi ng

t he

l i n e

r unni ng

Compani es

that pr oduce pr oduct s nd ser vi ces

at f our s i gma and

l ower l e v e l s of qual i t y spend n ext r aor di nar y

amount

of t i me and


2/13

money

pr act i ci ng

what

we c a l l

det ect i on

and cor r ect i on of mstakes

and

errors

So

per vasi ve

i s t h i s

pr act i ce t hat compani es unwi t t i ngl y

create hi dden

f actor i es

adhoc syst ems and

processes set up t o

c o r

r e c t e r r o r s

made

dur i ng t he

manuf act ur i ng

process

They

take

up

unnecessar y

space

t i me

and

resources

i dden

process canbe a s

si mpl e

a s

Mar y i n

epartment

B

r et ur ni ng a

def ect i ve part back t o

J ane i n

Department A

before

t

not i ced

by

management

Al t hough

empl oyees may t hi nk they

ar e act i ng

r esponsi bl y when

they hand

back

a def ect i ve pr oduct or s e r v i c e

of t e n they

ar e maski ng a bad

process

f r o m

management

Consequent l y

processes

ar e

never

f i x ed

whi l e hi dden

processes becomemore

e f f i c i e n t

and

l e s s v i s i b l e

Dat a

recorded

by empl oyees i n t hei r weekl y

or monthl y noncon-

f or mance reports f o r

extra mat er i al and

l abor

costs

ar e

not hi dden f a c

t o r i es

s i nce these

costs

ar e measured and recorded i n

a

v i s i b l e

way

Cost s t h a t

ar e

not made

known t o management ar e par t of

t he hi dden

factory

Cost s

that

cannot

be

br oken

down

and

traced

t o

s p e c i f i c

oper-

at i ons

ar e

a l s o

hi dden

H dden

f actor i es ar e not excl usi ve t o manu

f ac tur i ng

They

ex i s t i n

a l l parts

of an

or gani zat i on and al t hough they

often

f unct i on

wi t h

t he

best

of i nt ent i ons

they ar e r esponsi bl e f o r

l onger cycl e t i mes

i ncr eased c o s t s and

i nef f i ci ent

use of

resources

Li ke def endi ng agai nst st eal t h

f i ght er pl anes

compani es

cannot

f i gh t

what they cannot see or

t r a c e

Ever y def ect

takes

addi t i onal

space

t i me

mat er i al s

money and

manpower f or det ect i on i nspect i on

a na l y s i s and

def ect

r epai r

s

def ect

r at es i ncr ease hi dden

f a c t o r i e s

i n a company or pr oc es s t end

t o pr o l i f er a t e

and cost s escal at e

Most

execut i ves

don t

r e a l i z e

how

expensi ve hi dden

f a c t o r i e s

ar e

s

di scussed

bef or e

costs i n t h i s

i nst ance refer

not

onl y

t o f i nanci al d o l l a r s but

t o

qua l i t y

cust omer

per cept i on and

ret urn busi ness

al l of whi ch

ar e

i nt er dependent

Busi nesses

t hat ar e abl e

t o

pr event

defects through

better

control

of

process

c apa bi l i t y rather than wai t i ng

t o det ect defects a t t he end

of

pr oduct i on

or compl et i on of a s e r v i c e

see

enormous i mpr ovement s

i n

t h ei r

p r o f i t mar gi ns

a s

Mot or ol a di d wi t h i t s

hi ghl y pr of i t abl e Bandi t

pager


3/13

UNM SKING

THEHDDEN

F TORY

1

ri ngi ng Vi si bi l i t y i nto

the Hdden Factory

Customer

surveys r ej ect i on reports returned goods and war r ant y

cl ai ms

a l l

pr ovi de

compani es

wi t h

data

on

how

wel l

t h e i r

pr ocesses

ar e

p e r f o r m n g

Theyar e abl e t o count t he number of pr oduct or

s e r -

vi ce uni t s

t h a t

went i n to a

process

andt he

number that successf ul l y

came

out

T r a d i t i o n a l l y , compani esuse t h i s

type of data

t o

cal cul ate a

met r i c

cal l ed yi el d t he number of

uni ts

that

pass a par t i cul ar

i nspecti on

compared wi t h

t he t o t a l number

of

uni t s t hat

pass

t hr ough

that

poi nt

i n

t he

process

E s s en t i a l l y ,

t h i s

metr i c

b o i l s

down

t o

a si mpl e

concept

output di vi ded by i nput

t he

amount

of good

s t u f f

compani es

ar e

abl e t o make

contrasted

t o

t he t o t a l

amount put

t hr ough t he

system

Thi s measure of

oper at i onal

ef f ic iency

has very strong i n t u i t i v e

appeal andi s

