Scrap Rate

Scrap Rate

KPI Details

Scrap Rate measures the quality of the production output of the Manufacturing function. A high value for this KPI likely indicates poor raw materials inputs, careless production setup procedures, faulty machinery or ineffective production operators, all of which will result in increased costs to the company and slow down day-to-day operations. A very high Scrap Rate can also lead to an inability to produce enough finished goods to fulfill customer orders. Scrap Rate can be reduced by increasing training for programmers and operators, documenting product data throughout the process, or utilization of scientific approaches, such as Six Sigma or Multivariate Testing.

KPI Definition

The number of units produced that must be scrapped because of product defects or errors divided by the total number of units produced by the manufacturing group over the same period of time, as a percentage.

KPI Best Practices

• Preventative maintenance performed regularly on manufacturing equipment
• Use lean manufacturing methods such as Six Sigma, MVT, etc.
• Use high quality raw materials and components for production runs

KPI Calculation Instructions Scrap Rate?

Two values are used to calculate this KPI: (1) the number of units that are scrapped during the production process, and (2) the total number of units produced during the same period of time. Scrapped units are defined as any units of the production output that are not good units or units that are reworked. Good units are defined as units that pass inspection and are approved for sale or use as a component in another production run. Include good units, reworked units and scrapped units in the denominator of this calculation.

KPI Formula :

(Number of Units Scrapped / Total Number of Units Produced) * 100