Published On: September 22nd, 2023Categories: Machine Shop

From Scrap to Missed Profitability

All CNC shops today can relate to the desire to continuously improve their metrics, specifically when it comes to decreasing costs and increasing their rate of production. However, even with rising innovation in CNC systems, shops still regularly encounter setbacks due to scrap and rework. For manufacturers aiming to elevate their operations; optimizing scrap and rework metrics is paramount. Scrap can occur at any point throughout the machining process for a large variety of reasons making it difficult to anticipate. However, by observing why and when scrap occurs and properly recording and monitoring scrap and rework metrics any shop can drastically decrease scrap and rework costs.


What is Scrap?

CNC scrap is any manufacturing material that is unusable in its current state and must be wasted or reworked for other manufacturing purposes. Scrap can occur for a multitude of reasons such as a simple miscommunication or even a machine breakdown. Scrap can be quite costly for CNC shops, not only is there the cost associated with the discarded materials themselves but there is also labor cost, rework cost, and other miscellaneous costs that quickly add up. Why the scrap occurred is a key part of preventing future scrap, with that knowledge shops can determine if there are any patterns surrounding scrap and can implement improvement plans to resolve these issues. 


When Does Scrap Occur

Since scrap can occur at any point, it is important to track waste throughout all areas of processing to determine the true cause of the scrap. Additionally, depending on when the scrap occurred throughout the process there might be additional scrap and labor costs that must be accounted for, and might also impact that scraps’ ability to be reworked. In particular, there are three points in production during which shops need to keep a close eye on scrap:


Prior to Production:

Scrap that occurs before production is in its raw material form but for whatever reason it did not pass quality standards prior to production. When scrap occurs and is caught at this point the shop might work with their material supplier to ensure that the issue does not happen again. However, there is minimal labor cost lost since the raw material never made it to production.


During Production:

This references scrap that occurs at any point during the production, making it the most common type of scrap. Additionally, this type of scrap can result in a large amount of labor and scrap costs even in situations where the scrap is reworked.


End of Production:

Scrap that occurs at this point is the result of finished goods that do not meet the shop’s quality standards. When scrap occurs at this point more often than not it can be reworked. But scrap that occurs at this point is the most costly due to all of the labor costs that went into it both before and after reworks.

Keeping track of when scrap occurs allows shops even further insights into what caused the scrap and it provides shops the opportunity to develop preventative actions to deter future scrap. Additionally, since there are different costs associated with the different points of production it’s important to know when the scrap occurred.


Key Scrap Metrics

Several metrics can be utilized by shops to drastically reduce scrap and as a result rework. Here are some of the most important scrap metrics to track: 


Scrap Rate:

The scrap rate represents the percentage of raw materials or parts that are wasted due to defects, quality, or other issues. A lower scrap rate indicates higher production efficiency and product quality.


Cost of Scrap:

The cost of scrap tracks the financial impact of scrap, including the cost of wasted materials, time, and labor costs. This cost is not represented in the scrap rate and is key to understanding the true cost of scrap.


Cost of Rework:

This metric represents the cost associated with reworking scrapped parts. This includes labor, additional materials, and machining. Similar to the cost of scrap metric this metric shines a light on the true cost of reworking scrap.


First Pass Yield (FPY):

First Pass Yield tracks the number of parts that pass quality inspection without any rework or rejection. A high FPY number indicates reduced scrap and reduced rework.


Tracking these four metrics can make a huge impact on any machining operation, especially when utilizing a continuous improvement plan. However, most of these metrics can be optimized even further when used in conjunction with a machine monitoring system. Not only will a machine monitoring system allow for more accurate and consistent scrap data, but it also allows you to observe at which point in the operation the scrap occurred. Allowing machining shops to quickly find and resolve any scrap patterns. Overall, shops can dramatically decrease their costs and increase their rate of production by creating awareness of how and when scrap occurs and by diligently tracking their scrap metrics. 

About the Author: Katie Ruffing