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l i t y ( S i g m a )Final Test YieldWhat Does this Imply? Final Test Yield is Correlated to Process Capability 25 Six Sigma Champion Training Verify 90 Units Passed Final Test YFT = 90% Operation Not OK Rework Scrap DPU = 100 Units Start 37 Units d = 0 63 Units d 1 10 Units Scraped 53 Units Repaired ?Defect Type Count A 25 B 15 C 5 D 20 E 35 Total 100 YTP = 37% Throughput Yield Units with Zero Defects Process Capability = 37% not 90% Unlocking the Hidden Factory 26 Six Sigma Champion Training The Idea of Rolled Throughput Yield RTY or YRT Input Step 1 YTP1 Step 2 YTP2 Step 3 YTP3 … Step K YTPK Output YRT = e TDPU YRT = P Y TPJ K J=1 YRT = Probability of a Unit going through all Process Steps with zero defects YRT = YTP1 x YTP2 x YTP3 x …. Y TPK If TDPU = .25, then YRT = = % 27 Six Sigma Champion Training This process has a 5% scrap rate at Inspection BUT, the Process RTY is only %. Where did the other % of yield go? Rework, waste, setup, etc. are the HIDDEN FACTORY. A Process A Mixing 100 in 90 out 90% First Pass Yield RTY = 90% B Process B Making 100 in 80 out 80% First Pass Yield RTY = 90% x 80% = 72% C Process C Converting 100 in 90 out 90% First Pass Yield RTY = 72% x 90% = % D Process D Inspection 100 in 95 out 95% First Pass Yield RTY = % x 95% = % RTY Calculation 28 Six Sigma Champion Training 1 0 09 08 07 06 03 02 01 00R o l l e d T h r o u g h p u t Y i e l d %Profit Margin %Rolled Throughput Yield is Correlated to Profit Margin 29 Six Sigma Champion Training 6 05 04 03 02 01 0076543210C O P Q ( % S a l e s )Sigma LevelIndustry average is 20% COPQ 4 Sigma Company Sigma is Correlated to Cost of Poor Quality 30 Six Sigma Champion Training Internal Costs ? Scrap ? Rework/Repair ? Downtime ? Redesign ? Excess Inspection ? Excess Inventory External Costs ? Warranty ? Retrofits ? Service Calls ? Recalls ? Lost Sales ? Long Cycle Times What is the Cost of Poor Quality 31 Six Sigma Champion Training People(Indirect Labor) ? Rework ? Inspection ? Material Handling ? Maintenance ? Setup ? Excess Overtime ? Labor Variance off standard Inventory ? Raw Material Holding Cost ? WIP Holding Cost ? Finished Goods Holding Costs ? Obsolescence ? Inventory Shrinkage Maintenance ? Maintenance ? Repairs ? Rearrangement Defects ? Scrap ? Rework ? Defects ? Warranty Recalls ? Returned Goods Handling Premium Freight ? Air Freight ? Expedited Truck Freight Components of Cost of Poor Quality 32 Six Sigma Champion Training Six Sigma has shown that the Highest Quality Producer is also the Lowest Cost Producer Cost of Poor Quality (COPQ) Correlation ? Process Control is prerequisite for error free Quality – COPQ is a result of a poorly controlled process – Process Control can be measured in PPM/Yield – PPM/Yield measurements are correlated to – COPQ 33 Six Sigma Champion Training COPQ Sigma PPM 3040% of Sales 308,537 Non Competitive 2030% of Sales 66,807 1520% of Sales 6,210 Industry Average 1015% of Sales 233 10% of Sales World Class Cost of Poor Quality (COPQ) Relationship Industry Averages 34 Six Sigma Champion Training COPQ Sigma Yield 3040% of Sales 5% Non Competitive 2030% of Sales 93% 1520% of Sales % Industry Average 1015% of Sales % 10% of Sales % World Class COPQ Sigma/Yield Relationship Industry Averages 35 Six Sigma Champion Training ? What are your Business Metrics ? ? Do your Business Metrics link to your Customer`s Metrics? ? What improvement goals are established for your Business Metrics? ? PPM Parts per Million ? DPU Defects per Unit ? RTY Rolled Throughput Yield ? Cycle Time ? Sigma Level ? COPQ Cost of Poor Quality ? Capacity ? Inventory Cost Business Metrics 36 Six Sigma Champion Training Same Questions Same Answers ? New Behaviors ? New Values ? New Questions ? New Measures The Role of Leadership on Metrics 37 Six Sigma Champion Training Strategic/Business Technical/Process Six Sigma Activities QOS Level of Metrics 38 Six Sigma Champion Training Strategic 1. Performance against CTQ standards 2. Cost of Poor Quality Performance 3. Overall Sigma Level Process Quality 2. PPM, DPU, DPMO, RTY, COPQ Monthly Improvement Rates 3. Cycle Time Inventory Level Six Sigma 1. Project Savings $`s (Total per BB) 2. Number/ Status of Projects 3. Number of MBB`s, BB`s GB`s Certif 4. MBB BB Turn Over Ratio 5. Final Reports Completed Ideas for Performance Measures 39 Six Sigma Champion Training 2030405060J F M A M J J A S O N DG o a lA c t u a lDualSpoolMOD 5/6MOD 8WebGrabber2030405060DualSpoolMOD 5/6MOD 8WebGrabber%Area CArea AArea FArea B2030405060Area CArea AArea FArea BStitchingStainsDamageColor2030405060StitchingStainsDamageColor%P r od uc t Fa m il iesWor k Ce l lDef e