DPMO Meaning: Defects Per Million Opportunities, Explained

If you spend a week producing 100 chairs, and 10 of them consistently wobble, it’s worth examining why. Imperfections are inevitable in any business, but there are ways to measure the volume of possible flaws so you address the cause in advance. This start-to-finish business examination can save you from wasted effort and unhappy customers. It’s systematized by a formula called defects per million opportunities, or DPMO.

Learn how DPMO works and how you can use it to achieve more efficient, predictable outcomes.

What does DPMO mean?

DPMO stands for defects per million opportunities, and it’s a metric designed to measure how much opportunity there is within a process for defects to occur. It looks at how many possible points of failure there are within a process—e.g., manufacturing—and how many times the process fails, creating a defect. From there, businesses can assess which points of failure are causing defects and address them to improve the quality of their output.

How to calculate DPMO

1. Determine your sample size
2. Identify the number of defect opportunities per unit
3. Find the number of defects in your sample
4. Tally the number of defect opportunities in your sample
5. Calculate your quotient
6. Multiply your quotient to find your DPMO

Here’s a formula for calculating DPMO:

[Total number of defects / (Sample size x Defect opportunities per unit)] x 1,000,000 = DPMO

To calculate DPMO, follow these steps:

1. Determine your sample size

What’s the total number of units you’re considering evaluating? Use a sample size that’s large enough to represent the scale of your process, but small enough that you can monitor each defect opportunity. For example, if you’re evaluating athletic wear and produce 10,000 pairs of pants every month, you could monitor the defect opportunities on 1,000 pairs. This way, you get an accurate picture of the process without needing to monitor an overwhelmingly large sample size.

2. Identify the number of defect opportunities per unit

For example, you could identify five defect opportunities in the manufacturing process:

• Sourcing materials
• Cutting the pattern
• Sewing the pants together
• Running them through quality control
• Packaging for distribution

3. Find the number of defects in your sample

Monitor your manufacturing process and identify the total number of defects found in the process of making 1,000 units. For example, you might identify 150 defects in your total sample of 1,000 pairs.

4. Tally the number of defect opportunities in your sample

Multiply the total number of units in your sample (1,000) by the number of opportunities for defects per unit (in this case, five). Your result would be 5,000 opportunities in this example.

(1,000 x 5) = 5,000

5. Calculate your quotient

Divide the number of defects in your sample (150) by the number of defect opportunities (5,000)—meaning your quotient would be 0.03.

[150 / (1,000 x 5)] = 0.03

6. Multiply your quotient to find your DPMO

Multiply your quotient (0.03) by 1,000,000 to find your DPMO—in this case, 30,000 defects per million opportunities.

[150 / (1,000 x 5)] x 1,000,000 = 30,000

Once you calculate DPMO, you can assess if your process is efficient enough or if it needs improvement. If your DPMO is high, the next step is to identify and adjust specific elements of the process to reduce defects. You might find the majority of defects occur during the cutting of patterns, for example, and choose to use that insight to invest in high-precision blades for greater accuracy.

When to use DPMO

Defects per million opportunities is a key metric used in the Six Sigma method for continuous improvement—a set of quality management techniques focused on improving processes by lowering and eliminating defects. Using this method, businesses strive for a lower DPMO, meaning a higher sigma level (which represents a more efficient process).

Businesses can calculate DPMO for a variety of use cases beyond Six Sigma—whenever business processes have quantifiable room for error. Here are a few common applications within ecommerce:

• Manufacturing goods. Brands manufacturing their own goods can use DPMO to evaluate every detail of their process, from sourcing materials to the operation of machinery.
• Supply chain management. Ecommerce businesses can use DPMO to assess how efficiently materials and goods move through their supply chain, making it easier to scale more products to more places.
• Order fulfillment. With DPMO, ecommerce businesses can pick, package, and ship customer orders faster after being able to identify every possible point of failure before it happens.
• Customer service. Business owners and customer service leaders can use DMPO to understand the efficacy of complex customer service experiences. From digital app glitches to inconsistencies in call centers, DPMO shows just how many people are affected by flaws left unaddressed.
• Internal processes. A tech company could apply DPMO to internal processes such as staff onboarding and recognize the need for systems documentation to better equip new employees.

Service businesses can also use DPMO to measure the potential for errors in their service delivery processes. For example, a graphic design firm might use DPMO to uncover all the possible gaps between kicking off a project and delivering to its client. A high DPMO might lead them to rethink the way they brief their team, to create a more satisfying experience for their clients.