In my earlier article on Yield Value, I have explained the importance of Yield Value and a short case study was also discussed. Here we shall again discuss in detail on the transition from traditional yield value calculation to the current yield value calculation which is named as ‘Yield Metrics’.
In modern management approaches towards business processes has changed. The traditional approach of literatures report writing has been obsolete and replaced with numerical reports with explanation. The current report writing has again replaced by the numerical + explanation report by statistical analysis reports.
The idea of having this statistical report is to be precise and simple in the process of monitoring and control while maintaining the efficiency of the processes. Control charts such as Pareto chart, Run chart, Flow charts etc, has been the used as control tools for a single process or the whole process in the value chain.
In traditional management; out put is always been calculated and ratio between each production out put is calculated. Later transition in calculation came in where input/output ratio is calculated as the Yield Value. Currently this calculation has again being replaced by Yield Metrics of which the rework and scrap is also being calculated. This Yield Metrics measures a precise efficiency rate where variation and its cause were analyzed.
It is important to note that variation is the deviation from expectation, and this would determine the real output from any inputs. It is much related to the efficiency of the organization which directly determines the revenue and profit margin for any business organization
Measuring yield
In modern management approaches towards business processes has changed. The traditional approach of literatures report writing has been obsolete and replaced with numerical reports with explanation. The current report writing has again replaced by the numerical + explanation report by statistical analysis reports.
The idea of having this statistical report is to be precise and simple in the process of monitoring and control while maintaining the efficiency of the processes. Control charts such as Pareto chart, Run chart, Flow charts etc, has been the used as control tools for a single process or the whole process in the value chain.
In traditional management; out put is always been calculated and ratio between each production out put is calculated. Later transition in calculation came in where input/output ratio is calculated as the Yield Value. Currently this calculation has again being replaced by Yield Metrics of which the rework and scrap is also being calculated. This Yield Metrics measures a precise efficiency rate where variation and its cause were analyzed.
It is important to note that variation is the deviation from expectation, and this would determine the real output from any inputs. It is much related to the efficiency of the organization which directly determines the revenue and profit margin for any business organization
Measuring yield
According to Craig Gygi, Neil and Bruce, The traditional calculation of yield is often employed on the last, final inspection steps of a process; to measure the effectiveness of the overall process (Craig, Neil, Bruce 2005). He then continues by sayings that, the traditional result of calculating yield are misleading. Below differentiate between traditional yield calculation and the current yield calculation which is called ‘Yield Metrics’.
Let’s take an example for a credit department in a bank where loan application form received as the input value. The input value i.e. forms received are 352, and only 347 are the output (approved) where 103 is the rework. From 103, only 5 is a total rejection.
Traditional Yield:
Y= out /in = in – scrap/in
Hence in traditional calculation would be:
Y= 347 /352= 98.6%
The effectiveness is deemed to be good that is 98.6% and defect rate is only 1.4%.
However when we use the Yield Metrics calculation that is First Time Yield (FTY) the outcome would be different.
First Time Yield (FTY):
FTY= in – rework /in
The calculation would be:
FTY= 249/352= 70.75%
Here we realize that the effective rate of the process is only 70.75% and the defective rate is 29.9 % or 30%. The organization should now look immediately on the 30% defect on the process instead of seating comfortable with the 70.7% effective rate. Only then the organization is on the move toward continuous improvement and competitive.
From this single overall process, the organization should break this single big process into smaller process or value chain process. Later evaluation at every value chain components must be implemented, i.e. it’s FTY. Each FTY shall be calculated in total value, where it could be presented by RTY or Rolled Throughput yield. It is important to have in mind that in doing analysis in process evaluation, value chain must be the most effective approach.
Rolled throughput Yield (RTY):
RTY = FTYn x FTYn x FTYn x FTYn x FTYn
Where n is the number of breakdown process (n could be 1, 2, 3; according to number of process). As for the above example, lets take the process are being subdivided into 5 sections and
FTY1 = 0.75 FTY2= 0.95 FTY3= 0.85 FTY4= 0.95 and FTY5= 0.90
Therefore
RTY= 0.518 or 51.8%
It the realized that the effective rate or efficiency of the process is ONLY 51.8 % and the defective rate is 48.2% which turn to be very high.
Improving Processes
It the realized that the effective rate or efficiency of the process is ONLY 51.8 % and the defective rate is 48.2% which turn to be very high.
Improving Processes
To immediately improve the overall performance, select which process of the lowest FTY, focus and improve for example using DMAIC. Then turn to the next lowest and improve using the same approach. Use the control tool charts as the monitoring measures from time to time.
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