qui te

easy t o

cal cul ate

but

t a maj or manager i al t r a p

I t

has t he

a b i l i t y

t o

gr avel y

m sl ead

and

decei ve

I t i s

t he

cl oaki ng

mechani sm

that al l ows hi dden oper at i ons

pr ocesses

and

factories

t o

e x i s t

I t s

v i rus i s embedded i n many commonl y used i ndi ces of per

f or mance

f i r st ti me y i e l d,

f i r s t - p a s s

y i e l d, and

f i n a l

y i e l d,

j u s t

t o

menti on

afewThebasi c i dea of

contr asti ng

output to i nput l i e s a t t he

hear t

of

a l l

such metr i cs

To better under st and

how

hi s i dea can m s

l ead

and decei ve

l e t s consi der

two

scenar i os

I n t he f i r s t scenar i o i magi ne two

uni ts

of pr oduct that were

r ecent l y

pr oduced

a t some poi nt i n

a manuf act ur i ng

process

s a y ,

uni t

numbers 101

and

102 r especti vel y

These

two uni ts have

j u s t

arr ived

at

our

i nspecti on

stati on

f or

eval uat i on

Uni t

101

f r ee of

defects

however uni t

102 cont ai ns

two

defects

I n

t he

second sce

nar i o

we s ha l l consi der uni t

numbers

3and

104

Her e uni t

103

i s

e r r o r - f r e e ,

but

uni t 4 cont ai ns ei ght defects

Wenconsi der i ng

t he

twouni ts

descr i bed

i n

t he f i r s t scenar i o t he

f i r s t - t i me yieldwouldbe

computed

a s output 1 )

over i nput 2 ) , or

. 5 ,

whi ch i n per centage t er ms

equal s

5 percent

I n

t he

second scenar i o

t he f i r s t - t i me

y i e l d

wouldbe

t he

same

5 percent

From

t h i s per

specti ve both

pr ocessi ng scenar i os ar e

rated a t

t he

same

l e v el

of

per


4/13

82 SIX SIGM

f ormance ;

however ,

from

a

qual i t y perspect i ve,

t hey

are di f f erent I n

t he

f i r s t

scenari o, t he t o t a l def ect s

per

uni t t he

TDPU woul dbecom

put ed as twodef ect s di vi ded by two un i t s or

2 / 2

whi chequal s 1 . 0

For

t he

second

scenar i o,

we

woul d

compute

t he

T PU

as

ei ght

def ect s

di vi ded by t he two un i t s or 8/ 2 = 0 Si nce each repai rabl e def ect

w t hi n a product

must

be det ect ed, anal yzed, and f i x ed t obvi ous

t h a t

t he cost of product i on

i n

t he

f i r s t

scenar i o l e s s t han

t h a t

of t he

second

Thus,

t o t a l

cost

correl at es

t o T PU

but not

t o f i r s t - t i me

y i e l d

I n

ot her words,

yi el d can

r emai n

const ant

whi l e

cost va r i e s

whereas

t here

a

st rong correl at i on

between

def ect s

and

cost s

Hence,

we

can

be

seri ousl y

decei ved when

wegauge our success on t he bas i s of c l a s -

s i c yi el d

cal cul at i ons

St at ed more s c i e n t i f i c a l l y

yi el d

i s

a

f unct i on

of

def ect s, not

out put and i nput

I n

s h o r t

t he

gi venmethodof

yi el d

c a l -

cul at i on

wrong

and

masks

t he hi dden f act ory

Rarel y are

product s or servi ces creat ed

i n a

s i n g l e step

Fi nal y i e l d

t he

same

cal cul at i on

as

f i r s t - t i me

yi e l d

but

a f t e r

t he

l a s t

st ep i n

a

s e r i e s of st eps i n a process

* Hence many

compani es

us e t he term

f i na l

y i e l d

Much l i k e f i r s t - t i me y i e l d

f i n a l

yi el d does not

accurat el y

measure

process

per f ormance

Unf or t unat el y,

t he

vast maj or i t y of i ndust ri al

operat i ons

measure

f i r s t - t i me yi el d t o cal cul at e t he ef f i ci ency of

each process

On

t he

s u r -

f a c e f i r s t - t i me

yi el d

has

st rong

i n t u i t i v e

appeal

and

i s

easy

t o

cal cu

l a t e

However ,

t i gnores

cycl e

t i me, overal l product qua l i t y and t he

cost

t o

produce

t

The

f ol l ow ng

i s anot her i l l u s t r a t i o n of why f i r s t -

t i me

y i e l d

an unrel i abl e met r i c

I magi ne t hat

a

companyproduces

pl as t i c

cups t hrough an

i nj ec-

t i on process,

and

t hat

t en

cups canbeproduced i n

t he samemol d

t ypi cal pl ast i c i nj ect i on process consi st s of pl ast i c pel l et s i nput )

