There’s no such thing as a perfect process, which means that there is always a possibility of defects. Whether a company mass produces physical products or offers more intangible services, it’s always possible for a specific solution to fail to meet the expected standard. That’s why every company should track their quality data and overall defect rate.
Overview: What is population defect rate?
Population defect rate is the result of dividing the number of defects by the number of units tested. A unit could be anything from a car or new laptop to a meal at a restaurant or a ride on a roller-coaster.
3 benefits of population defect rate
Information is power, especially when it concerns processes fundamental to your company’s goals. Tracking defective products or services is essential for efficient quality control and procedural improvement, which are both fundamental to lean management.
1. Explaining losses
One of the main benefits of keeping track of defect rates is to aid in data collection and record keeping. Tracking specific sources of losses helps keep accounting clear and accurate. It also gives leaders more material to consider when making decisions.
2. Tracing problems
The real reason most companies care about calculating population defect rate is so they can start tracking down the source of their problems. Companies use a process of elimination as they examine defect rates for each part of their production process until they find the source.
3. Tracking progress
Defect rates are a benchmark statistic for many businesses. It’s a good number to know and watch to see if there are any trends or changes from period to period.
Why is population defect rate important to understand?
Like most data points, knowing your defect rate is only useful if you understand what it really means and how to use it properly.
Sample technique matters
Since most companies produce far more units of a product or service than they can reasonably test, they rely on sampling for quality control. Unfortunately, defect rates based on limited sampling are not as accurate as a test of the entire inventory. That’s why population defect rates are often reported alongside sampling data to indicate level of reliability.
Get a bigger picture
Just knowing that your defect rate went up or down compared to last period doesn’t tell you much. Leaders should always try to get a bigger picture and put this information in context with other data to determine management priorities.
It’s not always bad
Sometimes it’s simply not worth trying to fix the defect rate. It’s important for leaders to know what an acceptable rate of failure is for their particular industry and operations.
An industry example of population defect rate
An automotive maker produces vehicles in an extensive manufacturing facility that includes a lot of automation as well as skilled human workers. The company tracks defect rate as part of their basic quality assurance measures. Unfortunately, they are only able to do full operational tests on about 1 in 10 of the cars they make.
Last month the company produced 1000 cars, which means they did full quality tests on 100 randomly selected vehicles from the lot. These tests showed 2 defects. In this situation, the population defect rate is the result of dividing 2 by 100, which yields 0.02. Multiply this 0.02 by 100 yields 2, which means the defect rate is 2 percent.
3 best practices when thinking about population defect rate
Don’t let your defect rate scare you. As a leader, you need to get as much real and useful information as you can so you can make good decisions about the future of your company.
1. Consider in context
Context is always important, but it’s especially crucial when thinking about defect rates. Defect rates vary based on industry, time of year and customer preferences. Sometimes the solutions are bigger than a few tweaks in a process.
2. Redefine acceptability
Sometimes companies need to redefine the term “defect” in their environment. Quality standards obviously need to protect customers and maintain the manufacturer’s brand image, but a product is only truly defective if it can’t provide the function or value that it should.
3. Use defect tracking tools
Modern problems require modern solutions. Even small companies can leverage data and analytics without big investments into personnel and services. There are plenty of options for digital tracking tools that help companies collect meaningful data about their operations with minimal input.
Frequently Asked Questions (FAQ) about population defect rate
What is a defect?
Defects are defined by the person or company offering a particular product or service. At its simplest, a defect is essentially any unit that does not meet preset standards regarding its appearance or function.
What population defect rate is okay?
This answer is really up to each individual company. However, it’s a good idea to compare defect rates with close industry competitors to see where you fall.
Why does defect rate matter?
Defect rates matter because they can indicate opportunities for improvement. Defects are usually a straight loss for a company. In some situations, they can represent a substantial loss of time and resources. That’s why companies need to keep track of this number.
Opening eyes to opportunity
Measuring and tracking population defect rate is really just the beginning. This knowledge is only useful if leadership uses it to seek meaningful improvement within the organization. Just remember that there are usually several ways to solve each problem, so don’t get trapped trying to use methods that keep failing.