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Vastupal Vashisth

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  1. Vastupal Vashisth's post in Push vs Pull vs Continuous Flow was marked as the answer   
    Supply Chain Management:
    For any organization, supply chain management is the heart of it to run the organization smoothly because it handles the entire flow of goods/service starting from raw material to the final products delivery to the end user. To manage this task, companies create a network of suppliers, distributor, retailers in which all will be linked to each other to move the product from starting of its process all the way to final output to end user.
    There are six major components of Supply Chain Management which are given below:
    Planning of resources to fulfill customer demand. Sourcing to arrange suppliers for raw material in terms of goods/services Making of product includes all activities done to create the final product includes input from supplier to final output  Delivery includes everything which is used to deliver product to the end user Returning to create a network for defective products Enabling is the establishing of support processes for monitoring the information and ensuring the compliance by fulfilling all regulations.  in any organization, wee have seen that there are functions which are interlinked and sometimes overlaps, so to run it smoothly inventory management comes into picture because every process has its own limits to produce goods and no company wants to take risk of stock out at retailer or distributor end. So inventory management is very important factor to determine the health of supply chain because at the end it will impact the balance sheet of the organization. 
    Inventory can be seen at every step including from raw material supplier to work in process item to finished good material because at no station no one wants to stock out and wants to fulfill the fluctuating demands of customer. So at every level inventory is build up and we can understand this better with the help of Bullwhip Effect. 
    Bullwhip Effect:  it talks about the amount of inventory at various stages of the supply chain and generalizes that as we move to the beginning or left most of the supply change, the overall inventory will be higher. It also talks about that the variation in the inventory will also be higher.
    we can understand it be this example , if a customer demand is D then the distributors will hold a quantity of slightly more than D to take care the demand fluctuation of customers so the amount of inventories will be more than D and they dont produce so they will buy form the people who used to produce so the producer will be producing little more to fulfill the demand so the pressure comes on tier 1 supplier who will produce more to fulfill the uncertainty in the demand and this uncertainty builds a more pressure on tier 2 supplier to fulfill the demand. and the amount of average inventory hold by tier 2 supplier is very high
    This is called Bullwhip Effect  where the average inventory hold by various supplier in supply chain increases as we move towards the supplier direction and fluctuation will also increase. 
    So there is need to drive the supply chain efficiently without loss to the organization and the ultimate goal of supply chain is to fulfill the customer demand on time because the driving factor of any supply chain is the fulfilling of customer demand and future forecasting. So supply chain has its models or system to run it smoothly as per requirement of the type of business. The system are explained and compared below:
    1. Push System:  it can be referred as  " Make to stock" in which production is based on the demand forecasting. in this system inventory level is high at every station and goods are produced on forecasting basis and tries to sell in the market. in this system we need to tackle with more lead time and inventory control and waste for controlling and holding the inventory at each station. for example distributors have inventory with them , as soon as goods are consumed they replenish them with new one. 
    2. Pull System:  it can be refereed as  " Make to order" in which production is based on the actual demand.In this production starts as soon as the order is placed by the customer. for example in a restaurant, any customer is giving any order then they start to make it although they have all ingredients in advance to fulfill demand fluctuations.
    3. Continuous Flow: it involves the continuous flow of material form one place to other or from one work station to other. in works when organizations know that demand of their product will be there and it will consumed irrespective of type of customer. and this system is used where in one processing line companies can get multiple products for example refineries in which crude oil is processed and they have petrol, diesel, and other products from the same input at various stages of process and the consumption of these products will always be there throughout the year.
    there are various situations to prefer one over other which are explained below:
    1. Variation in Demand : when the demand of any product is stable, certain then it can be forecasting with high accuracy and in this scenario Push system will work very well. On the other hand if demand is fluctuating then consider for pull system. low variation in demand leads to a highly efficient system that minimize the cost per unit. for example ice-cream manufacturing, soft drinks manufacturing they know that consumption of their product is high in summer and low in winter so they plan accordingly to meet customer requirement rather than to produce the same number of output throughout the year and hold the inventory.  
