Yield — Manufacturing Glossary

Yield in manufacturing is the percentage of good, usable units produced from the total units started in a production process. A yield rate of 95% means that for every 100 units started, 95 meet quality standards and 5 are scrapped or require rework. Yield directly affects MRP order quantities, material costs, and production scheduling.

At User Solutions we see yield as one of the most impactful yet frequently overlooked planning parameters. Inaccurate yield factors cause consistent over- or under-production — both of which disrupt schedules and waste resources.

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How Yield Works in Manufacturing

Yield losses occur at multiple points in the production process:

• Material yield — raw material loss during cutting, machining, or processing (e.g., chips, shavings, offcuts)
• Process yield — units rejected during manufacturing due to defects, dimensional errors, or equipment malfunctions
• Inspection yield — units that fail final quality inspection

Yield in MRP Calculations

MRP uses yield factors to inflate order quantities so that enough good units emerge from production:

Start Quantity = Required Good Quantity / Yield Rate

This adjustment happens automatically when the item master contains an accurate yield percentage.

Cumulative Yield

When a routing has multiple operations, each with its own yield rate, the cumulative yield is the product of all individual yields:

Cumulative Yield = Yield(Op 1) × Yield(Op 2) × Yield(Op 3) × ...

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Yield Example

A manufacturer produces precision ground shafts through a 4-operation process:

Cumulative yield = 0.98 × 0.95 × 0.97 × 0.99 = 89.4%

A customer order requires 200 good shafts. MRP calculates:

Start quantity = 200 / 0.894 = 224 shafts

The manufacturer must start 224 to expect 200 good units at the end. This means:

• Raw material: enough steel for 224 shafts (not 200)
• Machine time: capacity for 224 at Op 10, then approximately 220 at Op 20, etc.
• Scrap: approximately 24 shafts lost across all operations

If the planner ignores yield and starts only 200, they will likely finish with only 179 good shafts — 21 units short of the customer order. This triggers an unplanned second run, consuming additional setup time, material, and capacity that was already allocated to other jobs.

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Why Yield Matters for Scheduling

Determines true capacity needs. Scheduling must account for the start quantity, not just the finished quantity. A job requiring 200 good parts but needing to start 224 consumes 12% more machine time than the planner might expect if yield is ignored.

Affects material planning. MRP uses yield to calculate gross requirements for raw materials. A 10% yield loss means 10% more material must be purchased — a significant cost impact at scale.

Drives scheduling accuracy. When scheduling tools like Resource Manager DB calculate operation times, they use the adjusted start quantity at each step. Accurate yield data ensures realistic schedule durations.

Identifies improvement opportunities. Tracking yield by operation reveals which processes have the highest loss rates. A grinding operation at 95% yield might justify tooling investment that could raise it to 98% — recovering significant capacity and material cost.

Feeds closed-loop MRP. Actual yield data from completed work orders should be compared against planned yield. When actuals consistently differ from plan, the yield factor in the item master needs updating.

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Related Terms

• Work Order — The production authorization that tracks actual yield against planned yield for each production run.
• Gross Requirements — Total material demand that is inflated by yield factors to account for expected losses.
• Bill of Materials (BOM) — The component list where yield-adjusted quantities determine how much raw material each product requires.

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FAQ

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This term is part of the Manufacturing Glossary. For a deep dive into material planning, see our MRP Guide.