goi ng

i n t o

a

mol d

wi t h c av i t i e s ; t hrough pressure

and t emperat ur e

changes,

t he

cups are f ormed output), andabl ade used

t o

t r i mt he

* I n

many i n d u s t r i a l

s e t t i n g s

f i n a l yi el d i s

t he

onl y process per f ormance met r i c t hat i s measur ed

and repor t ed Thi s s i n g l e measurement i s used t o

report

on howwel l

t he

process i s

worki ng

Thi s

type o f y i e l d can be t hought of as

post - process yi el d

because

t

can be assessed onl y a t t he

end

o f

t he

process

I t s

c o r o l l a r y

i n t he Si x Si gma wor l d

r o l l e d t hroughput y i e l d I n general , f i n a l

yi el d

i s

t he pr obabi l i t y

t hat a un i t

w i l l successf ul l y

pass

al l

of t he systeml evel

requi rement s

assessed at

t he

end

of

t he

process,

whereas

r o l l e d

t hroughput

y i e l d

i s

t he

pr o babi l i t y

of

pass i ng

al l

i n- process

requi rement s as wel l

a s end-of - l i ne requi rement s


5/13

UNM SKNG

THE

HDDEN

F TORY

3

excess

pl ast i c

f rom

ar ound t he edges However

t he

oper at or oversee-

i ng t he process

not i ces

t hat f i v e

out

of

t he

t en cups

ar e

def ect i ve and

he pl aces t he f i v e bad

cups

i nt o a

shredder knowng

that t he

pl ast i c

can

be

reused

and

sends

t he

f i v e

good

cups

on

t o

i nspect i on

I n

t h i s scenari o f i r s t - t i me

y i e l d

wi l l be percent because

of t he

f i v e cups

tested each

wi l l

pass

i nspect i on Furt her no mat er i al s

wer e

was t ed

The

def ect i ve uni t s were

recycl ed

back

i n t o

t he process t o pr o

duce good

uni t s and t he rej ect ed cups

wer e

never recorded i n a non-

conf ormance report

The

t i me spent

r emaki ng t he

def ect i ve cups i s not

capt ured

i n

any

cost st ructure

As

such

t

const i t ut es

a

hi dden

factory

How

oMasure Process

Performnce

Theway

compani es

masure

andcal cul at e

per f ormance canrei nf orce

t he use

of

cost l y

hi dden

f act ori es

To

expose

t he

unnecessary

and

cost - i nt ensi ve

r ework and repai r

processes

one

mst

have t he

r i g h t

per f ormance measures

The wrong or i nappropri at e

met r i cs can

decei ve and msl ead whi l e t he

r i g h t

met r i cs can

act

l i k e

an X- ray

mchi ne

exposi ng operat i onal

di seases and

mnagemnt

mal i gnan-

c i e s

E s s e n t i a l l y

t here

are

t hree

f undament al met r i cs

t h a t

when

used

c o l l e c t i v e l y

can

expose

even

t he

smal l est

i nef f i ci enci es

i n

a

process

or

f a c i l i t y These

met r i cs ar e throughput yi el d

r ol l ed

throughput

yi el d

and norml i zed

yi el d

ach

of t hese yi el d

masuremnts i s based on

t he

def ect s

pr oduced wher eas t he

mre

c l a s s i c al

measures of

y i e l d

ar e

based on

t he

numer of

uni t s

pr oduced At f i r s t

gl ance

one

mght

be i ncl i ned t o

concl ude that

t here i s n t r e a l l y that mch

di f f erence

Upon

deeper

i nvest i gat i on

however

t he

opposi t e

i s

seen

t o

be

true

Underst andi ng

t h i s

di f f erence

i s

what separat es

a f our s i gma

process

f roma s i x

s i gma

process

UN ERST N NG

THE SIX SIGM PRO ESS

METRI S

Throughput

yi el d

i s

t he

probabi l i t y t hat al l

defect

oppor t uni t i es

pr oduced a t a

part i cul ar

st ep i n

t he

process

w i l l

conform

o

t h e i r

respect i ve per f ormance

st andards

I t

t he l i kel i hood

of doi ng

al l


6/13

t hi ngs

r i g h t a t

a

gi ven

