Six Sigma – iSixSigma Forums Old Forums General Advantages of RTY

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• #35397

gutierrez
Participant

Hi,
I am trying to calculate RTY in my company, but this work will need a financial source and some time. The answers of above questions will make me take a decision about the utilization of RTY as yield indicator.
1-What are the advantages of RTY compared to the others ways to control the rate of scrap and rework?
2-What is the financial return that the utilization of RTY can bring?
3-How is conduced the RTY control?
4-What is the meaning of the result of RTY? What this number show to me?
5-How to know if the result of RTY is good or bad?
I would like to know about some experience of implantation of RTY in others companies, what were the reasons, the profits, the advantages of it.
My email is [email protected].
Thanks.

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#100538

6SGuy
Participant

Hello Eduardo.  I’ll do my best to answer some of your questions.  I’ve addressed your questions in the order that made sense, which is why I’ve started with number four.
4. Meaning of RTY – RTY gives you the big picture for how good your process really is performing.  By definition, it means how much product will make it through your process the first time without any scrap or rework.  If your RTY = 60% then six out of every ten pieces will be shipped out the door without any quality issues.  Conversely, it means that four out of every ten pieces were either reworked or scrapped at some point in the process, which may be an opportunity for improvement.  Mathematically, it’s the product of all First Pass Yields (FPY) within the process.  In other words, RTY = FPY(1) * FPY(2) * …. FPY(x).
1. Advantages of RTY – The advantage to RTY is that it takes rework into consideration, whereas classic yield only accounts for scrap.  This is important because the true COPQ is influenced by both scrap and rework.  In addition, the RTY gives you a baseline for improvement.  We graph and communicate our RTY monthly to give us an indication of the direction of our business.  If we see a decline in RTY, we look at the individual FPYs to find out which aspect of our process is contributing to the decline and address the issue as needed.  Part of our strategic planning incorporates annual improvements in our RTY.
2. Financial Return for RTY – The financial return for improving a percentage point in your RTY depends on the COPQ of your processes and which process made the improvement.  In other words, which FPY(s) improved that contributed to the RTY improvement?  Once you isolate the process responsible, was it because scrap was reduced?  Or was it because rework was reduced?  If a project was initiated that reduced scrap by 3% and this resulted in a 1% increase to your RTY, then the return on the RTY 1% increase is equal to the savings achieved by that 3% scrap reduction project.
5.  Good vs. Bad RTY – This is one of those answers that people hate to hear – it depends.  Is it good if a major league baseball player safely hits the ball three out of ten times?  You bet!  That’s worth at least \$5 million in contract terms.  But is it good if three out of ten flights reach their destination on time?  Of course not.  When you start out, your RTY is what it is.  It’s a starting point to mark future improvements against – good, bad, or indifferent.  You ideally would like to see a continuing upward trend to demonstrate improvements in your processes regardless of the level of your RTY.
One point to remember is not to become narrow sighted and make improving the RTY the only goal.  Consider the following example – You are a manager in charge of a process that’s made up of three sub-processes.  Subprocess A FPY = 0.58.  Subprocess B FPY = 0.78.  Subprocess C FPY = .71.  Therefore your process RTY = .58 * .78 * .71 = .32 or 32%.  Where do you focus your improvement efforts?  If your goal is to make the largest impact to the RTY, you would look at subprocess A since it’s the lowest FPY at 58%.  But what if I told you that a percentage point increase in FPY for subprocess C is worth twice the \$\$ as a percentage point increase for subprocess A because of higher rework processing costs at subprocess C?  Moral of the story is you should always focus on what hits the bottom line the hardest.
In summary, RTY is just a metric.  It tells you where you’re at in terms of how much you do right the first time.  That’s all it does.  It’s then up to you to initiate projects in the areas where you’ll get the biggest bang for your buck in order to improve the RTY.

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#100540

Reinaldo Ramirez
Participant

Hi6SGuy:
Would you please give me and example of the RTY uses in the service industry? (a call center, a bank or the likes?
Thanks
Reinaldo

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#100546

gutierrez
Participant

6SGuy

Thank you for the answer, it was everythink I would like to read. The information you send me was very helpful to achieve my decisions.

Eduardo

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#100552

Ken Feldman
Participant

6Sguy,
Your reply first says: “RTY gives you the big picture for how good your process really is performing.  By definition, it means how much product will make it through your process the first time without any scrap or rework.”
Then you say: “The advantage to RTY is that it takes rework into consideration, whereas classic yield only accounts for scrap.”
Sounds a bit inconsistent….I think if you check this site out you might find a slightly different definition where RTY does not count the rework for the yield of the step but allows it to pass through as the input or denominator for the next step.  The RTY will be higher than the true FPY but lower than Traditional Yield.  Check out this link on the Forum:
https://www.isixsigma.com/dictionary/Rolled_Throughput_Yield__RTY-168.htm
or check the Dictionary button above and look up Rolled Throughput Yield

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#100554

Reinaldo Ramirez
Participant

DARTH:I got this information in the link you suggested:…If in order to get the yield out of each step we had to do some rework (which we probably did) then it really looks more like this:..

