Int. J.

Production Economics ] (]]]]) ]]]]]]

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Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Enhanced Rolled Throughput Yield: A new six sigma-based performance measure

Abbas Saghaei a,n, Hoorieh Naja a, Rassoul Noorossana b
a b

Department of Industrial Engineering, Science and Research branch, Islamic Azad University, Tehran, Iran Department of Industrial Engineering, Iran University of Science & Technology, Tehran, Iran

a r t i c l e i n f o
Article history: Received 7 April 2010 Accepted 1 February 2012 Keywords: Rolled throughput yield Six sigma Process capability Overall performance of organization Rework Scrap

abstract
The quality level measurement of a given process is essential to some phases of six sigma methodology. So far, different indicators have been applied to estimate the capabilities of a process such as classic yield, defect per unit, sigma quality level and rolled throughput yield. However, the examination of the efciency of total processes in a certain organization is a recent challenge which is, unfortunately, not thoroughly explored in scarce studies undertaken. The proposed approach called Enhanced Rolled Throughput Yield (ERTY), unlike other methods, pays particular attention to such factors as the difference between scrap and rework cycles, the cost of scrap and rework and the sequence of stages. Moreover, the proposed approach is able to cover all previous methods. The presented real case illustrates the results of applying this model upon the industrial production of electronic sets. & 2012 Published by Elsevier B.V.

1. Introduction Nowadays, the global market is highly competitive and in order to survive, organizations need to produce products and services of high quality to achieve customer satisfaction and loyalty to stimulate top-line business growth (Kumar and Antony, 2008; Chen, 2008). The six sigma improvement method is problem-focused and its main objectives are decreasing scrap, earning income and creating value. This business management strategy started with manufacturing (Kwak and Anbari, 2006) but over the years it has expanded its realm to a variety of elds such as healthcare (Heuvel et al., 2005; Lazarus and Butler, 2001; Sehwall and DeYong, 2003; Woodard, 2005), banking (Jones, 2004), servicing (Antony, 2004a; Benedetto, 2003; Does et al., 2002; Hensley and Dobie, 2005; Woodall, 2001). Six sigma has been exploited by many world class organizations such as GE, Motorola, Honeywell, Bombardier, ABB, Sony, Samsung Electronics, and Johnson to name a few from the lengthy list, and resulted in billions of dollars of bottom-line savings (Snee, 2004, 2005; Antony et al., 2005a, b; Shamji, 2005; Zu et al., 2010). The term sigma is a Greek alphabet letter used to describe variability and is applied as a statistical process technology measure in organizations (McAdam and Lafferty, 2004). In a six sigma quality program, one of the widely-applied measures

Corresponding author. Tel.: 98 2188534460; fax: 98 2188534461. E-mail addresses: a.saghaei@srbiau.ac.ir (A. Saghaei), h.naja@srbiau.ac.ir (H. Naja), rassoul@iust.ac.ir (R. Noorossana). 0925-5273/$ - see front matter & 2012 Published by Elsevier B.V. doi:10.1016/j.ijpe.2012.02.002

to evaluate the performance is the sigma quality level. The sigma level is often measured for a single product or sometimes applied for a process. Six sigma is dened as having less than 3.4 defects per million opportunities or a success rate of 99.9997% (Antony and Banuelas, 2002). Of course, other criteria such as yield, Defect Per Million Opportunity (DPMO), and Defect Per Unit (DPU) are still used for capability measurement of any process. In six sigma methodology, a new criterion titled Rolled Throughput Yield (RTY) was introduced to measure the quality of a process. RTY demonstrates the possibility of a product or service passing the whole process defect free (Graves, 2002; Pyzdek, 2003). Harry (1998) claims that organizations are often classied as world-class, industrial average or non-competitive based on their cost of poor quality (see Table 1). However, Tort-Martorell et al. (2009) say that the numbers in Table 1 are given without any justication or research to support them. They believe that despite the advantages of sigma level it has some considerable difculties. The tendency of managers to report the performance of organization processes overall performance of organization has increased (Deleryd, 1999). That is why Harry (1998) attempted to draw attention to sigma level as an overall criterion for estimating performance of organizations. Ravichandran (2006) highlighted a challenge by asking Does a six sigma organization mean that an organization has achieved six-sigma goal of 3.4 part per million in all critical processes of interest?. Although there are some criteria for the yield assessment of a given process, little attempt has been made on the estimation of total organization processes.