poi nt i n t he process

Rol l ed throughput

yi el d i s

t he probabi l i t y of bei ng

abl e

t o pass a uni t of product or ser vi ce

t hr ough

t he ent i re

process

def ect - f r ee

Expressed d i f f e r e n t l y

ro l led

t hr oughput yi el d

i s

t he l i kel i hood of doi ng

al l

t hi ngs

r i ght a t

each

step

across an ent i re s e r i e s of pr ocess

st eps

Si x i gma a l so

makes use of

what i s cal l ed

normal i zed

yi el d Normal i zed

y i e l d can

be t hought of as

t he average t hr oughput

y i e l d resul t

onewoul d expect at any

gi ven

step of t he process i t r epr esent s t he

t y pi c a l y i e l d one

coul d expect

I n t h i s sense normal i zed

yi el d i s

a

basel i ne measure I t

i s t he

base

met r i c

f r om

whi ch

a

s i gma

measurement

i s

computed

CONTR STINGFIRST TIME

YIELD

TOT ROU PUT

YIELD

Most compani es

curr ent l y u t i l i z e two

measur es

of

yi el d- f i r s t -

t i me

yi el d

and

f i n a l yi el d

ompani es

that

us e these

measur es

of ten

f i n d

that

they

have

hi gh

y i e l d

r a t e s and assume someti mes mstak-

e nl y

t hat t hei r

pr ocesses ar e oper at i ng

ef f ect i vel y

Therear e i mpor t ant

di st i nct i ons between

t he

c l a s s i c

meas ur es of

yi el d

and

those advanced by t he Si x Si gma

school of

t hought

s d i s -

cussed

above whi l e i t i s t r ue that f i r s t - t i me yi el d

can ref l ect

process

e f f i c i e n c y i t most of ten does so onl y

a f te r

t he i nf l uence

of

t he

hi dden

factory Throughput y i e l d on

t he

ot her hand measur es process

e f f i -

ci ency

bef or e

t he

hi dden

f act ory Fi r s t - t i me yi el d

i s

basedon

t he

t o t a l

number

of

uni t s

produced r egardl ess of

t he

number of

oppor t uni t i es

f or

def ect s

cont ai ned w t h i n

a uni t Throughput y i e l d however i s

based on

t he t o t a l number

of c r i t i c a l - t o - q u a l i t y charact er i st i cs

per

uni t andnot

t he number

of uni t s

produced

I n

ot her

words

f i r s t - t i me

yi el d

i s

uni t

s e n s i t i v e and

t hr oughput

yi el d

i s

def ect

sensi t i ve

Fi r s t - t i me yi el d

i s

not

sensi t i ve

t o

product

compl exi t y

i t s i mpl y l ooks a t

t he

quant i t y

of

uni t s

pr oduced

Throughput

yi el d i s ext r emel y sensi t i ve t o product

compl exi t y

as

wel l

as t o t he

t o t a l

number of

def ect opport uni t i es

cont ai ned i n

a uni t of

product or servi ce

I n ot her wor ds whi l e f i r s t - t i me yi el d

measur es howwel l compa

ni es

process uni t s t hr oughput

y i e l d

measur es

how

wel l

compani es

process qual i t y

Thi s i s

why

t he Si x Si gmayi el d

measurements

have


7/13

UNM SKING

THE

HIDDEN

F TORY

85

a hi gh s t a t i s t i c a l cor r el at i on t o l a b o r costs,

cyc l e t i me,

and work i n

process i nvent or y) , whi l e c l a s s i c meas ur es showl i t t l e cor r el at i on

ONTR STINGFIN L

YIELD

TO

ROLLEDT ROU PUTYIELD

Al t hough f i n a l

y i e l d t o o i s a w del y

used met r i c, t has

several

dr awbacks

Li ke f i r s t - t i me y i e l d

f i n a l y i e ld

i s

based on t he

t o t a l

num

ber

of uni t s pr oduced,

whi l e

r o l l e d

t hr oughput

y i e ld

i s

based

on

t he

t o t a l number of

def ect oppor t uni t i es

pr oduced Here

agai n,

f i n a l

y i e l d

s based on

r esul t s cal cul at ed a f t e r

t he

def ecti ve

uni t s

have

been

processed

t hr ough

t he

hi dden

factory

r epai r

and

r ewor k

l oops)

