Scrap Rate
Category: Strategic
Measures the percentage of products or materials that are discarded due to defects or errors during production.
What it Measures ?
How many products are wasted.
Relevant StakeHolders
Quality Control, Production Supervisor
Why it Matters ?
Reduces material wastage during production.
In-depth Use Case / Real-world Example
Scrap Rate is calculated by dividing the total value of discarded materials or products by the total value of materials used. For instance, if a plant uses ₹100,000 worth of raw materials but discards ₹10,000 worth due to defects, the scrap rate is (10,000 / 100,000) × 100 = 10%. A high scrap rate is a clear indicator of inefficiency and waste, leading to increased production costs. In a factory that makes plastic components, a high scrap rate could be caused by improper molding processes or subpar raw materials. Reducing scrap through process improvement or better quality control can help save costs and improve overall productivity.