Please cite this article as: Saghaei, A., et al., Enhanced Rolled Throughput Yield: A new six sigma-based performance measure. International Journal of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.002

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Table 1 Sigma levels and cost of poor quality. Sigma level 6 5 4 3 2 1 Cost of poor quality o 10% of sales 1015% of sales 1520% of sales 2030% of sales 3040% of sales 440% of sales World class Industry average Noncompetitive

2. Enhanced Rolled Throughput Yield Suppose that the main process consists of n sub-processes. In each stage of this process, defects might be found. If the products in any stages of the process do not meet the dened criteria, they should be either corrected in that same stage or returned to previous stages for rework. Otherwise, they are considered scrap and must be discarded from the production line. Fig. 1 shows the typical diagram of a main process. The notation is summarized below. A aj Nj S(j) B bji Nji R(ji) rj n 1 Matrix Expectation of scrap costs for sub-process j. Random variable of scrap numbers for sub-process j. Random variable of unit scraps cost in sub-process j. n n Lower triangular matrix. Expectation of occurred rework costs by sub-process j and return to sub-process i. Random variable of occurred rework number by subprocess j and return to sub-process i. Random variable of the total cost caused by rework in sub-process j and return to sub-process i. Random variable of the correcting costs for sub-process j. Boolean variable. It takes 1 if the defect goes through the sub-process k and 0 otherwise. Random variable of the cost of producing a unit of product in sub-process k. m 1 Matrix Expectation of prot gained from the sale of product j. Random variable of number of product j sold. Random variable of price per unit of product j. Number of sub-processes. Number of products. Weight of sub-process j. Weight of product j. ( 1 kj 1 n matrix s:t ek 0 kaj The probability of a unit to pass sub-process j defect free. The RTY for the main process j. Entrance to the rst sub-process. Number of units entering sub-process j.

Table 2 Different features of ERTY and other methods. Method Yield RTY Weight-based sigma level Final product yield Process efciency Importance of subprocesses Importance of products Difference between scrap and rework Extent of rework cycles Process step that a defect occurs Yes No No No No No No Yes Yes Yes No No Yes No No No No No No No No Cost-based sigma level Yes No Yes Yes No No No ERTY

Yes Yes Yes Yes Yes Yes Yes

mk
gk C cj Mj X(j) n m wj ~ wj ek Pj rtyj y uj

Ravichandran (2006) presented a method for calculating organizational sigma level by assigning weights to all critical processes based on their importance. His proposed method has been modied in 2007, cost-based process weights has been set up to determine a unique weighted-defects per million opportunity. The proposed approach uses both internal and external performances of the products and processes in terms of costs involved to determine cost-based process weights. In order to calculate the organization performance based on six sigma viewpoint, we suppose that a welldesigned overall organization measure attempts to consider the following features:

      

The The The The The The The

nal product yield (effectiveness) process efciency importance of sub processes importance of products fundamental difference between scraps and reworks extent of rework cycles process step that a defect occurs in

This paper presents a new model called Enhanced Rolled Throughput Yield (ERTY) to calculate the overall performance of organization. Table 2 shows the differences between the proposed and current methods. Therefore, at rst all the references related to the development of Six Sigma indexes were studied and the characteristics of every index were extracted which is shown in Table 2. Simultaneously, certain characteristics of real processes indexes for assessing the performance were listed. Then, a new statistics mathematics model for calculating the performance of organization processes, was designed based on the RTY index. The organization of this article is given as follows. In Section 2, we formulate the proposed method. In Section 3, some numerical examples show the limitations of current methods. In Section 4, the results of applying the proposed method on electronics industry are presented. A few concluding remarks and future studies are offered in Section 5.

In this model, importance of each sub-process is considered according to scrap and rework costs. The rework cost for each sub-process is a cumulative cost based on all rework cycles that end at this sub-process. As it is described above, total rework cost can be written in the following form: Rji r j
j X ki

mk g k

This equation shows that the total cost of reworking a defective product in every stage of process is obtained from the sum of the costs of reforming actions in stage j and those of product return to sub-process i. aj E
Nj X k1

! Sj k ENj ESj ! Rji k EN ji ERji 3 2

bji E

Nji X k1

Please cite this article as: Saghaei, A., et al., Enhanced Rolled Throughput Yield: A new six sigma-based performance measure. International Journal of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.002

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wj Pn

aj

k 1 ak

Pj ej Bk k Pn 1 Pq
q1

by (11)(13). 4 DPMOj 5 RTY ENj Pj

i1

eq Bk k1

EN ji

uj 1 DPMOj 10
6

106

10

ERTY where cj E

n Y j1

pj

wj

n Y j1

 11

Pn

j1

wj 1. ! EM j EX j 6

Mj X k1

j Xk

v  uY  u n DPMOj n 1 NRTY t 106 j1 weighted DPMO Here, Pn wj 1.

n X j1 j1

12

cj ~ w j Pm

j1

cj

wj DPMOj

13

v uY u m ~ 1w m1 rtyj j Overall RTY t

j1

8 3. Numerical examples In this section, two examples are used to illustrate the effectiveness of the proposed ERTY method. Assume g 1 5, g 2 10, g 3 15, r j 1, j 1,2,3, ES1 5, ES2 10, ES3 15 and mk 1, k1,2,3. In Fig. 2(a) and 2(b) we can see different rework cycles. Obviously, the process shown in Fig. 2(a) is more efcient than Fig. 2(b). NRTY and classic yield methods make similar performance results in two cases. In contrast to the NRTY and classic yield, the proposed ERTY method differentiates between two typical processes. Fig. 3 shows two different processes which have same classical yield and NRTY results for Fig. 3(a) and 2(b). The ERTY reveals more reasonable performance result. It is clear that the performance of process (a) and (b) are related to the scrap costs of the rst and third sub- processes.