Rol l ed

t hr oughput

y i e l d

does

not suffer

from

h i s l i m t a t i o n

because t mea

sures

y i e ld i ndependent

of any

i nf l uences

f r om

t he hi dden factory

I n t e r e s t i n g l y

there

i s no connect i on between f i r s t - t i me

y i e l d

and

f i n a l

yi el d they ar e i ndependent

meas ur es

I n ot her wor ds , f i r s t -

t i me yi el ds cannot be

used

t o cal cul at e

t he f i n a l

y i e ld There

s

how

e v e r

a

di rect i on

cor rel at i on

between

Si x

Si gma

measur es

of

y i e l d

because

al l of these

meas ur es

ar e basedon def ect dat a Throughput

y i e l d

i s basedon def ect s- per - oppor t uni t y dat a, and r o l l ed t hr oughput

y i e l d

i s based ondef ect s- per - uni t dat a

I n

t h i s

case, bot h measur es ar e

dependent on

qual i t y

i nf or mat i on

rather t han

pr oduct i on vol ume

I n

essence,

f i n a l yi el d

reports

on

t he pr opor t i on

of

pr oduct

or

s e r -

vi ce uni t s t hat

pass

i nspect i on,

whi l e

r o l l ed

t hr oughput

y i e l d

reports

on t he l i kel i hood that any gi ven pr oduct or ser vi ce uni t

wi l l

pass

t hr ough t he ent i re process error - f ree

Fi nal

yi el d t e l l s us what we di d

andr o l l ed t hr oughput y i e ld

t e l l s

us what we

wi l l

do I n e vi t a b l y r o l l ed

t hr oughput yi el d i s subst ant i al l y

l e s s

than

f i n a l

y i e l d

PPLYING

THE

METRI S

T ROU PUT

YIELD

Agai n,

t hr oughput

yi el d

t e l l s us

t he

s t a t i s t i c a l

l i kel i hood that

a

uni t of

pr oduct

or ser vi ce

w i l l pass t hr ough a

cer t ai n process step

e r r o r - f r e e

I t

s t he probabi l i t y of achi evi ng

conf or mance

t o

s tan

dar ds

f or

al l

of

t he c r i t i c a l - t o - q u a l i t y char acter i st i cs CTQs

i n a

p a r -

t i c u l a r

step

i n a process

Supposewe

have a

process cons i s t i ng of

f i v e

steps L e t s

assume

1 uni t s

have j u s t passed t hr ough Step

3

of

t he

f i v e - s t e p process

L e t s


8/13

a l s o

assume

t h a t each

of t he uni t s has 2

CTQs, or oppor t uni t i es f or

def ect

whi chwe

wi l l desi gnat e

by t he

l e t t e rL e t s

assume

t h a t

we

have j u s t obser ved

5

def ect s

across t he

100

uni t s At

t h i s poi nt

wecom

pute

t he

def ect s per

uni t

DPU

t o be

PU=5/ 100

=

. 0 5 ,

or

5

per cent

G ven

t hat

there

are 2

CTQs per uni t ,

t he def ects

per oppor t uni t y

DPO woul d

bePUM

= 05/ 20

=

. 0025

Usi ng

t h i s c al c ul a t i on,

we

cansay t hat t he pr obabi l i t y of cr eat i ng

adef ect i ve oppor t uni t y i s . 0

025

or . 2 5 per cent

Thus t he oppor t uni t y

l e ve l

y i e l d

woul dbe

-

. 002

5 =

. 9975 or 99 . 75

per cent

We coul d

compute

t he def ect s

per

m l l i o n

oppor t uni t i es

a

standard

Si x

Si gma

measur ement

as

PMO

=

PO

x

1 000 000

= 0025 x10 =2 500 Thi s converts t o 4. 3 s i gma capabi l i t y

per

oppor t uni t y

us i ng a standard s i gma

conver si on

char t

Nowwe

can

say

t h a t

i f ever y

oppor t uni t y i s 4. 3 s i gma

capabl e

and there are 20

oppor t uni t i es per uni t , t hen

we

shoul d ant i ci pat e an aver age

of . 05

def ect s

per

uni t f o r those uni t s passi ng

through Step 3

I n

ot her wor ds

5

out

of

ever y

1

uni t s

created

at

Step

3

of

t he

pr ocess

wi l l

cont ai n one or

more

def ect s and consequent l y

f a i l

t o

y i e l d Thi s

gi ves us a t hr oughput yi el d of 95 per cent

95

out

of

ever y 100

uni t s created

wi l l

pass through Step 3 of

t he

process wi t h

zero

def ect s

Nowcompare t h i s wi t h f i r s t - t i me

yi el d

I f

onl y of

t he 100 uni t s

pr oduced

cont ai ned

al l

5

of

t he obser ved

def ects

t he

f i r s t - t i me

yi el d

woul dbecomputed as 99

good

uni t s

out of

100

t o t a l

uni t s s t a r t e d , or

99 100 =. 99,

or

99 per cent

On

t he

ot her hand i f

t he 5 def ect s

occurred

i n

5

di f f er ent uni t s , t he

f i r s t - t i me

yi el d

woul d be 95

/ 1 =

. 95 ,

or 9

5 per cent

I n

ot her wor ds f i r s t - t i me y i e l d i s hi ghl y

dependent

onhow

t he

def ect s

ar e di s tr i but ed

across t he sampl e

uni t s Thr ough-

put

y i e l d ,

on

t he ot her

hand

r emai ns

constant

and

t her ef or e

of fers

a

more

accurate ass essment

of

a

par t i cul ar

step

i n

apr ocess

Thi s i s t he pr i mar y di f f er ence between

f i r s t - t i me

y i e l d andt hr ough-

put y i e l d

I n many cases these two methods of

y i e l d

cal cul at i on can

r eveal a ver y

d i f f e r e n t

sense of t he process

Fi r s t - t i me

y i e l d

i s al most

al ways equal t o or hi gher t han t hr oughput

y i e l d

I n t h i s sense t hr ough-

put y i e l d i s

t he

gr ound

f l o o r of

f i r s t - t i me

y i e l d

Thus

f i r s t - t i me

y i e l d

can pr ovi de

amore o p t im s t i c and rosy pi ct ur e of process e f f i c i e n c y ,


9/13

UNM SKINGTHE

HDDENF TORY

87

whi l e t hroughput

y i e l d

provi des

a def ect- sensi t i ve

pi ct ure that

hi ghl y corr el at ed t o t hi ngs such

as c o s t ,

i nventory,

and cyc l e

t i me

PPLYING

THEMETRI S ROLLED

THROUGHPUT YIELD

Because

rol l ed t hroughput yi el d gi ves

us

t he

probabi l i t y of zer o

def ect s

across an enti re process, t i mpor t ant

t o

better understand

t h i s concept and

see

how

t i s di f f erent from

i na l

y ie ld Consi der t he

f ol l owi ng exampl e

Bl ackBel t i s wor ki ngon

at r ansact i onal

process

t hat i nvol ves

f i v e

i ndependent

steps

and

she

wants

t o

compute

t he

rol l ed

t hroughput

y i e l d

of t he

process

The

Bl ack Bel t

must

f i r s t gat her

def ect

data on

each

TQ

roduced

at

each of t he

f i v e steps

Wth these data i n hand,

t he Bl ack

Bel t woul d have

al l

t he necessary

i nf ormat i on t o compute

t he t hroughput

y i e l d

f o r each step as i n

t he

pr evi ous

i l l u s t r a t i o n )

