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Goldie Socks

Goldie Socks

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Published by: weekesg on Nov 10, 2010
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11/10/2010

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RTY, PCE, PLT, WIP, FTY and VAT Or GOLDIE SOCKS AND THE THREE LETTER ACRONYMS

All rights reserved Newcrest Mining Ltd

What was going on and how could he make the customers more gruntled? All rights reserved Newcrest Mining Ltd .Once upon a time there was manager who ran a factory that made TLA¶s (Three Letter Acronyms) for a voracious market. TLA·s R Us He thought that his factory was doing really well but he was getting caned in the marketplace by his competitor (TLA World). Market surveys showed that his customers were disgruntled at not getting their TLA¶s delivered on time for their elevator speeches and soundbytes.

All rights reserved Newcrest Mining Ltd . Goldie figured out that he would have to improve the effectiveness of the factory.To help solve the problem he enlisted the services of Goldman Socks. a world famous Six Sigma Black Belt.

Goldie first focussed his attention on the warehouse. It looked like this: He saw a great opportunity to reduce the PLT (Process Lead Time). All rights reserved Newcrest Mining Ltd .

Goldie recognised that there was also a Time Trap.Goldie knew that PLT= WIP/Exit Rate. This immediately halved his PLT from 1 minute to 30 sec. There were TLA¶s lying around the place everywhere in internal inventory. so he introduced a Capacity Improvement. so he first looked at the process WIP (Work In Process). The factory still wasn¶t producing TLA¶s fast enough. as shown: This was great but not good enough. The PLT was now just 21 seconds. so he halved this number from 6 units to 3. Goldie was pleased but still not completely happy. All rights reserved Newcrest Mining Ltd .

This was much less than industry average.5/40 =3. as a result reducing WIP to just 40 TLA¶s.4%.Goldie then looked at the entire factory to check its PCE (Process Cycle Efficiency): It was taking 5 days altogether to produce TLA¶s. Exit Rate was 20 TLA¶s per day and WIP was 100 units. Goldie set about to reduce the internal inventories.75%. The PCE is calculated as: PCE= VAT/PLT =1. But still Goldie was not finished! All rights reserved Newcrest Mining Ltd . The PLT was halved to just 2 days and the PCE subsequently increased to 9.

³But my process yield is 90%´ said the Manager. ³Ah´ said Goldie. So Goldie recommended improvements to the Word-smithing section so that the number of faulty TLA¶s produced fell to almost zero. The RTY subsequently increased to 90%! All rights reserved Newcrest Mining Ltd . where faulty FLA¶s (Four Letter Acronyms) were being reworked into the much more desirable TLA¶s. Your RTY (Real Throughput Yield) is really only 63%.He noticed a dreaded ³Hidden Factory´ in the process. ³That is your FTY (First Time Yield).

³Golly!´ said the Manager. All rights reserved Newcrest Mining Ltd . ³You just saved me a lot of money´. looking at his new process.Finally Goldie was happy. So he gave the Blackbelt $10M.

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