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Supplier performance and risk

PPM defect rate calculator

Enter the units received, the defective units found and the cost of each defect. You get the PPM, the defect rate and the cost of the quality problem.

PPM is defective units divided by units received, multiplied by one million. At the default numbers the supplier is at 700 parts per million, which is 0.07% defective.

Written by Procurement VMS Editorial Team · Reviewed by Michael, Procurement Advisor Expert · Updated

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Your numbers

The boxes start with an example so you can see how it works. Replace them with your own figures.

Your result

Defects per million700PPM
Defect rate0.07%
Cost of poor quality for this lotUSD 6,650

The supplier is 200 PPM above target. The cost for this lot is USD 6,650, so the case for a corrective action request or a chargeback is clear.

Defects per million700 PPM
Defect rate0.07%
Good units99.93%
Cost of poor quality for this lotUSD 6,650
Defects above target200 PPM

The currency box changes the label only. Enter amounts in the currency you choose.

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The files open with the example numbers from the page. Type yours over the blue cells in the Excel file. The calculator on this page is free to use without a form.

How the PPM defect rate calculator works

The formula

PPM = defective units / units received x 1,000,000. Defect rate = defective units / units received x 100.

Parts per million puts quality on a scale that works for small defect rates. A defect rate of 0.07 percent looks tiny, but it is 700 PPM, and at a quarter of a million units that is 175 bad parts.

Set a PPM target in the contract and measure it by lot. When the cost per defect is known, the figure also gives you the cost of poor quality, which is the number to use in a supplier conversation.

The example numbers are illustrative and are not benchmarks. Use your own data for any decision.

How to use it with your own data

  1. Count defective units found at incoming inspection or on the line, and the units received.
  2. Estimate the cost of one defect from rework, scrap and delays.
  3. Compare the PPM with the target and record it on the supplier scorecard.

Mistakes that skew the answer

Counting only defects found at receiving

Defects found later on the line or by customers belong in the supplier figure.

Leaving out the cost per defect

Without it PPM is only a rate. The cost gives it weight in a negotiation.

Comparing lots of different sizes

Small lots can swing PPM widely. Look at the trend across lots.

What to do with the result

Share the result in the next supplier review, with OTIF and price. Record each one on your supplier scorecard and, if quality problems persist, price a move with the supplier switching cost calculator.

Questions about the PPM defect rate calculator

What does PPM mean in quality?

PPM means parts per million. It is the number of defective parts for every million received.

How do I convert a percentage to PPM?

Multiply the percentage by 10,000. A defect rate of 0.05 percent is 500 PPM.

What is a good PPM target?

It depends on the part and the industry. Critical parts often carry targets of a few hundred PPM or lower.

What is the cost of poor quality?

It is the cost of defects: rework, scrap, returns, line stoppages and the time to resolve them.