The Bl ack Bel t

computed

t he t hroughput

yi el ds

f or each step

of

t he

process

and

recorded

t he

yi el ds

as

98

percent,

93

percent,

95

per-

cent, 98 percent, and94 percent,

r espect i vel y Tocompute t he

rol l ed

t hroughput y i e l d ,

t he

Bl ack Bel t si mpl y

mul t i pl i ed al l

of t he

i n d i v i d -

ual

t hr oughput yi el ds . 98 x . 93

x

. 95

x

. 9 8

x

. 94

=

. 7 976 ,

or appr ox-

i matel y

8 percent Thi s t e l l s

us t he l i kel i hood

of passi ng a uni t of

product t hr ough

al l f i v e

steps

error-free .

Rol l ed

t hroughput

y i e l d

can

rapi dl y

decrease

as

t he

number

of

steps i ncr ease Thi s

i s

why

a

company, pl ant , or servi ce

oper at i on must

have hi gh t hroughput

y i e l d s at each st ep i n t he

process

i n

order

t o

achi eve a hi gh r o l l e d t hroughput y ie ld

I t must

al so t r y t o m n i m z e

t he

o v e r a l l

number of steps andCTQs

Whi l e t hroughput

y ie ld

i s onl y

sen-

s i t i v e

t o t he number of CTQs i n a

product ( pr oduct

compl exi t y) , r o l l e d

* At t hi s poi nt i nour di scussi on the reader

may

wonder

why

we don t simpl yaggregate the

f i r s t -

t i me yi el ds

General l y

speaki ng the simpl e

cross-mul ti pl i cati on

of f i r s t - t i me yi el dvalues ref l ects

the probabi l i ty that anygi ven

uni t

of product w l l

pass

a l l functi onal test poi nts i n a process I t

does not reveal the probabi l i tyof

passi ng

a

uni t

of product

throughthe enti re

process defect- free

Onlyrol l ed throughput yi el d

can

provi de

thi s

i nformat i on I f

one

i s trul y customer

focused

and

concerned

wth

val ue

enti t l ement then themeasure

of process effi ci ency sel ectedshoul d r ef l ec t

not

onl y

the l i kel i hood of product

functi onal i ty

but

form

and

f i t as

wel l

In

other

words rol l ed

throughput yi el d i s the

probabi l i ty

of

meeti ng

a l l requi rements

throughout the

process

not j ust

those

requi rements

rel ated

t o product functi onal i ty

After a l l , a product

coul d be 100

percent

func-

ti onal at

the

end

of

product i on

cycl e

but

s t i l l

contai n defects thatmay

cause the

customer

prob-

l ems

duri ng

or

a f t e r

the

warranty

peri od


10/13

t hroughput

y i e l d s

s e n s i t i v e

t o bot h t he number of

CTQs

and t he

number of

process steps

process compl exi t y)

True

val ue

ent i t l ement

can

onl y be r e a l i z e d

when

rol l ed

t hroughput y i e l d i s at i t s ent i t l ement

val ue

Gett i ng

there

i s what t he

Br eakt hr ough Strategy i s al l about

PPLYING

THEMETR S NORM LIZEDYIELD

Normal i zed

y i e l d

i s

a si ngl e

and equi val ent val ue

that i s assi gned

t o a s er i es

of process

steps

i nvol ved

i n

maki ngaproduct Thi s

i s used

t o

c o l l e c t i v e l y

charact er i ze al l t he steps i nvol ved

i n

manuf act ur i ng

a

product

when

t he

t o t a l

defects

per

uni t

at

t he

f i n a l

step

i s

known

I n

t h i s sense,

we say

that normal i zed

y i e l d represents

a ki nd of average

y i e l d

val ue per step f or a s er i es

of process s t e p s and i s used

t o

s i gma-

t i z e

processes

and products

Adopt i ng

met r i cs such as t hroughput

y i e l d

rol l ed t hr oughput y i e l d and normal i zed

y i e l d hel ps compani es

measure,

uncover, and el i m nat e hi dden

f actori es

Here

i s

how

normal i zed

y i e l d

s

cal cul at ed

Si x Si gma

Bl ack

Bel t

f rom

HumanResour ces

anal yzi ng a

part i cul ar process i nvol vi ng

a form

He

knows

that there

ar e t en

steps i nvol ved i n t he

process

and

cal cul at es that

t he

rol l ed

t hroughput y i e l d

equal

t o 6

. 8

percent

When

t he

team

wants

t o

assi gn

y i e l d

val ues

t o

each

of

t he

t en

s t e p s

one

member suggest s di vi di ng 6. 8

percent

over

t en steps

They qui ckl y real i ze

that thi s not t he correct method t o cal cu

l a t e t he normal i zed

y i e l d

Another member suggest s, i ncorr ectl y,

that s i nce

t he

rol l ed

throughput y i e l d equal s 6. 8 percent, then

al l steps shoul dhave t he same

throughput y i e l d 36 . 8 percent)

