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DPMO vs PPM


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Q 78. DPMO (Defects Per Million Opportunities) is used as an alternative to PPM (Parts Per Million Defective). For customers, defective items or Non- Conforming outcomes is a prime concern and they have penalty clauses based on PPM. Companies sometimes prefer to use DPMO instead of PPM as a measure of process performance. Explain specific situations where DPMO is a better measure as compared to PPM and vice versa. 

 

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PPM (Parts per Million) is a measure for defectives, which gives an indication of the number of parts having (one or more) defects in a given population. This measure does not provide insight into the quantum of defects, since there could be parts that have more than one defect. PPM is a popular measure when dealing with proportion defectives, where large number of pieces are involved. Even one defect in a piece usually render them unusable of may have to subject it to rework. Eg. Auto components being supplied to a large automobile manufacturer. It also applies when we referring to a single quality characteristic of interest, say the weight of a bottle of packaged drinking water; Proportion of batches delivered on time.

 

DPMO (Defects Per Million Opportunities) is a measure for defects. When we deal with a part, it may be easier to express the defects per part or defects per x number of parts. Imagine, we are dealing with a process and need to express the number of defects during a certain period of time. We could say the number of defects from the process in a given period of time. However, if we need to compare the defects rate of process A and process B, it will be meaningful only if the opportunities for defects for these process are comparable. This may not be the case always, and hence the approach adopted is to pre-identify the number of defect opportunities in a given process, and use the ratio "Defects over the number of opportunities". For ease of dealing the the numbers, it is multiplied by a million and hence know as DPMO. The opportunities represent potential failure modes. For eg. DPMO can be used to express the Quality levels for a check processing activity, Knowledge transfer process, or to compare different production processes.  

 

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DPMO and PPM

Defects per million opportunity (defects is the key word) and PPM- Defective parts per million (defective is the key word)

  

A process/product where a single unit of output has multiple opportunities for error/defect/failure(A) Vs a process/Product where a single unit of output has limited opportunities of error(B). for scenario A, DPMO is more suitable because it accounts for every defect that occurs in a unit, for eg. a data entry form(a unit of output) might have 50 fields to enter, each field could be considered as an opportunity for an operator to do mistake(defect) therefore accounting each defect becomes important. But why?? When we process millions of transactions, if we don’t track exactly where we are repeatedly going wrong within the 50 fields, it become extremely difficult to prioritize for us to work on it, Secondly, per example above, there is effort in entering every field accurately and so the DPMO measure brings out the actual score that determines the accuracy of work.

 

On the other hand, PPM measure defectives, in the example mentioned above, lets say we using PPM, the operator has entered 49 fields correctly and  entered 1 wrongly, in such case it is considered as a defective form. What about 49 right fields? that’s the problem, in PPM its not accounted, it just says that the form is defective

 

Scenarios A : 100 units with 50 fields per form and we have say 50 defects(imagine there is 1 defect in each chart)

 

DPMO = (50/(100X50))X1000000=10000

99% accurate

 

Scenario B: 100 units with 50 fields per form and we have 50 Defectives (imagine there is 1 defect in each chart)

 

PPM = 50/100*1000000=500000

50% accurate

 

Therefore, I feel that DPMO over PPM will best suit where there are multiple opportunities to error in a unit of output

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DPMO

PPM

Stands for: Defects Per Million Opportunities

Parts Per Million

Result: Sigma level

Quality Level

Target: 3.4 for a world class six sigma process/service

0[zero] for a product/service

Implies: Lower the DPMO, greater sigma level=> better quality, less defect

Lower the PPM => better the quality

 

Calculation: DPMO = (no of defects/sample size x defect opportunities) x 10^6

PPM = (no of defects/sample size) x 10^6

One unit/part can have multiple defects

One part can have one defective

Total defect in a sample size CAN NOT be MORE than (sample size x defect opportunities)

Total defects CAN NOT be MORE than total quantity/sample size

Example:

 

Defects = 10

Sample size = 500

Defect opportunities/part = 5

DPMO = (10 / (500 x 5)) x 10^6

DPMO = 4000

 

For the same data, if defect opportunities per part is 25, then DPMO = (10 / (500 x 25)) x 10^6

 

DPMO = 800

 

Defectives(n) = 15

Sample Size = 500

Ppm = (15 / 500) x 10^6

Ppm = 30,000

 

If n =10 in 500 sample size then,

 

Ppm = (10 / 500) x 10^6 => Ppm = 20,000

 

if n= 30, sample size =1000, then Ppm = (30 / 1000) x 10^6 = 30,000

 

DMPO checks overall quality of a process/service[in a given sample size]

PPM generally used in production to check quality level.

 

I am not concluding which one is best both have their own uses, but as DPMO checks overall quality, sometime companies can prefer it more.

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DPMO is used in cases where there is a scope of more than 1 defect happening in a sample case whereas PPM is used in cases where there is binary result of the output being defective or non-defective. Let us first see the formulae and then cases where each of it would be used.

 

DPMU-equation4.pngimage.png.42b0329ed0440c572839ebaede521053.png

 

PPM-equation1.png

 

In every case where multiple pieces of input is required in making an output, when there is a chance of several inputs being defective, DPMO would be used. One of the examples could be filling up of the form at an Aadhar card centre to obtain a new Aadhar card. In case the government has plans to implement an e-form filling for obtaining Aadhar, then the govt. should initially measure DPMO and not PPM as by using DPMO, they can specifically understand total defects that could occur in a million opportunities and try to insert validation in the fields where there is a history of high error occurrence(while implementing online form).

 

On the other hand, when analyzing the number of call drops which occurred in connection of voice calls from one network to another, the number of calls which could not be connected because of unavailability of access points would be measured using PPM. 

 

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The difference between PPM and DPMO is that a whole product (part) is the opportunity in PPM, while in some sectors like ITeS, a unit (product) of delivery may contain many opportunities.

 

Situations, where one of the above is a better measure partly depends on defining "better for whom", for the buyer or for the seller.

 

Generally, the broader the definition of opportunity, tougher is the target. For the buyer, a tougher target always goes some way to assure a higher product quality, while for the seller, an easier target means lesser costs and higher profits.

 

For example, in an automobile component company, a part that is delivered is one opportunity. But in a Banking BPO, a form with (say) 12 fields represents 12 opportunities.

 

In the former, a target of 100 ppm means a million products with not more than 100 of them being defective. But in the case of the latter, 100 DPMO means just 83,334 forms (one million fields) with not more than 100 fields being defective. Here, 100 PPM is clearly the tougher target than 100 DPMO. However, if the opportunity is redefined as a complete form, then it is on par with the former by requiring one million forms, with not more than 100 forms having errors.

 

 

 

 

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 DPMO is an opportunity and it is more exhaustive than PPM because the later indicates the number of defective units in 1 million units. For example in Car manufacturing unit it is always better to consider DPMO because to produce one unit we have to make many operations. and in all operations there are opportunities to produce defects. Thus it is always robust because we have to accurately determine the no of ways a defect can occur and thus quality assurance would be of high standard. In any assembly operation therefore it is necessary have the DPMO calculated because PPM can only showcase the no of defective units per million and it is a straight forward approach, whereas DPMO does considers all the possible permutations to identify the no of ways error might occur.

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