DPMO (Defects Per Million Opportunities) Calculation



DPMO calculation

Hi all

I am in a strange situation. The following is a quick run down of what I have- The question follows after that.

1. My companyt has about 4 plants. They have no formal receiving inspection.

2. We are in the consumer product industry and so our customers are the big retail outlets.

3. all customer returns are directed to a warehouse in Mexico. There is a quality manager at this warehose who inspects 100% of the returns. He fixes what he can and what cannot be fixed is sent back to the supplier.

4. some products are finished goods from our suppliers in the far east and some are assembled in Mexico. (Components could be brought in from domestic or overseas sources or some components may even be manufactured by our factories)

Question: I have been asked by senior management to come up with a process of calculating DPMO of all the suppliers keeping in mind that we don't have any receiving inspection.

Is this possible ? how do you think I can do this ? Should I try to set up a system at our suppliers ? I am open to any/all suggestions.

Elsmar Forum Sponsor

Rick Goodson


Can you give us a little more information.

First, it appears that you buy both components and finished goods from the far east and that the components brought in from the far east are assembled with components that you manufacture in Mexico. Final product is either bought from the far east or is manufactured in Mexico from both mexican and far east components? If the final product is bought from the far east, do you do any inspection or test on it?

Second, what type of quality program exists within the four plants? Do you currently have any manufacturing/assembly metrics you track.

Third, do you have any type of corrective action system in place both internally and with your suppliers?




In explanation to your questions:

1. We have some products that are finished goods from the far east.

2. The other products are assembled and finished in Mexico. The components from these could come from the far east or domestic suppliers or even by our own plants.

3. We basically don't have any kind of receiving inspection at any plants. A receibving clerk merely receives the finished goods or components and enters that into our network.

4. we do not know our products are good or bad till our customer starts returning them to us.

WE just give specifications to our suppliers, do the first article, OK for production and then assume that all the production parts frpom then on are OK. I know it is primitive thinking in this day and age ! Our management ( new fresh blood) has therefore strted introducing Six Sigma, and all other pertinent quality concepts. This particular exercise is a part of this drive.

I hope I have made clear the situation.

Faujix, I would start with the Quality Manager in Mexico.
At that point start gathering data and classify it into the categories you wnat to monitor.
EX. Type of defect, Supplier, Plant, Finished Product, Reason for Return, Qty of defects, Qty of Product .. . . . . etc.
Once the data is collected you can analyse it and prepare the nexessary reports.

Geoff Cotton

Quite Involved in Discussions

This may be side tracking a little but, have your "new" management team worked in a six sigma environment or have they picked up a few buzz words from magazines etc...?

If its the later you may have a bigger problem than you think.:frust:

Regarding your questions... A lot depends upon how sophisticated your systems are at measuring process yeild etc. If they are very "basic" I would keep the measurment "basic" and analyse External PPM to begin with.

What do they intend to do with the information?

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