    2. Types of Product : it means about the products which are either customized or produced as a mass production as per designed. 
    when a product is customized personally by customer then pull system is followed . These products are with high brand value and customer also have their emphasis to personalize the product.  for example car manufacturing companies like Rolls Royce, Lamborghini, Ferrari, Porsche produce cars as per customer demand. so this is a pull system as and when customer demand is raised they start to work to deliver it.
    3.Manufacturing:  when we are seeing that manufacturing setup for a product is very expensive then go for push system to have proper ROI and we can consider Pull in which we can change the setup very quick without affecting efficiencies. 
    4. Lead Time:  here we are dealing with lead time to fulfill the demand of customer. it can be manufacturing, replenishment lead time or any combination which depends on situation. push system is favored by higher lead time to build inventory so that our end customer will get goods as per their demand. Short lead time goes to pull system . for example in Domino's Pizza, when any order is placed then it is must for them to deliver within 30 minutes and they start to work accordingly. another example is of steel processing for automobile industry, process is continuous an dis very critical so they follow push system to make inventory in advance to run the customer main line as per the grade, size of steel for the various parts of the final product. 
    5. Production Method : in the production is continuous  we used to follow Continuous flow of manufacturing rather than to push or pull because we can not start from beginning if any order comes or we cant make inventories in between work station. Situation where we need to handle continuous production like assembly line, refineries, cement industry, chemical industry. in these type of industry CFM works very well with Just In time by following FIFO and products transfers to next work station when finished at previous station so the continuous production will finish the product as soon as it passes from all work station. like in automobile assembly line, all products are going in line and a specific work is done at a single work station, so by maintaining takt time we used to produce our final product out of assembly line. 
    6. Marketing Strategy :   when any company is going to launch its new products in market they follow push strategy to do marketing of their product. the basic idea of the company is to push the information about the product by making awareness through many methods so that they go for it. and they expect pull strategy so that customer can come to you. for this company has to make their brand value and loyalty. in this type of strategy word of mouth plays a important role and this is one of the marketing method, if you are sure about your product loyalty and quality people will refer your product to buy . It happens in case of car buying, mobile buying. People used to take reference form their friends or relatives, they used to give feedback about the same and if you are good in your customer satisfaction, automatically new customer will come to you. 
    For any organization it is preferable to combine both Push and Pull to be effective and to manage customer demand. for example any restaurant , they have all raw material with them as per forecasting so this is push system for them but they start to work after placing a order by any customer to give him fresh dish so this is pull system otherwise if they prepare dish in advance so no customer would like to buy that dish and it will a waste for that organization. Same example with retailers, stores they have inventory with them and replenish as soon as goods are consumed, so consumption of good is pull and having inventory is push to meet customer fluctuating demand, thats why companies have warehouse to supply them otherwise it will be stock out if they start to work after placing order by customer. s
    another example of push and pull is of car manufacturing. they produce cars as per forecasting, this is push system but a new car demand coming form a showroom is pull because someone has purchased a car form their showroom . so to have minimum inventory they pulled out a car from company to meet customer requirement. 
  2. Vastupal Vashisth's post in Sigma Level, Z score was marked as the answer   
    Six Sigma methodology can be implemented in every industry. The structure followed five important phases - DMAIC, in which output of one phase is the input of next phase. It is a top driven approach and it needs commitment from top management for the successful implementation and desired results.
    Six Sigma professional insist on Z Score during measure phase even though there is well established process performances. 
    Z Score tell us about errors within the system or in other words we can say that it tells us about the number of standard deviation present between the mean and specification limit. 
    For any organisation it is very big challenge to define definition of defects as they have different processes and defects changes from process to process. for example in purchase it may be lead time failure, In fiance it may be vendor payment, in sales it may be not achieving sales target, on shop floor it may of not achieving quality objectives. Now the biggest challenge here to compare performance of all these processes as defects are defined in different units. Here comes Z score in picture which is common platform that is used to compare performance of all processes and find out on which process we should work to improve it further.
    Higher the Z Score  indicates that  there are more number of standard deviations within specification limits and the mean value is far away from outlying limit. which means that majority of the results lies nearby average value and process is capable and stable both at the same time.
    Lower Z score indicates that there is less number of standard deviation present or there is presence of variance in output. and presence of variance indicates that product or service quality can change or fluctuate from its defined value which leads to dissatisfaction of customer. 
