How to Measure Quality in Manufacturing

Understanding a handful of the most important KPI's is the first step toward increasing consistency in the quality of your facility’s production operation. There are five key performance metrics in manufacturing to consider to obtain right-first-time quality.

How to Measure Quality in Manufacturing

For manufacturers in any industry, the goal is to consistently provide customers with high-quality products. While ensuring customer satisfaction is the key to operating a successful business, effective quality control is also essential for preventing unnecessary losses. Not only will customers be less inclined to buy a product that is likely to break or need replacing, but the cost of performing re-work on sub-par items can be exceptionally high.

All of this begs the question: How can you ensure consistently high quality in manufacturing? The answer lies in measuring and tracking five critical metrics that together can illustrate a clear picture of your facility’s volume, quality, and efficiency. Using that information, you can identify areas in which you are succeeding as well as areas of opportunity. By tracking these key performance metrics, also known as KPIs, you can monitor and improve the quality of the items you are producing and ultimately increase consistency.

Understanding a handful of the most important KPIs is the first step toward increasing consistency in the quality of your facility’s production operation. Consider these five key performance metrics for manufacturing:


1. Yield

Yield is perhaps the simplest and most basic KPI to examine when you’re trying to measure quality in manufacturing. Yield refers to the number of quality products that your facility has produced within a designated time period. A quick math calculation can determine your first-pass yield or the yield without any re-running. Divide the number of quality units produced by the total number of units produced. To calculate overall yield, you’d perform the same equation but you would include any products that you may have re-run to rectify quality issues that may have occurred during the first pass.

You will typically find that your overall yield is higher than your first-pass yield, but the goal is to get your facility into a place where the difference is nearly negligible. When you see a substantial discrepancy between the two, it’s a sign that your quality control procedures aren’t as effective as you want them to be. 

Ultimately, when you can produce a high number of quality units during your first pass, it increases your profit margin and saves you money in the long run.


2. Scrap Rate

In the context of manufacturing, scrap is a word used to describe units that have any sort of defect that prevents it from being sold. In some cases, a unit may be considered scrap because of issues with materials, and in others, it can be due to issues in the production process.

The scrap rate is a metric in the form of a percentage, which is measured by dividing the number of scrapped units by the total number of units your facility produced within the same time frame. While a zero scrap rate is ideal, it’s also virtually impossible to achieve. However, you should aim to get your scrap rate as low as possible, ensuring that the overwhelming majority of products produced in your facility meet acceptable quality standards. If the issue lies in the materials you are using, it’s worthwhile to address it with complain to the supplier or submit a supplier chargeback.


3. Supplier Defect Rate

The quality of the materials you use in production is vital to the success of creating a high-quality product. Supplier Defect Rate refers to the percentage of materials that you receive from suppliers that meet your quality standards. If you receive materials that fall short of your quality standards, you cannot use them and therefore they’re nothing more than waste.

Most of the time, you will have relationships with and receive materials from multiple suppliers. It is important that you calculate the Supplier Defect Rate for each of your suppliers so that you can pinpoint which suppliers consistently deliver high-quality materials. If you determine that a particular supplier has a high defect rate, you may not want to continue purchasing materials from them.


4. Customer Complaints

The value of feedback from your customers cannot be understated. When you see specific complaints or issues appearing time and time again, you can likely trace them back to a specific area of improvement, which may be in the realm of quality control. It’s worthwhile to track the number of customer complaints you receive in a designated time frame and compare it to the number of complaints you resolve within that same period. As you attend to each customer’s issue, you will find ways to continuously improve your product as well as your operations.

There are additional KPIs that are helpful at measuring customer satisfaction, too. Churn rate illuminates how long you’re retaining your customers, and you can also track how much it costs your company to acquire each new customer. Many times you will find that it’s more cost-effective to focus on retaining the customers you have instead of striving to acquire new ones.

5. Supplier Chargebacks

It’s inevitable that at some point you’ll receive shipments from suppliers that contain materials of substandard quality. When this happens, you can issue a chargeback to combat the issue. Sometimes a chargeback for poor-quality materials will cover the cost of the materials and other times it will also cover shipping costs and labor charges. When you track the amount of money you get back by issuing chargebacks, you can measure how much poor quality within your production facility costs you over time.


Increase Your Shop’s  Quality with Freedom

Freedom AI’s Analytics Intelligence platform makes it easier to track and monitor some of  these vital KPIs, enabling you to reduce labor costs and increase product quality. By using Freedom AI, you’ll save time, increase your facility’s output without increasing overtime, and reduce the amount of time you need to allocate to maintenance and downtime. Freedom AI also offers real-time insights, alerts, and notifications that can assist you in maintaining smooth and optimized operations within manufacturing facilities.

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