Formula
Defect Rate = (Number of Defective Units ÷ Total Units Produced) × 100
Calculation Example
If a factory produces 100,000 units and 2,000 are defective, Defect Rate = (2,000 ÷ 100,000) × 100 = 2%
Data Source
QA Reports, Manufacturing Data, ERP Systems
Tracking Frequency
Weekly, Monthly, Quarterly
Optimal Value
Lower is better; below 2% is ideal.
Minimum Acceptable Value
A high defect rate suggests quality control failures.
Benchmark
Industry benchmarks: Automotive ~1-3%, Electronics ~2-5%, Consumer Goods ~3-7%
Recommended Chart Type
Line chart (to track trends), Bar chart (to compare production lines)
How It Appears in Reports
Displayed in quality assurance reports to assess manufacturing efficiency.
Why Is This KPI Important?
Indicates production quality and consistency.
Typical Problems and Limitations
May not differentiate between minor and critical defects.
Actions for Poor Results
Implement stricter quality checks, improve supplier material quality, enhance employee training.
Related KPIs
Return Rate, Downtime Rate, Production Efficiency
Real-Life Examples
A smartphone manufacturer reduced defects from 5% to 1.5% by upgrading inspection systems.
Most Common Mistakes
Focusing only on reducing defects without balancing production speed.