    Z score helps a company to ensure the quality of its output and enables the organization to workout for the poor processes in case of any undesired result. Z Score is very useful and helps the six sigma professional to make comparison during measure and control phase to highlight where improvements can be made .
  3. Vastupal Vashisth's post in Net Present Value (NPV) was marked as the answer   
    Before Analyzing The NPV calculator, let us first understand what NPV is all about:
    NPV stands for Net Present Value which is one of Discounted Cash Flow Techniques which were developed to take account the time value of money and to improve the accuracy of cash project evaluations. in simple words we can say that NPV is the difference of present value of cash ouflow and future value of cash inflow over a period of time. NPV consists of:
    finding the present value (PV) of each cash flow, discounted at an appropriate percentage rate. finding the NPV by adding the discounted net cash flow to determine whether the project is acceptable or not. If two or more projects having positive NPV then the one which is of higher NPV is a more likely choice.
    NPV can be positive, negative or zero. Projects with Positive NPV have more return or cash flow or in other words we can say that projects with positive NPV are profitable to the organization but projects with negative or zero NPV is loss to the organizations but it does not mean that we can not go with projects with negative or zero NPV. This will be explained further.
    Lets understand the calculator with the given values in the question:
    Future Cash Flow: Amount given is 50000 which is an estimated value when the investment done for the project. Cash flow is the amount which is the increase or decrease in the amount of money for any business. or in other words its the company's ability to create value for shareholders which is determined by its ability to generate positive cash flow. 
    For any organization its very important to have good Cash Flow, Profit and Return of Investment(ROI). Any organization can survive with less profit and ROI but it cant go with poor cash flow or if there is no cash flow then it may close down the business in future.  
    Rate of interest of discount rate: it is the expected rate of interest to compute the present value which is 8 % in above example. discount rate is company specific  because its related to how the company gets its funds. It is the rate of return that the company expect.
    Time Period: this is the time period after which the cash flow is expected. In above example this is of 2 years. 
    Initial Investment: This is the amount which is invested initially that is expected to generate future cash flow. in above example this is 42867. 
    in above example when we put all values in calculator we see that NPV comes zero. but it does not means that zero NPV indicate no value zero NPV means that  investment earns a rate of return equal to discount rate. Because NPV is the measure of wealth creation relative to the discount rate. 
    In above example we should go with this project as this project gives a huge increase in employee satisfaction scores and corporate responsibility visibility for this company. in above example we have good cash flow which is very good for the organization but has zero NPV. 
    Sometimes we select projects even negative NPV for example when we are going to buy a new car  then we know that after so many years residual value will be less when we sell it. but still we buy because  things like bus or any cab fairs that we are not going to pay now after buying a car and now we can drive anywhere ,we can go anywhere , there will no need to wait over stations or bus stands so time also saving, so we buy new car when we consider all factors although we know that residual value of car is less.
    Another example is that Facebook bought what's app and Instagram yet both are not still profitable because they know if they don't then Google might buy both and get more users on What's App and Instagram. So Facebook has to pay to avoid the user churn. Another example is of safety equipment used in  industries, they all have almost negative NPV but still are used because they are important to ensure people are not getting injured or killed. 
    Similarly we can select project with Zero NPV because:
    Zero NPV increase revenues despite not increasing profits. because shareholders look to revenue growth as an indicator of financial growth. It may involve social benefits that will increase brand value of the organization. it may be a part of legal or regulatory requirements. it may change in the economic cycle which will lead to project to a positive one. As stated in the example it may  give a huge increase in employee satisfaction scores and corporate responsibility visibility for this company.
  4. Vastupal Vashisth's post in Takt Time Calculation was marked as the answer   
    Before analyzing the Takt Time calculator let us understand first what Takt Time is all about.
    Takt Time: This is the rate in time per unit at which the process must complete units in order to achieve the customer demandime . It may computes as
    take Time = Time available/Number of units to be produced
    Takt time is basically a time based measure which is sometimes confused with cycle time. Cycle time is total time taken to complete the work. for any work task at a station cycle time must be less than or equal to takt time.