Af t er

several di scussi ons,

t he

Si x

Si gma

Bl ack

Bel t poi nts

out

that

t he normal i zed y i e l d

i s

equal

t o t he kt h

root

of t he rol l ed

t hroughput

y i e l d

wherek

equal s t he

number of

process

steps He

expl ai ns

t o

t he

team

hat

t h i s

i s

a

formof average that represents

anequal i zed val ue

appl i cabl e

t o al l steps of

t he process

The

team

then cal cul ates the

th

root

of

. 368

and

concl udes that each

step

has a normal i zed yi el d equal t o 9 5 percent

The

Bl ack

Bel t

nowr ecogni zes

that

9 5

percent normal i zed

y i e l d i s t he

perfor-


11/13

UNM SKNG

THEHDDENF TORY

89

mance basel i ne

f or

each

of t he t en

s t eps t hat

compr i se t he

p r o c e s s

Thi s

i s

t r u e

because . 90510

=3 6 8 ,

or

3

6 . 8 percent

Throughput

y i e l d , r ol l ed

t hroughput y i e l d , and

normal i zed

y i e l d

have

i mpor t ant busi ness

i mpl i cat i ons

Usi ng

these

y i e l d

measur e-

ments

al l ows compani es t o

much

more

accur at el y

assess t he

perfor

mance

of

t he i r

i ndust r i al or commer ci al

processes

For many

compani es ,

these yi el ds pai nt a surpr i s i ng

and

di s t urbi ng pi ct ur e

Compani es

who

cal cul at ed t he i r

f i n a l

y i e l d at 9

percent m ght f i n d

t hat

t he i r

r ol l ed

t hr oughput

y i e l d

i s

onl y

percent

Once

compani es

under st and

t he i r

true

y i e l d ,

t hey

canbegi n t o s et br eakt hr ough

t a r g e t s

and

t rack

i mpr ovement s wi t h

measurements

that t e l l

t he

whol e

s t o r y

Cal cul at i ng

r ol l ed

t hroughput y i e l d

wi l l

f a r more accur at el y ref l ect

qual i t y ,

cycl e t i me, and

cost because

cal cul at i ons ar e

done

at each

st ep i n

t he process

and

not

j us t

at

t he uni t l e v e l ,

as i s

t he

case wi t h

f i r s t - t i me

y i e l d

As a

f i n a l

poi nt

on

r ol l ed

t hr oughput

y i e l d ,

we

need t o take a

cl oser

l ook at t hi s met r i c s

re l at i onshi p

t o

cost To

i l l u s t r a t e ,

l et s l ook at

t he

f ol l owi ng exampl e

Suppose

t hat a cer t ai n process di spl ays a

r o l l e d

t hr oughput

y i e l d ( Y r t )

