The Royals were involved in a thrilling 3-3 draw with Norwich last weekend but McDermott insists they must be better at the back if they are to keep pace at the top of the Championship.
He said: "As a team we are creating more chances but now we need to tighten it up at the other end.
"I watched the Norwich game back again last weekend and they had four shots and scored three goals.
"If you look at our defending, we made three errors and we were punished. That won't keep happening, it just can't.
"At the moment we are an up and down team but we're still amongst it and only two or three points off the play-offs."