    Available time does not include luches, breakdown, and planned downtime. So to meet the demand takt time can be reduced if there is any breakdown or downtime.
    for example in car manufacturing industry , lets assume daily car production target is 500 in  two shifts of 960 minutes. Lets not include of lunch, break so we have 900 minutes to produce 500 cars. 
    SO takt time is : 900/500 = 1.8 minutes or 108 sec which means in every 108 seconds one car must be out form shop floor. 
    lets assume demand is increased to 800 cars in a day in festive seasons then takt time will be reduced , revised takt time is now = 900/800 = 1.12 minutes or almost 68 sec.
    we have seen that takt time has been reduced as demand increased , so in every 68 sec car must be out form shop floor and any activity at a particular station which is defined must be completed before takt time. or in other words cycle time at every station should be equal or less than takt time to meet the requirement.
    it may be possible that we have to deploy extra manpower, processes to reduce the cycle time at station to meet our takt time.
    Similarly example can be seen in any industry like, foods, beverages , air conditioning, their demands fluctuates throughout the year so on forecasting bases takt itme can be increased or decreased and planning of manpower and other item can be done in advance which will be helpful in cost saving for the organization also. 
    For example demand is not there and organization has maintained its takt time of 68 sec to deliver cars by investing on  extra machines, overtime, extra manpower which is a waste for the organization as it leads to high inventory of finished good for which organization needs more space which is also a wasteful activity and loss to the organization.
    Lets understand with calculator:
    1. Total customer: this is the daily customer demand which changes from industry to industry like automobile, four wheeler, two wheeler, heavy commercial vehicle, daily consumer goods industry, . this is a foretasted demand which is derived from its yearly plan which is based on its previous history and its upcoming plan to the market as per the market. it may vary throughout the year eg in case of icecream which is more consumed in summer time  than the winter time. Same is with automobile industry where demand is more in case of festive seasons. 
    For example we have a demand of 1000 bikes in a day.
    2. Production Time : this is the time available for production for example if any industry operates in 2 shifts then it will be 2*8*60 = 960 minutes and in case of 3 shifts then it will be 3*8*60 = 1440 minutes. 
    For above example lets suppose we have two shifts of total time is 960 minutes.
    3. Break time: this time is break time for lunch, tea in shifts and to calculate Takt Time, this time excluded from production time so we assume our total break time for lunch &  in two shift is 90 minutes then we have available time is only 960-90= 870 minutes.
    means we have only 870 minutes to produce 1000 bikes as per our example so our takt time will be : 870/1000 = 0.87 minutes or 52 sec. as now we have available time is 870 minutes. 
    4.  Down time:  this may be planned or unplanned and to calculate takt time , down time must be excluded as during this time is not used for production. So if we exclude downtime then our takt time will be reduced. 
    Suppose our total downtime is 70 minutes so now total available time is 870 - 70 = 800 minutes to produce 1000 bikes.
    so revised takt time is : 800/100 = 0.8 minutes or 48 sec which is less than before , so to meet this target we have to deploy extra manpower of increase speed of line and reduce cycle time at every station to finish the defined work to match the demand. 
    takt time changes with demand and total time availability. it is a very simple concept which gives us production stability by limiting overproduction and stabilizes the system. As we have seen in our example also it prevent us to build up inventory which is an unnecessary waste for any organization. 
  5. Vastupal Vashisth's post in R Squared was marked as the answer   
    Regression Analysis is a technique that typically  uses continuous predictor variable to predict the variation in a continuous response variable. 
    R - Square or co-efficient of determination is used to find out how well our model fits the data points or in other words it is used to explain how good our model when compared to base model. Range of R - square varies form 0 to 1 where values closer to 0 means poor fit and values closer to 1 means perfect fit. 
