Scrap rate
Scrap rate measures the percentage of materials or products that are discarded because they fail to meet specifications and cannot be reworked or salvaged. High scrap rates indicate process problems, quality issues, or material inconsistencies that waste resources and increase effective unit costs.
Examples
Manufacturing scrap: A machining operation produces 5% scrap due to dimensional nonconformances, tool wear, and material defects. This 5% scrap rate means material, labor, and machine time for those units are lost.
Supplier scrap factor: A supplier's quote includes an 8% scrap factor in material cost, reflecting expected waste from their manufacturing process. Understanding this factor enables discussion of whether scrap reduction could enable price improvement.
Material yield vs scrap: A stamping process uses sheet metal, producing parts and scrap from the remaining material. Material yield is the percentage of input material that becomes product; the complement is scrap, which may have salvage value as recycled material.
Definition
Scrap rate directly affects product cost. If scrap rate is 10%, producing one good unit requires 1.11 units of material input. This material premium compounds through the supply chain, affecting landed cost and profitability.
Scrap differs from yield loss in terminology: yield typically refers to process output (percentage good), while scrap rate refers to the waste (percentage bad). They're complementary measures: 90% yield means 10% scrap rate.
Scrap causes include process variability, equipment problems, material quality issues, operator errors, and design limitations. Reducing scrap requires understanding its causes and addressing root causes rather than just accepting waste as normal.
Scrap has value implications beyond direct material cost. Floor space for scrap handling, disposal costs, and the environmental impact of waste all matter. Some scrap can be sold for salvage or recycling, partially offsetting the loss.
Previous
*GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and COOL VENDORS is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.