Internal PPM measures the defects your own inspection finds before parts leave the building. Customer PPM measures the defects the customer finds after delivery. Both use the same formula, but the numerator and denominator come from different places. Internal PPM = (Rejects at Internal Inspection ÷ Units Produced or Inspected) × 1,000,000. Customer PPM = (Units Rejected by the Customer ÷ Units Shipped to That Customer) × 1,000,000.
The two numbers tell different stories. A high internal PPM with a low customer PPM means the process makes defects but inspection is catching them; you are paying for sorting and scrap. A low internal PPM with a high customer PPM means defects are escaping, which is the more dangerous situation. The goal is to drive both down, but customer PPM is what contracts are written on.
Customer PPM is normally calculated per customer and per month from their rejection reports, using the quantity you shipped to them in that month as the base. Some customers count the whole rejected lot, others count only the defective pieces found; agree the counting rule before the first shipment.
Standard Procedure
- 1Pull the internal reject count and the production or inspection quantity for the month.
- 2Calculate internal PPM.
- 3Pull the customer's rejection count and the quantity shipped to that customer in the same month.
- 4Calculate customer PPM using the counting rule agreed with that customer.
- 5Compare the two figures and classify the month as "catching" or "escaping".
Lesson Summary
- ✓Internal and customer PPM share a formula but use different counts and bases.
- ✓A large gap between internal and customer PPM means inspection is working but the process is not.