    Adjusted R - Square is used to find out how important is a particular feature to our model and  to overcome the limitation of R- square as R - square can be increased artificially. it is used with multiple regression because unlike R - square , the adjusted co-efficient will increase 
    For example:
    we are comparing a five independent variable model to one variable model and the five variable model has a higher r - squared. just compare adjusted R - square values to find out whether this model with five variable actually a better model or not
     Variable                 R - Square Value                   Adjusted R - Square
    1.                                        70.1                                    71.2
    2.                                        73.5                                     72.6
    3.                                        79.5                                     78.5
    4.                                        82.6                                     71.9
    5.                                         85.7                                   70.8
    In the example we have seen that Adjusted R - Squared value increases upto a certain point when the new term improves the model fit and decreases with each and every additional independent variable when the term does not improve the model fit by a sufficient amount.
    so we can use only three independent variable rather than five as adjusted R - square value starts decreasing after that so there will be no use to add further
  6. Vastupal Vashisth's post in Control Plan was marked as the answer   
    Control plan is a quality document which is part of PPAP and its a method for documenting all the functional elements  in the process to assure quality standards are met for the desired product or output of that process. 
    The best way to create a control plan is its development by the cross functional team, that has the understanding of the process which we are going to execute or controll. With the help of CFT, we can identify opportunities for improvement. Control plan is more than just a document, it is that plan which is created by or developed by the CFT team to control the process form input to output and ensure that the process produces quality output/products that meet the customer requirement. 
    CFT team should consider observation/output/know-how from following to create a good control plan.
    We should consider process flow diagram to consider each step involved in the process to control it  Consider the output and previous know -how from DFMEA Consider the output and previous know how-how from PFMEA Consider quick learning form previous similar parts, processes Do design review Knowledge of the team about the process and part or output Consider special characteristics Control plan must be living document because all the information and problem history changes throughout the life cycle of the process. We should continuously update control plan as per input form any process step or something new happened which was not there earlier.
  7. Vastupal Vashisth's post in Point of Use Inventory was marked as the answer   
    Point of Use inventory, as the name itself suggests that it is the storage of raw materials/consumables at the work stations where they are used and it is one of most useful Lean Concept.With this system, we used to deliver the quantity of products you need, where you need it and when you need it. All materials and information are stored near workstation so they can be accessed more quickly by the workforce. It is one of the most efficient and economical system giving us a clarity about our raw materials/consumable which we are using is matching to our inventory or not.
    POUS help us reduce classic lean wastage. In our Lean Journey, we see that there are seven types of waste which are identified as TIMWOOD, Transporation, Inventory, Motion, Waiting, Over-processing, Over-production, Defects. To start the process of standardization of work at a work center first we need to address material storage locations and we should be able to quickly the benefits of POUS. 
    Biggest waste in TIMWOOD is Transportation and Motion which is eliminated and reduced by using the concept of POUS.
    Transportation is a type of waste which does not add any value because it does not contribute to transforming the final products. POUS technique helps to minimize the transportation waste.  Motion is also reduced by the technique of POUS. it involves the double handling, reaching of parts and stacking of parts  In any factory, we can reduce non value adding activity, excess movement of material from one place to other by using technique of POUS.
  8. Vastupal Vashisth's post in Nominal Conditions was marked as the answer   
    For any process or department we must know and highlight abnormal conditions which needs to to eliminated. And to recognize abnormal, it is must to understand what normal is. Nominal condition defines standard of process on which it s operating within acceptable limits. It is a very important concept and we have to understand better what nominal condition is.
    The first thing to define Nominal condition is to establish acceptance limits. For example, we know that parts are producing from different tools which have different rate of production or has different SPM(Strokes per minute), A part of high SPM of 12 will be produced 720 units in one hour on the other hand a part of low SPM of 8 will be produced 480 units only in one hour. SO we should define limit because at the end of that day we are knowing that we will achieve our target .
    other example for the same is rules change by government in Engines from BS4 to BS 6 before it was BS 3, every time they are giving some acceptable limits for emission control so that companies do modification accordingly and set their target and range accordingly during production. 
    The second important key to define nominal condition is to be able to measure it in process metric. For example machine has a capacity to produce 4000 parts in eight hour and so every hour it should finish 500 parts, so if you are knowing that at particular time you are supposed to finish 2000 parts but you are behind that target it means you are out of your Nominal condition. One should be able ot measure the condition real time e.g. at the mid hour mark - what is the count which gives you the opportunity for correction. It is hard to correct when the measurement cannot be real time (or with lagging measurement)
    The most common challenge is to maintain it for a long time. Mostly people think that it is one time activity and left after achieving it, but actually it is day to day activity and there are chances of continuous improvement. Like Toyota has implemented it long time back but still they are continuously working on it to improve it further and to maintain it further.
