Factory Production Loss: 5-10% Yield Defects Cost SGD 50K-500K/Year
Electronics manufacturer SGD 10M/year production. Defect rate: 7% (industry avg 5-8%). Defective units: 7,000. Cost per unit: SGD 50-200 material + labor. Total loss: SGD 350K-1.4M. Root cause: Line 3 (overnight shift) has 10% defect rate vs Line 1 (day shift) 4%. Fix: shift supervisor training = recover SGD 3K/month immediately.
Why Manufacturers Bleed Profit#
Most factories track "total output" but not "quality output." SGD 10M production looks good until you realize 7% is scrap. That's not 7% of profit (maybe 20-30% of profit is scrap). Line-level visibility: Line 1 (4% defect) is efficient, Line 3 (10% defect) is broken.
The Hidden Cost Structure#
Manufacturing SGD 10M: material SGD 6M (60%), labor SGD 2M (20%), overhead SGD 2M (20%). 7% defect on SGD 6M material = SGD 420K material loss. Plus: rework labor SGD 3K per unit × 700 units reworkable = SGD 210K rework cost. Scrap (irreparable): SGD 210K lost. Total defect cost: SGD 630K-840K (6-8% of revenue).
Line 1 (day shift): 4% defect.
Root Cause Analysis (AskBiz Tracking)#
Line 1 (day shift): 4% defect. Line 2 (afternoon): 6% defect. Line 3 (night): 10% defect. Root cause: night shift supervisor less experienced. Recommendation: rotate supervisor training, shift incentive for quality.
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AskBiz Production Yield Monitoring#
Real-time defect rate by line and shift. "Line 3 night shift: 200 units produced, 20 defective (10%). Alert: defect rate 2x average. Compare: supervisor changed last week, training incomplete. Recommend: restart supervisor training."
- Electronics manufacturer SGD 10M/year production.
- Defect rate: 7% (industry avg 5-8%).
- Defective units: 7,000.
People also ask
What's an acceptable defect rate?
Electronics: 2-5%. Mechanical: 1-3%. Food/beverage: 0.5-2%. Anything >5% suggests process issue.
How do I reduce defect rate?
Statistical process control, staff training, equipment maintenance, material quality checks, shift incentives for zero defects.
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Track Production Yield (Recover SGD 50K-500K/Year)
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