What gets measured gets done. It might be an old cliché, but it still rings true for manufacturers today. Only by collecting the right data in your business can you make steps to improve. But which measures should you rely on? How can you know you’ve got your finger on the “quality pulse” of your business?
A reputation for great quality will lift any company above the competition. And poor quality will lead it to the depths of business despair even quicker. The reality is that capturing the right quality metrics is critical for manufacturers of every size, in every industry.
Why? Because the right metrics can give you a holistic picture of what’s going on in the business and help you identify areas where you can improve processes and enhance efficiency. With the right quality metrics, you can also ensure you’re meeting internal and external quality and compliance standards too. These days, that’s not something to take lightly.
Let’s get down to specifics. Here we highlight five metrics that can form a framework for good quality controls…
RIGHT FIRST TIME ROUND
How many products reach the end of the production line and are dispatched to the customer without the need for rework? This is an essential measure that determines whether the production process has an inherent problem, as well as measuring any resultant waste.
There are a number of quality measures relating to products coming out of the production line. Here are three you should know:
- Overall yield: Products manufactured that meet quality and compliance standards without any reruns, rework or scrap.
- First pass yield: Number of units that leave the production process divided by the number going in over a specific time slot.
- ‘Not right first time’ (NRFT): Defined by the Quality–Cost Delivery system (QCD) as a measure of products produced with some sort of defect.
For example, many of our customers use iDSnet to capture and report on the quality metrics, including number of rejects, the reason for rejects (via reject codes) and the number of rejects in a set time period. If rejects exceed the normal tolerance level, the operator can assess the situation and fix the issue before there’s any further wastage.
Keeping on top of operational costs is critical to business profitability, so you need to know the percentage of materials sent to production that don’t make it into a finished product. This is the scrap rate – in other words, the amount of scrap your company produces.
Companies that employ a lean manufacturing philosophy might go further and measure defects per million opportunities (DPMO), also known as parts per million (PPM). This is a measure of defects recorded in every million products produced, and can form a valuable benchmark of business performance and capability.
SUPPLIER DEFECT RATE
If your production line has a multi-tiered and complex supplier base, the Supplier Defect Rate becomes an important measure. This is the percentage of materials and products received along the entire supply chain that fail to meet quality and compliance specifications. Again, you would use the DPMO or PPM method above. For example, if you had 25 defective pieces in a shipment of 1,000 pieces:
25/1000 = 0.025 or 2.5% defective
0.025 X 1,000,000 = 25,000 PPM
The Supplier Defect Rate becomes a benchmark to measure suppliers against. For every defective supplier part, your production line is at risk of disruption and your product quality is compromised. So, depending on the complexity of the supply chain, you may also need to measure your supplier’s supplier quality too.
The cost impact of poor quality supplier parts extends beyond mere replacement of any defective parts; one defective part can disrupt production across multiple and dependent lines. Before you know it, output has come to a standstill. Supplier chargebacks is a measure of the amount of money charged back to suppliers for those parts that don’t meet your quality and compliance specifications.
You can also record the wider impact costs of defective supplier parts by measuring non-material costs, such as the impact on overall production times, cost of carrying inventory, late delivery costs, and so on. Sometimes, this can be more costly than the material expense.
Are you listening to what your customers are saying? Build customer feedback into your quality metrics:
- Rejects: How many times do customers reject products or request returns of products for different reasons?
- Complaints: Nature of customer complaint – was the complaint resolved and how long did it take?
What matters is not just how you collect the data, but how you continuously collect, analyse, and act on feedback to improve the business. Building this capability and culture can take time, but it’s a rewarding investment.
Establishing a framework of good metrics is essential to ensuring quality in any business. By first understanding what is happening, you can start focusing on the “WHY” and make steps towards moving your manufacturing business to the next level.
Speak to our team at Matthews Australasia to find out how we can help you capture the right data in your production line.
You will also find lots of valuable information in Matthews’ expansive resource library. And it’s all free to download! There are case studies, whitepapers, presentations we’ve done to industry bodies, infographics for manufacturing, articles from our thought leaders, vids showing solutions in action, lots of detailed of brochures and more!
Image credit: iStock / smiguli