    Mostly people think that this can be used in manufacturing facility only but it can be used in any department of the company. There may, however be a lot of resistance to such a change.
  9. Vastupal Vashisth's post in Weighted Pareto was marked as the answer   
    Pareto Chart or Pareto Diagram,  is a excellent tool for  prioritizing potential root causes or number of defects/problems. It is based on Pareto Principle of 80-20 Principle. It is based on theory of unequal distribution of wealth. This principle dictates that 80% of the failures are coming from only 20% of the causes. This tool based on the present data, it does not provide any projected movement of any one of the contributing factor in coming future.
    It is the visual representation of vital few against trivial many. A Pareto diagram is combination of bar and line graphs of accumulated data where data is associated with a problem are divided into smaller groups by causes.It is a dual scale chart. The length of bars represent frequency and arranged with longest bar on left and shortest to right in decreasing order. 
    On left side Y axis there is number of problems or defects and right side Y- axis cumulative percentage. Cumulative percentage of 100% should be equal to total no of problems or defects for getting accurate pareto Chart. On X- Axis types of defects or problems are defined. Cumulative % will be derived after arranging all types of defects/Problems in decreasing order. 
    We can use Pareto chart in following conditions:
    When we are analysing data about the frequency of problems in a process. When we want to compare results before and after taking countermeasure. When we are communicating with other about our data to make them understand in better way, When analysing causes in broad way by looking at their specific components. When we have many problems and we want to focus only on significant problems.  
    A Weighted Pareto does not look like normal Pareto chart in which we look at how often defect occur but it considers how important they are. There are some of different attributes that we can use in weighted Pareto;
    Severity of defects Cost related to defect Detectability of defects  
    A Weighted  Pareto may change how we see the priority for improvement projects. It requires valuation, different attributes are needed to calculate valuation and these attributes can be objective to find out and fix cost to each type of defects/problem so that we can identify which type of defects is having more impact on company and its reputation. it will help you to identify where high cost defects occur. We reconstruct Pareto to draw Weighted Pareto by multiplying frequency to its assigned value of attributes and re-arrange all defects in decreasing order to calculate cumulative % of each defect type.
    for example if we see a sheet metal industry, some defects are occuring like crack 10 cases, 25 dent, 30 deform. As per Pareto Chart we consider these defects as Deform, Dent and Crack in decreasing order. So if we consider cost related to these defects like we spend 5 rupee to repair one deform and 7 rupee to repair one dent but we can't repair crack so we lose 20 rupee for a crack.
    so Loss for 10 Cracks =  10* 20 = 200 rupees
         Loss for 25 Dents=  25* 7   =  175 rupees
         Loss for 30 Deforms = 30 * 5 = 150 rupees.
    so according to weightage of defects we are observing that Crack which was least important before now comes at top position and to focus more for taking countermeasure, similarly Deform which was on first position before now comes at end for taking action and least important.
    So Weighted Pareto changes the scenario how we see the priority for improvement of projects. 
  10. Vastupal Vashisth's post in Nominal Group Technique (NGT) was marked as the answer   
    Nominal Group Technique is an extension of Brainstorming. It is a structured method for group brainstorming used to encourage contributions from everyone in the group. It is a way of using small group discussion to reach consensus. Hence the technique is helpful when we want to take everyone's opinion but also want to make quick decisions.
    Here is when NGT would be prefered over traditional brainstorming:
    When not everyone can think when everyone is talking, some members prefer silence to come up with ideas. When some group members are very vocal and overshadow others. When some or all members don't know each other well and hence there is a lack of comfort. when there is a possibility of conflict. When group is not able to come up with enough ideas  When not all group members are participating When some group members but others' ideas short. The usual four step process to conduct Nominal Group Technique is outlined below: Generating Ideas:  The moderator introduces the problem to group and indicates that everyone should write their ideas individually and without any discussion. Recording Ideas: Members engage in a round-robin session where they share their ideas  with the moderator without any discussion or cross questions. No duplicate ideas need to be mentioned.  The moderator records the points where everyone can see them.  Discussing Ideas: each recorded idea is the discussed at this stage. Voting on Ideas:  Individuals are now asked to vote privately to prioritize the ideas. The ideas that are most highly rated as per the vote tally are the most favoured group action or ideas. Advantage of NGT:
    It can generates a large number of ideas in a more comfortable environment. It allows the group to prioritize the ideas and everyone has a say in the form of their vote. It reduces the fear of standing out in the group esp when the opinion is different than others. Encourages participants to avoid conflict. Balances the influence of individuals who are too vocal or too quiet   
  11. Vastupal Vashisth's post in Rolled Throughput Yield Part 2 was marked as the answer   
    Yield of any process is output divided by input but here we are talking about Rolled Throughput Yield. Before understanding RTY,  we should know about First time Yield.