of

70 percent

Tocompute t he number of equi v-

al ent

uni t s t hat

must be started t o

pr oduce one def ect - f r ee uni t

( assum ng

that

al l

defects

ar e

r epa i r abl e ) ,

we

use

t h i s

f or mul a

1

- Y r t ) ,

or , i n

t h i s c a s e ,

1 - . 7 0 ) , whi ch

equal s

. 30 I n ot her wor ds,

we

must

s t a r t an

equi val ent

of

. 3

uni t s

i n t er ms of

mat er i al and e f f o r t

i n

order t o

send one

good uni t

on t o

t he cus t omer

I f

t he

defects ar e not

repai r abl e and t he un i t

must be s cr apped ( owi ng

t o one or

more

of t he def ect t y p e s ) , then

wewoul d

use

t he s l i g h t l y di f f erent

f or mul a

of

/

. 7 0 ,

or

. 43

I n

ot her

wor ds ,

we

woul dneed

. 43 uni t s

As you

may

have guessed, t he hi gher

t he

def ect

r a t e ,

t he l ower

t he

r ol l ed

t hroughput

y i e l d , whi ch, i n

t u r n ,

decreases

capaci t y

As a r e sul t ,

more

equi val ent

uni t s must be created i n order t o

pr oduce agood uni t

I f

everyt hi ng

i n

apr ocess goes r i g h t , pr oduct i on t i me

i s

kept

t o

a

mnimum

Thi s

m ni mal

or opt i mal product i on t i me i s referred

t o

as

cycl e- t i me ent i t l ement ,

or t he

r i ght f u l l ev e l

of expect at i on,

whi ch

we

abbr evi at e

as

Imn

Weabbr evi at e t he act ual l engt h

of t i me

i t takes


12/13

t o pr oduce t he uni t s as Tact ual

We

can

compute

t he act ual

process-

i ng t i me per uni t s as a c t u a l =

Imn

t i mes t he

r o l l e d t hr oughput

y i e l d

I f

t he opt i mal t i me m n 10 m nut es, t hen t he

act ual

t i me i s 10

X

. 3 , or 13 m nut es

Thi s means

t h a t ,

on average, a un i t

requi res 13

m nut es t o process, versus

t he

ent i t l ement t i me of 10 m nut es

Si nce

i nvent ory

i s

equal

t o cycl e t i me t i mes process vol ume, i f

t he

schedul e

requi res t hat

1, 000 uni t s be

pr oduced

each day,

we

need enough

resources t o

pr oduce t he

equi val ent

of 1, 300 uni t s aday t o get

t he

1, 000

uni t s weneed

t o

meet t he pr oduct i on schedul e

Thi s

al l ows us

t o

track

work- i n- pr ocess

c o s t s

and

l abor

c o s t s ,

whi ch,

of

course,

r e l a t e di r e c t l y

t o

t he

bo t t om

l i n e

ynow

t

shoul d be cl ear t hat t here

no

way

t o cal cu-

l a t e

t h i s

ki nd

of

rel at i onshi p

f o r f i r s t - t i me

y i e l d

or

f i n a l y i e l d

So

why

do compani es

cont i nue t o use

f i r st - t i me yi el d as a

basi s f o r

measur i ng howwel l

t hei r processes

work t o

creat e pr oduct s

and

s e r -

vi ces?

ecause t

easy

t o

cal cul at e, can be

cal cul at ed

usi ng readi l y

avai l abl e dat a,

and most compani es

don t

recogni ze t he

di f f erence

between f i r s t - t i me

yi el d

and r o l l e d

t hr oughput

y i e l d

Agai n, we don t

knowwhat

- we

don t know, and

- we can t

do anyt hi ng

about what we don t

know Si x

i gma i s about worki ng

smart er , not necessari l y

harder Si x

i gma

about doi ngwhat i s r i g h t , not

necessar i l y

what

easy

Are You Ef f i ci ent

Ef fecti ve?

Ef f ect i veness f ocuses on resul t s

Ef f i ci ency

f ocuses on a c t i v i t y Com

pani es,

l i k e

peopl e, can do

t he

wrong t hi ngs wi t h

great ef f i ci ency

There s

a

smal l

town

i n Ar i zonawhere l i f e revol ves around horses

and

c a t t l e ,

and

not

much

happens

t hat

t he

t own s

sheri f f

doesn t

know

about One

ni ght

several

years ago ,

t he l ocal s h e r i f f ,

new

t o t he town

and not

yet f am l i a r

wi t h al l

t he s t r e e t s , was

awakened

by a c a l l e r

i nf orm ng

him

t hat

there was

a dead horse i n t he m ddl e of t he road

and

t hat t he horse

needed t o

be

moved ri ght away The s h e r i f f sai d

he d

be

r i gh t ov e r ,

and asked

t he

c a l l e r t o

g i v e him

t he

name of

t he

st reet

The c a l l e r sai d

t h a t

t he horse

was

l y i n g i n

t he

m ddl e

of

Man

zani t a St reet

Howdo you

s pe l l that?

t he

sheri f f

asked

I dunno,


13/13

UNM SKNGTHEHDDENF TORY

t he c a l l e r repl i ed

But I l l

f i n d

out

Ten

mnutes

passed

bef or e t he

c a l l e r f i n a l l y came

back on

t he phone

and

s a i d, Sher i f f ,

coul dn t get

t he correct

spel l i ng

of Manzani ta

St r eet f or you, so

donemoved

t hat

dead

hor se

over

t o

Easy

Street

That s

spel l ed

E A S Y

Ef f i c i ency

means t ur ni ng

t he crank r i ght

Ef f ect i veness i s t ur ni ng

t he r i ght

crank I n

ot her wor ds,

youmaybe

t ur ni ng your cr anks

f a s t e r

t han anyone

e l s e

i n

t he

i ndust r y,

but

youneed t o turn the r i ght cranks

t o be

e f f e c t i v e

The

Br eakt hr ough

Strategy shows

compani es how

o

be ef f ect i ve

Mor eover ,

i t

has t he

pot ent i al t o hel p compani es

r edesi gn

pr oduct s

and

ser vi ces

so t hat

no

cr anks

need

t o

be

turned

at

al l

because

there

ar e no def ect s t o

f i x

Vi r t ual l y al l

execut i ves

and

manager s

can be

educat ed

i n t he Si x

i gma Br eakt hr ough Strategy But t hose

whohave

t h i s year s f i nanci al

bonus or i ncent i ve package

t i e d

t o t he

f i r s t - t i me - y i e l d

met r i c

may

have

b u i l t - i n

i ncent i ves

t o

cont i nue

usi ng

ol d

methods

anagement

needs

t o

consi der

t he ki nds

of

act i ons

they

are

r ewar di ng

or penal i z -

i ng Rat i onal i z i ng busi ness pr act i ces t hat are f l awed can i mpede t he

i mpl ement at i on of Si x Si gma,

and has

not hi ng t o do w t h what

w i l l

best i mpr ove acompany s l ong- t ermper f or mance

Hidden Factory- Harry - Text

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