Six Sigma is an approach to improving the quality of products and services that are made using a process. Almost every business can benefit from systematizing their approach (the company’s “way of doing things”) into a process. And, Six Sigma is a way to reveal improvement opportunities within that process.
The term “throughput yield” (or “first pass yield”) describes what products and services are produced from a given process. It identifies what is produced for what is put in. In other words, your company may purchase 2 tons of something in order to produce 1 ton of something else. Throughout the course of your process, your company changed the 2 tons of materials into 1 ton of sellable goods. In Six Sigma terminology, your throughput yield would equal 0.5, or the result of 2 tons of input / 1 ton of throughput.
So why does that matter? The throughput yield (or TPY) is a measurement of efficiency. Although it is easies to describe in regards to a company that produces tangible products, the measurement can be used to gain insight no matter the company or industry.
Improving efficiency obviously increases our profitability. One of the clearest ways of defining this is by noting the efficiency in our own process – measured by TPY.
Setting a standard efficiency rating for your company operations is the first step in improving its efficiency. After the standards are set, be sure to measure your various activities. Tracking the actual scores against the target efficiency rate can help your company stay accountable to its goals.
- Eliminate unnecessary steps, or said differently, steps that your clients are not willing to pay for
- Offer less services/products
- Create specialists within your company
- Share best practices internally
- Review client roster and look for clients that take more resources than they can support