    FTY( First Time Yield) is the common way to calculate process yield or is the probability of defect free output for a process. It considers only the set criteria at the end of the Process. It does not capture the how many defects were found and corrected within a single unit during the process flow.
    Now the Hidden Factories come into picture and FTY will not detect the effect of Hidden Factories. It will typically indicate that a process is performaing better than it really is.
    Rolled Throughput Yield ( RTY) is the probability that a single unit can pass through a series of process steps free of defects.
    RTY is defect sensitive - which means that instead of being based on yield on produced unit, it uses the number of defects found at each process steps. 
    So mathematically we can say that we can multiply FTY of each process to find out overall RTY.
    When a process steps produces defects and its yield will be less than 100 percent even if defective output are corrected, its yield will remain same. and to correct defective output is separate process.
    RTY = Yield of process step 1 * Yield of process step 2....Yield of Process step N.
    It is Ideal for any process to produce its products without any defects or without any rework.  But it is always there that defects are repaired and ok products given to customer by not seeing the cost of rework because customer should be happy and many organization focus more what gets outside the door. and while calculating FTY we are not able to recognise the hidden Factories but if we calculate RTY , it quantifies the effect of inefficiencies  found throughout the process and its steps to finish it.
    Lets take a example to understand more that how RTY highlights about Hidden Factories:
    for example any process is completed in two steps and have input of 100 parts and output of 100 parts. 
    so FTY indicates a good process with no defects getting to customer because there is 100 input and 100 ouput and organization is very happy to see this a s100 % output. FTY does not capture any effect in the process steps.
    100 Input --Process Step A --- Process Step B ---- 100 Output
                          ( Yield: 0.95)           ( Yield : 0.95)
      ( Remaining defective Reworked and again processed in both steps)
    FTY = 1 or 100%
    RTY= 0.95*0.95 = 0.90 or 90%
    so we can see that 100 in and 100 out , a good process as per FTY and we are not aware about rework done. FTY does not capture this 5% rework done in every step. So in one way 10% of the output is reworked to keep customers from getting defects. So Process has to do enough work to be done to make 110 outputs to produce 100 defect free products. The two hidden factories here exist because of defect generation at each step but organization or process owner wants for the customer to receive defect free outputs. So the rework which has been done for those 10 defective outputs will show up as process's cost of poor quality.
    So RTY on the other hand captures the work done by two hidden factories, instead of a process in 100% compliance as described by FTY, we can say that RTY describes that a Process that wastes 10% of its resources.
    So RTY points the way to where improvement efforts are needed and highlights "hidden factories".
  12. Vastupal Vashisth's post in Force-Field Analysis was marked as the answer   
    Example is of inventory management. 
    One group is saying in a company to increase the inventory for three days instead of running inventory for one day. Now the point is how will you store the inventory for three days? Another group is against to increase inventory level, they just want to go on with one day inventory only. Now forces which are in favor to increase the inventory level are if any tool breakdown, machine breakdown, quality problem in parts, then customer line can be managed by using inventory and no need to have contingency plan if have sufficient inventory to support the line. 
    Tool maintenance will have sufficient time to work in dies, machine maintenance will have sufficient time for preventive maintenance. 
    Forces which are against in the decision to increase inventory level like
    Who will take care for the increased inventory? 
    Extra resources will be needed to increase the inventory level like area, building, manpower, trolleys, lifters, electricity. 
    So we can see that for any change there are some forces which are against the change and some are far. So by doing brainstorming in a team considering all aspects a team can take a better decision by this technique of Force Field Analysis. 
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