~ where j 1 w j 1. Eqs. (2) and (3) successively calculate the total of reworking costs of products and that of scrap in the sub-process of jth. Formula (4) states the weight of each sub-process based on scrap and rework costs. Eq. (5) calculates the RTY of a process by focusing on importance of each sub-process. . If m products each of which has their own main processes are produced within the organization, the overall performance is obtained by using Eqs. (6)(8). Eq. (6) shows the prot gained from selling various products of the organization. The weight of each product is obtained by using Eq. (7) and nally the RTY of the organization as a whole is calculated based on Geometric mean from the formula (8). j In Eq. (2), for each j, Sk ,k 1,. . .,Nj , is independent identied j distribution and for each j,Sk ,k 1,. . .,N j , is independent from Nj. This point is likewise for (3) and (6). Moreover, classic yield can be calculated by using the following relation. Pn j 1 EN j Yield 1 9 y Assuming that in each sub-process, there is one defect opportunity then DPMOj could be dened according to the proposed model variables as (10). Then the relations of RTY, Normalized RTY (NRTY) (Pyzdek; 2003), weight-based sigma level and costbased sigma level (Ravichandran, 2006, 2007) are achieved

Pm

4. Applying ERTY on electronics industry The presented example in this section is related to real data of an electronic industry. There are ve different products (EP1, EP2, EP3, EP4 and EP5) in this industry which vary according to production rate, cost and capabilities of given processes. The production process includes case manufacturing, printing and nally assembling the electronic boards and accessories brought from the contractors as shown in Fig. 4. The whole set is then tested. The next stages include assembly control, electrical quality control, and a series of environmental tests. The main difference between processes in various products lies in the type of environmental tests. The occurred defects in each sub-process only include rework, which means the matrix A in this case is equal to zero. Moreover, all the corrections are provided at the rework stages equals zero, in other words, r j 0,j 1, y, 15. As shown in Fig. 4, all rework related to environmental tests move back to the Primary Test stage and mk 1,k 1, y, 15. To make

Scrap Rework
Fig. 1. The typical diagram of a main process.

Sub1

Sub i

Sub j

Sub n

100 1 10 20 2 30 3

100 1 10 20 2 3

30

Fig. 2. Two processes with different rework cycles.

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30 100 1

10 100

10

30

Fig. 3. Two processes with different sequence of occurred scraps.

Start

Case Print

Case Assembly

Accessories

Accessories and Boards Assembly

Boards

Primary Test

Assembling Control

Electrical Quality Control

The weight of each sub-process is obtained from the information given in Table 3 and Eqs. (1), (3) and (4). Table 4 shows the parameters estimation. The efciency of each main process is estimated with the use of Eq. (5).The performance of organizational processes is shown in Table 5 based on three methods of classical Yield, NRTY and ERTY. Regarding Table 5 it is revealed that classical yield shows a similar performance for all products by focusing on the number of output products and input resources, regardless of rework during processing. The NRTY indicator designates different performance levels to the process of products but it disregards important factors mentioned in Table 2. Finally, the ERTY method shows that the products efciency is in fact less than the estimated yield by other indicators. It can be seen that when there is an increase in the number of reworks, or when the rework cycles get bigger, or the rework occurs in the later stages of the process this difference is more severe. Accordingly, this method us able to compare organizational processes and improve them with more sensitivity. Also considering Table 4, we can identify poor sub-processes of a certain process based on its imposing costs on the organization. In order to obtain total performance of the industry, it sufces to use Eqs. (6)(8). Table 6 shows estimated price per unit and the rate of product sale in a given period of time and the nal weighted performance. v u 5 uY ~ 4 1w Overall RTY t 14 rtyj j 0:73
j1

