Measuring of Rate of Damaged Material by Error of Workers

WinningKPI - Manufacturing - KPI for Measuring of Rate of Damaged Material by Error of Workers posted in category Manufacturing

KPI details:

This indicator is for measuring the cost of the damaged material by error of works as a % of the total material, in a given time period. This is calculated by measuring what percentage of cost the damaged material covers over the entire material cost.

It is in the company’s interest to minimise this KPI, as damaged material incurs a high cost for the company and decreases ROI.

Although a certain rate is acceptable (e.g. due to working conditions, long working hours etc), the company may choose to put in place practices to minimise this KPI as much as possible. This can be done through staff training, better machinery, better manoeuvre practices etc.

Formula:

Total cost of material damaged by worker error/ total cost of material x 100

KPI Unit: %

KPI Time Frame: update annually

Posted by Oana Boteanu | Help to protect community: Flag for moderation

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Here are comments:

Example:
A manufacturing company measures the Rate of Damaged Material by Error of Workers over a 6 months period.

Formula:
Total cost of material damaged by worker error/ total cost of material x 100

Total cost of material: 150 000
Total cost of material damaged by worker error: 18 000

Rate of Damaged Material by Error of Workers:
18 000/ 150 000 x 100 = 12 %

The total damaged material accounts for 12 % of the total material cost.
Although this figure could be seen as moderate, it does represent a high cost to the company and should be minimized.

Oana Boteanu | September 13, 2012 at 9:54 am

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