Of all the components comprising the cost structure of manufactured goods, material cost is one of the most expensive for almost any industry.Â
Of course, without raw materials and components, there would be no production. But if too much material is rejected owing to its poor quality, it can negatively impact a company’s profit margins.
Across industries, rejected material is referred to as “scrapâ€. Few things get the attention of management like high scrap rates. The issue is so critical that, similar to labor and equipment utilization, programs to reduce scrap are almost always an essential part of manufacturers’ continuous improvement initiatives.
Manufacturers have to take into consideration scrap rate as opposed to focusing solely on creating maximum output, to ensure optimal profit.
But what exactly falls into the category of “scrap†material? How can managers actively strive to reduce the amount of scrap generated? Read on to find out!Â
In this article, we will delve into the concept of scrap, the method to calculate your scrap rate, and explore strategies that you can deploy to reduce scrap and rework in your manufacturing operations.
What is scrap?
Manufacturing scrap is the unusable material from a manufacturing operation that will be discarded.
Scrap can be subdivided into several categories while used as a general definition for all rejected material. First, there’s scrap that’s rejected in raw material form.Â
It may be due to spoilage, or it may be due to off-specification performance characteristics such as tensile strength or shatter point. This material has had no additional processing or partial processing added to it.
Second, there’s scrap that has been partially processed. Many manufactured goods are produced in stages of a production process, and failure at any one step can mean that the part must be rejected.Â
This is more expensive than scrapping raw material since additional value has been added to the partially finished part.
Third, finished goods must be scrapped due to failure to meet specifications. Some can be reworked to adjust the part or turn it into something else. Others may require complete scrapping if no rework can be performed.
The magic of data: A method to measure your scrap rateÂ
What is scrap rate in manufacturing?
Scrape rate is a measure of production quality and output that helps manufacturers gauge the efficiency of their processes. A low scrap rate suggests an operation is manufacturing at high efficiency, and a high scrap rate may mean that the organization is suffering from quality control issues and a lower level of operational efficiency.
How is manufacturing scrap rate calculated?
Put most simply, the formula for scrap rate is simply a function of the number of unusable units divided by the number of total units produced. In theory, this is the opposite of first-pass yield, which looks at the number of usable, or quality units produced divided by the total number of units produced.
Scrap rate = Unusable units / Total units produced
Applying dollar values to these scrap parts allows manufacturers to engage in a manufacturing scrap analysis to determine the full cost of scrap that the business is incurring.
There is also a more complicated albeit accurate method for measuring scrap rate, which takes into consideration additional types of waste to ensure a complete view of the scrap generated.Â
You would be well-advised to incorporate estimates of these wastes to generate a more accurate scrap rate:
- Materials
- Rework time
- Energy
- Handling
- Disposal cost
- Quality assurance cost
That being said, here are 4 strategies that you can use to reduce scrap and rework in your manufacturing business.
Read More: Reduce Manufacturing Waste Using Data
3 tips to reduce scrap
#Tip 1: Minimize manual handling of delicate parts
How does automation help eliminate scrap in manufacturing processes?
First, machines don’t get sick or tired the way manual laborers do. A machine doesn’t get a muscle spasm because of a repetitive motion stress injury or sneeze and drop a multi-thousand-dollar load of small, delicate, no-scratch parts all over the floor.
If you can set up a machine to handle a given task in a way that doesn’t risk damage to the parts you manufacture, then automating that process is often the best option. Not only will you save money on reprocessing your parts, you’ll improve your time to market by getting parts right the first time.
This is often recommended when your production process uses specialized steel wire baskets to carry parts from one phase of your process to another, which helps to limit physical contact with your delicate manufactured parts.
#Tip 2: Use the right metal forming tool for the job
Reducing scrap in manufacturing processes means more than just making cuts efficiently: it requires using the right tool for the job to maximize efficiency.Â
The tools and techniques you use to shape metal forms go a long way towards reducing the amount of excess scrap that is created during your manufacturing process.
The choice of machine to use depends on a number of factors, such as whether or not the sheet metal needs to be bent into specific shapes. By choosing the right tool for the job, scrap can be kept to a minimum.
Other tools that you might want to take a closer look at include the containers that you use to hold your parts during the production process.Â
Inefficient container designs contribute to part damage and scrap during late-stage production processes such as ultrasonic parts cleaning or heat treating. Sometimes, eliminating scrap may be as simple as revising the design of your cleaning baskets for better handling of parts.
#Tip 3: Keep your employees trained and motivated
No matter how heavily you’ve invested in factory automation, your people are still key to your company’s success. It is your workers who set up, operate, and maintain the machinery that you use to meet your production goals.Â
Ensuring their skills are up to date while motivating them to find ways to improve efficiency is vital to minimize scrap. Teams with greater knowledge and training will naturally be better at reducing scrap and other forms of waste that cost your company money.Â
They’ll make smarter use of your resources, and not have to go through nearly as many “trial and error†experiences to find out what does and does not work.
One way to incentivize your employees is to implement a performance based program that rewards employees for tackling wasteful processes and enhancing efficiency.Â
En bref
There’s a lot more to reducing scrap than just the 3 tips that we’ve covered in this blog. In the next blog of this series, we’ll uncover the main reasons why scrap is generated in the first place and also explore additional tips that you can use to lower waste and drive growth!
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