DPPM (Defective Parts Per Million) Reporting - Large Quantity Approach

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Lpitt56

#1
We are looking at changing our DPPM metric and want to see how other companies are calculating this metric. Currently if a supplier provides a direct deliverable part we count that as one part (even if that part is made up of 40detail parts). We also count kits received as one part received. Then calculate DPPM based on parts rejected vs parts received.

However, we have many suppliers who provide us with a direct deliverable as mentioned above (one part made up of 40 or more detailed assemblies) and he still only gets credit for shipping one piece. We are looking at changing our method of to give credit to the supplier for all components parts shipped (i.e. credit the supplier with shipping 40 pieces when we recieve the one direct deliverable).

We feel this will be a more acurate and fair method, but we want to know what others are doing who might have the same situation.
 
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Marc

Hunkered Down for the Duration with a Mask on...
Staff member
Admin
#2
Can anyone here help with this one? My Thanks in advance!
 
T

tomvehoski

#4
Unless you are buying millions of these things, scrap the focus on number of parts/assemblies and focus on dollars. PPM is only useful if you are comparing the exact same (or very similar) items.

Vendor A:
Complex assembly. $10,000 each. 10 per year. One unit was rejected at receivieng, so their PPM is 100,000. Say they fix it the next day for free. You lose about $100 in time with the paperwork, CAR, phone calls, etc.

Vendor B:
Small components. $1 each. 100,000 per year. They run about 1% defective, which causes your assembly line to incur $10 of cost for rework for each instance. Their PPM is 100.

According to PPM, Vendor B is better - but they wasted 10 times more of your money and time.
 
L

Lpitt56

#5
Thanks for the reply and yes I agree that dollars would be a better indicator. However, I am locked into a supplier rating software package that is mandated by our corporate office and my only option is possibly giving credit for more parts shipped. A good example of the situation I see is with kits received. We purchase a kit under one part number. The kit may contain as many as 40 parts but we receive it under one part number in the system. I do have the ability to credit the supplier with the total number of parts in a kit without messing up the receipts. We have the same situation with direct deliverables where a part is received that is made up of maybe 60 or more subassemblies. Currently the supplier get credit for shipping one part. The reason for my concern is that we have some very good suppliers that are showing a high DPPM when they are actually just not getting credit for all the good parts they ship. Before I make this change I want to see what other are doing that might be experiencing the same situation.
 

Bev D

Heretical Statistician
Staff member
Super Moderator
#6
We purchase a kit under one part number. The kit may contain as many as 40 parts but we receive it under one part number in the system.
We have the same situation with direct deliverables where a part is received that is made up of maybe 60 or more subassemblies. Currently the supplier get credit for shipping one part.


The reason for my concern is that we have some very good suppliers that are showing a high DPPM when they are actually just not getting credit for all the good parts they ship. Before I make this change I want to see what other are doing that might be experiencing the same situation.
In either case can you use the one part number' (Kit or top level assembly) if one or more sub parts are bad? if no then stick with your current system.

This is about the suppliers effect on your business, not about being kind to them. I'm sure you pay more for the part number with multiple sub-assemblies and for kits than you do for single parts. The supplier knows what his responisbility when he signs the contract.

DPMO is only really useful (fair doesn't come into the question) when comparing relative final quality and improvement progress between disaprate products, lines or facilities and then ti really only serves to stave off the 'it's not fair whining' and focus the groups on the real goal which 'zero defects' or some other high quality level...
 
T

tomvehoski

#7
Thanks for the reply and yes I agree that dollars would be a better indicator. However, I am locked into a supplier rating software package that is mandated by our corporate office and my only option is possibly giving credit for more parts shipped.
If corporate only gave you a hammer, would you use it to torque a bolt to 30 lb-ft? Bad metrics (or tools) can be more dangerous than no metrics. I do sympathize with upper level mandates to fit a process to the wrong tool. I've been arguing with customers and our registrar as to why I won't put any effort into PPM since it does not work well in our batch manufacturing.

You could still code dollars as PPM. If a unit is $2 and you buy 100,000 - that is 200,000 opportunities. If issues cost you $500, your PPM = $500/$2K X 1M, or 2500 PPM.
 
L

Lpitt56

#8
Thanks for the reply and input! I probably used the wrong terminolgy when I said "fair to the supplier". In actuality I want to make sure my attention is on the real problem suppliers. For example our system has some auto triggers that require I visit a supplier or in some cases de-source a supplier that can't get to a gold level we have set, when in reality they are not my problem supplier. In a perfect world I would fly to corporate and tell them to change metric to something more appropriate to my needs but I could also come back unemployeed. Our target is always zero defects and we communicate that relentlessly to our supplier base, but right now I am looking for a real-world workable solution.
 
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