Re: How do you decide what is acceptable internal or external PPM number?
Great Question.
I believe that your goal should be reduced by 50% year over year with the ultimate goal of 0 ppm.
Your PPM also depends on the type of product that you are making. For example for machining type operations 0 ppm is achievable (back in 1997-1999, my company was at 0ppm for about 24 months supplying both Ford and Chrysler). For companies that make appearance items, it is a lot more difficult. Subjectivity in criteria such as color harmony and gloss is all over.
Another issue is how does your customer handle rejects. Some companies (Honda for example) every reject is written up as an HTR and counts against your PPM. Other OEMs can be more lenient based on your relationship and how fast you respond to concerns.
For internal PPM it is more complex, all depending on your operations, technology, experience of employees and available resources to reduce ppm. Internal PPM should be no more than 10x higher than your external ppm.
A good rule of thumb is to reduced by 50% every year. (more aggressive is OK).
In general to drive PPM down to close to 0, you must have or create a problem solving culture where everyone understands root cause analysis (prefer 5 Why analysis with concise problem statement, combined with review by experienced problem solver) and know how to fix issues at a reasonable cost using poke yoke (yes, do not need an $100,000 vision system to fix it).
New launches should be included in your PPM calculations from the first day of production. To keep your PPM low during a launch, consider processes like GM GP-12 or similar and use the data to address the issues found during your GP-12 activities.