The management methodology known as Six Sigma strives to improve efficiency and minimize defects in any process. One of the methods that Six Sigma practitioners use to determine the efficiency of a process is measuring the defects per million opportunities, or DPMO. This method recognizes that for each component or action in a business process, multiple opportunities for defects can occur. The DPMO method allows for a more thorough evaluation of business processes.
The Six Sigma methodology defines a defect as a difference between the desired and actual outcomes of any business process. Each step in a process can contain multiple opportunities for defects. Each defect must be counted toward the DPMO calculation. For instance, a data entry technician can enter erroneous data into three fields of an online form. Each field that contains erroneous data can be classified as a defect in that form, so the single form contains three defects.
An opportunity includes any step in a business process during which a defect can occur. Since most business processes involve multiple opportunities for defects to occur, the Six Sigma method uses the number of opportunities, rather than the number of completed processes, to determine efficiency. Using the above example, the data entry technician must enter data into 20 fields correctly to complete the data entry process. Each field represents an opportunity for a defect, so the form completion process contains 20 opportunities.
The calculation process itself is relatively simple. The DPMO is the ratio between the number of defects and the number of opportunities, multiplied by 1 million. Most businesses use samples to determine the full extent of the DPMO. In the example above, a data entry form contains 20 fields. A sample of 200 forms was evaluated. The evaluation found 500 total defects in the 200 forms. The DPMO calculation would look like this:
[(500 defects)/(20 opportunities/form) x (200 forms)] x 1,000,000
= [500/4000] x 1,000,000
= [0.125] x 1,000,000
= 125,000 DPMO
Uses for DPMO
Six Sigma experts use DPMO to measure how efficiently a business conducts its processes. Each “Sigma” represents a step above the average performance. A score of 6.0 Sigma equals 3.4 DPMO, or a 99.9997% defect-free rate. A DPMO count of 125,000, from the example above, results in a 87.5% defect-free rate and a score of 2.65 Sigma.