TDC - Scrap Cost Category

While most of the industry has a handle on recording manufacturing scrap cost, relating that cost to machine failure is seldom done. Another setback may be the fact that most facilities are still tracking scrap cost on paper only. You will need to incorporate your current reporting methods into your CMMS and/or EAM software, so that the relationship can be analyzed. Also the existing method of calculation will need to meet the TDC recommendations below.

The amount of scrap produced, and wheather or not it's recyclable at that stage of the production will be recorded in other TDC categories such as Equipment / Start-up cost. (Start-up cost records amount of normal scrap generated each time machine is taken out of, or placed back into production.)

The Equipment / Start-up cost category is also where you would calculate the actual dollar value per scrapped product, in relationship to that stage of the production. This scrap category is where you record the amount of scrap not covered in other categories, that is directly related to equipment failure and maintenance operations.

The cost per product of re-work at various stages of the production will be calculated and recorded in the Labor / QC category. That cost per product will be multiplied by amount of products needing re-worked do to downtime.

Some causes for scrap related directly with downtime...

Examples from the above table...

While these examples may be placed under more than one example area, the important point is that the scrap should be recorded and related to the downtime occurrence in this "Downtime/Scrap" category.

Equipment failure:

 A closed loop control board on an extruder fails.... all parts made till machine stopped were too thin (scrap).... minor hardware failures which take hours or days to diagnose and repair.



It is accepted by operators, every time machine speed is adjusted while running, one part is scrapped. But in accordance with manufacturers this should not be occurring. Therefore indicating a machine problem.



Scrap per hour produced because of problem temporarily being band-aided till scheduled repair. Also scrap produced while performing band-aid repair on machine. True Band-aid cost are important to track, as they are deceiving when weighing decision as to full repair or just band-aid.


Equipment installation:

While new equipment is being installed, as long as production is not stopped, scrap costs can be overlooked. This area should be addressed during the planning, and monitored during the actual install. There is also the unplanned occurrence from accidents, such as the fork lift bumping a running machine while moving equipment. Also slowing or stopping production due to traffic by the installers. All the different aspects of an installation can affect many areas of downtime cost, and they add up quickly! This area of cost will be covered in more detail when we launch our new site


Maintenance procedure:

Consider this example of cost related to maintenance procedures and human error. A maintenance person makes an adjustment on one shift, but does not record what was done. This adjustment could have increased scrap rate for three shifts until that person returns to work the next day.

Unwillingness of maintenance personnel to "accept ownership" of the system.


Run till failure:

Usually before such a radical practice is adopted, detailed analysis, including scrap predictions are performed. But if growing scrap rate in relationship to end of life of part was not considered, you will need to reconsider your run till failure policy.


Please share your examples, factors, and comments.

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