Environment Test 1

5. Conclusions The estimation of an organizations quality level has been expanded since six sigma started to develop. However, few studies have been done in this eld. The ERTY method is a new approach for measuring the performance based on the process efciency and effectiveness. Different view of scrap and rework, calculation of rework costs according to the structure of the process and estimation of scrap costs according to the related sub-process stage are among the criteria for evaluation of subprocesses, hence a point of distinction among all current methods. Numerical examples were used to illustrate the effectiveness of the proposed ERTY method. These examples showed that the classic yield and normalized rolled throughput yield are limited indicators to report the processes performance. Finally a real example of electronics industry was presented to validate the ability of this method compared with current methods. This approach not only presents more sensitive and able criteria for the identication of low-quality organizational processes with the inclusion of scrap and rework costs, it also covers previous measurement methods based on dened variables. Since this index includes the characteristics of real processes more than the previous ones do, it can reect the

Environment Test 8

Delivery

End
Fig. 4. Electronic industry processes.

it simpler, for each product a different period of time was considered so that the process input volume for all products would be the same (y 100). The number of reworks occurred and the related total cost within a given time are estimated and shown in Table 3.

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Table 3 Number of reworks and total cost per unit in each sub-process. Sub-processes of electronic production Sub1 EP1 EP2 EP3 EP4 EP5 gk 0 2 0 0 1 1 Sub2 1 3 0 0 0 0.9 Sub3 0 0 0 0 0 1 Sub4 0 0 0 0 0 1.1 Sub5 2 1 1 1 0 2 Sub6 9 0 18 30 5 2.1 Sub7 1 0 0 0 0 2.2 Sub8 24 4 17 55 18 3.1 Sub9 26 4 51 37 9 3.2 Sub10 17 2 0 0 0 2.2 Sub11 6 0 16 0 10 3 Sub12 18 0 0 0 0 3.5 Sub13 0 0 0 0 0 2.9 Sub14 4 2 0 0 11 4 Sub15 0 0 0 0 0 3

Table 4 Efciency and weighted efciency of sub-processes. Sub-processes of electronic production Sub1 pj EP1 pj EP2 pj EP3 pj EP4 pj EP5 pj
wj wj wj wj wj

Sub2 0.99 0.99 0.97 0.99 1.00 1.00 1.00 1.00 1.00 1.00

Sub3 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Sub4 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Sub5 0.98 0.99 0.99 0.99 0.99 0.99 0.99 0.99 1.00 1.00

Sub6 0.91 0.99 1.00 1.00 0.82 0.98 0.70 0.96 0.95 0.99

Sub7 0.99 0.99 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Sub8 0.76 0.95 0.96 0.99 0.83 0.97 0.45 0.68 0.82 0.95

Sub9 0.74 0.93 0.96 0.98 0.49 0.67 0.63 0.82 0.91 0.98

Sub10 0.83 0.96 0.98 0.99 1.00 1.00 1.00 1.00 1.00 1.00

Sub11 0.94 0.99 1.00 1.00 0.84 0.95 1.00 1.00 0.90 0.97

Sub12 0.82 0.94 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Sub13 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Sub14 0.96 0.99 0.98 0.99 1.00 1.00 1.00 1.00 0.89 0.95

Sub15 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

1.00 1.00 0.98 0.99 1.00 1.00 1.00 1.00 0.99 0.99

pj

pj

pj

pj

Table 5 Comparison three performance methods yield, NRTY and ERTY. Product EP1 EP2 EP3 EP4 EP5 Yield 1.00 1.00 1.00 1.00 1.00 NRTY 0.92 0.98 0.91 0.89 0.96 ERTY 0.81 0.97 0.62 0.54 0.88

Appendix Eq. (2) provided in Section 2 can be proved as the following: E

Nj X k1

!
j Sk

E E

Nj X k1

!! Sj 9N j k

Since E
Nj X k1 N X k1

!
j Sk 9Nj n

n X k1

!
j Sk 9Nj n

n X k1

!
j Sk

nESj

Table 6 Price and rate of products sale and weighted performance of processes. Product EP1 Price per unit of products Rate of each product sold rtyj
~ 1w j

!
j Sk 9Nj

E
EP2 7.5 1.5 0.98 EP3 5.6 1 0.65 EP4 4.7 1.5 0.58 EP5 3.2 1.75 0.89

N j ESj

Therefore, E
N X k1 j where, for each j,Sk ,k1, y, Nj is independent identied distribution and for each j, S(j), k1, y, Nj is independent of Nj. k Similar to the procedure of Eq. (2) formulation, we can prove (3). Also, E(R(ji)) is obtained as below:
j X ki

9.3 2.5 0.89

!
j Sk

ENES

ENESj

performance of organization processes more and improvable points. The model is also used to evaluate the performance of processes of all organizations including production and service. This research could be advanced for systems with more complicated processes. It is also possible to dene different criteria for sub-process/product weighting according to the purposes of various organizations.

ER E r j

ji

mk g k Erj E

j X ki

mk g k Erj mk

j X ki

Eg k :

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Please cite this article as: Saghaei, A., et al., Enhanced Rolled Throughput Yield: A new six sigma-based performance measure. International Journal of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.002