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#100560

6SGuy
Participant

Darth,
Let me clarify –
I stand by both my statements, which do agree with the link to the definition that you’ve provided.  I think you got caught up in my wording, which may be why you think those statements contradict.  I basically stated the same thing from two different angles.
Statement #1 – “RTY gives you the big picture for how good your process really is performing.  By definition, it means how much product will make it through your process the first time without any scrap or rework.”
This exactly correlates to that definition you linked to. It refers to what the value means.  i.e. 60% RTY = 6 out of 10 items that pass the first time (no rework or scrap)
Statement #2 – “The advantage to RTY is that it takes rework into consideration, whereas classic yield only accounts for scrap.”
Where the previous statements refers to how to interpret the value, this statement refers to what factors go into that value.  See the FPY formula below and compare it to the classic yield formula.  The classic yield does not factor in rework, while FPY does (RTY is a function of multiple FPYs)
RTY = FPY(1) * FPY(2) * …. FPY(x)
FPY formula = (Input – Rework – Scrap) / Input
Classic Yield formula = (Input – Scrap) / Input
Hope this clarifies.  Sorry about the confusion.

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#100563

6SGuy
Participant

Hello Reinaldo,
You’re asking me to go outside my manufacturing world now, which may not lead to good results, but I’ll give it a shot.  ;)
This is a very vague example so bare with me.  Assume you’re looking at cycle time for the loan approval process at a local bank.  And now assume that the loan application travels through three different departments at the bank in order to become approved.  Again, let’s assume that you promise the customer a two day approval process.  And finally, assume that you’ve been assigned to a project to find out why many of the loan applications are not complete within the two days promised to the customer.
In order to break this down, you need to take a look at each of the three departments the application travels through individually.  Then you need to define what a defect is.  Since there’s 16 hours in two work days and you promise the customer an answer within two days, you may decide it reasonable to allow an application five hours in each department (5 hours x 3 departments = 15 hours which will meet the demand of approval within two days).  In this case, a defect would be an application that sits in the department for greater than the alotted five hours.  You perform one month of data collection which covered the analysis for 250 load appliations and discover the following results:
Department A = 32 applications exceeded the five hour limit for a defect rate of 12.8% (32/250) and a FPY of 87.2% (inverse of defect rate)
Department B = 10 applications exceeded the five hour limit for a defect rate of 4.0% (10/250) and a FPY of 96.0%
Department C =  14 applications exceeded the five hour limit for a defect rate of 5.6% (14/250) and a FPY of 94.4%
Therefore your RTY = .872 * .96 * .944 = .790 or 79%
From here you would focus on Department A since it has the lowest FPY by performing root cause analysis.  Once you’ve made a change that addressed Department A, you could recalculate your RTY with another round of data collection and see how significantly you’ve improved the process.  Then with your new data, you can decide if further improvements are necessary and where they should occur.
Again, this is a pretty poor example, considering I know nothing about a loan approval process.  But maybe you can relate it to some of the transactional areas you deal with.  Best of luck.

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#100569

Ken Feldman
Participant

Sorry ur example is a bit confusing and misleading.  In order for RTY to make real sense you should also include some rejects and reworks.  Try this out:
Step A – 100 loans were started.  10 were defective due to missing information.  5 were pulled from the process and sent back and 5 were corrected on the spot (reworked) and thus 95 passed on to the next step.  Yield is 90/100 or .90 if we are thinking RTY.
Step B – 95 loans came to this department.  10 were rejected due to credit problems but 5 were reassessed (rework) and approved to move on to the next process and thus 90 passed on to the next step.  Yield is 85/95 or .89 if we are thinking RTY.
Step C – 90 loans came to this department.  10 were rejected due to appraisals being too low but 5 were reappraised (rework) and approved for loan and thus 85 loans were approved.  Yield is 80/90 or .89 if we are thinking RTY.
All in all 85 of the original 100 loans made it through the process giving us a Traditional Yield of 85/100 = .85.  But that is deceiving because it ignored the rework.   RTY would be .9 x .89 x .89 = .713
First Pass Yield would have been 70/100 or .70.  Eliminates all reworks and scrap.  Of course we may be using different definitions but putting that aside and assuming my math is correct this should help the original poster.

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#100589

6SGuy
Participant

Good example.  Much better than mine, which focused on cycle time because you were able to incorporate rework (don’t really have rework with cycle time as you do with processing errors).  Us manufacturing people have a little trouble placing ourselves in that transactional world.
Still confused, but interested, as to why you think we have different definitions.  I agree with your math in your example.  Maybe it’s just slightly different usage of the terms.  What you’re referring to as “yield” in each process step of your example (90/100 in step A), I refer to as First Pass Yield for that step.  The term “Yield” is too closely associated with the classic view of Input minus Scrap, so I differentiate “yield” and “first pass yield” within process steps.  For example –
Step A Yield = 95/100  = 95% (classic yield)
Step A FPY = 90/100 = 90%
Anyway, I think we’re saying the same thing, just a little differently.

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#100590

Ken Feldman
Participant

Agreed, just a matter of terminology which isn’t too important as long as we agree on concepts.

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