Customers returned 47 defective products this month. The number represents the quantity of products that didn’t meet specification. How big is the problem? Is it getting worse?
Data that describe the state of affairs for a snapshot in time usually are not useful performance indicators. The number doesn’t provide context, making it difficult to determine whether any action is needed.
For meaningful performance indicators, it is beneficial to look at comparative ratios and performance trends.
For example, you can compute a ratio by comparing the number of defective products with the total number sold. The ratio reflects the significance of the issue. A high ratio signals potential issues with quality control and the production process.
Alternatively, you can compare the number of defects with the acceptable range. When the number sits outside, say higher than the acceptable range, it is an indication that something unusual might have triggered an anomaly. Was there problem with the input materials? Was calibration of machinery the culprit?
When you turn data for a snapshot in time into figures that have meaning, you are in a much better position to use the information for taking sound actions.